A boiler failure caused a loss of production at a company that manufactures credit cards. The insured claimed all overtime worked as extra expense to make up lost production. A review of payroll records indicated that the amount claimed was mostly normal overtime payroll. The result was that only a small portion of the overtime worked was actually compensable as extra expense.
Pumping Up A Claim
A personal trainer who sold exercise equipment was injured in an auto accident. A chart of annual earnings trends was prepared to show that the income loss claimed greatly exceeded historical revenues and was clearly excessive. The case was settled before trial for a fraction of the amount demanded.
Loss of income claims that are not as a result of a covered peril
A few times each year we discover that insureds suffer losses of income due to occurrences that are not caused by insured perils. When we review the data, giving rise to such losses, we discover the cause of loss to be from uninsured situations.
We were contacted to review documentation relating to an insurer-agency relationship. From a review of such documentation, we determined that funds were misappropriated by the agency and restitution was received for the documented amounts.
We have been contacted on many occasions to aid in the valuation of marital assets, including closely held businesses, current and future earning projections. As with all of our assignments, we are not advocates but rather fact finders and offer our opinions of value.
Misappropriation of funds
Some investment firms contacted us to review their books and records, as well as the personal files of the accused people, to determine the extent of particular misappropriation schemes. Through each project we discovered additional theft mechanisms and funds stolen. Usually the thieves admit to amounts substantially less than we eventually uncover.
Loss of income by a startup operation
An insurance claim was filed by an entity for loss of income that they allegedly suffered during their startup phase of their operations. We were able to demonstrate that their losses were discontinued rather than the entity suffering any loss of income.
Financial motive for murder
A man accused of murdering his wife by strangulation and then partially destroying her body and other evidence in a vehicle fire was acquitted by the jury that noted the coroner was unable to determine a specific cause of death. In this case, the accused stipulated to our findings of a strong financial motive.
Financial motive for arson
An insured, accused of destroying his business by fire, removed documents from a fireproof filing cabinet and placed them on a wooden desk. The fire cause and origin experts testified that gasoline was poured around the desk and ignited. The fire department handed us the slightly charred documents that included IRS and other liens. We were able to demonstrate a deteriorating cash flow for the company as well as the owner. The claim was successfully denied and defended in court. No payment was made to the insured.
Loss of income claim settled as an extra expense claim
The insured claimed that a loss of production equated to a loss of sales and thus a loss of income. We were able to demonstrate, through the books and records of the insured, that no sales were lost and that some extra expenses were incurred, after the property restoration period, to rebuild inventory to pre-loss levels.
Often we have found that a portion of employee dishonesty claims are actually accounts receivable or notes receivable that the employee had never repaid. Another element often overlooked is the accrued vacation wages that are not paid to the employee. The claim should be reduced by the net payroll amount attributable to the unpaid vacation wages.
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