Proving an Insured Loss: Policyholders Need Experts Too



This clause is included in the basic property coverage form of one insurer. Entitled “Extra Expense, Expediting Expense, and Loss Adjustment Expense.” Coverage is limited to $10,000 or 10 percent of the combined business real and personal property loss, whichever is less. Note that only expense involving employees’ work is intended to be covered, and not the cost of using outside auditors, public adjusters, or other professionals, unless the policy is specifically amended to that effect. However, in a case decided on appeal in New York State, Tri Town Antlers Foundation v. Fireman’s Fund Ins. Co. (7-10-90), the court, with two justices dissenting, found this language sufficiently ambiguous to allow recovery by the policyholder of $8,709.14 of a public adjuster’s fees as “wages paid to employees.” Whether other courts would agree is a good question, so given the chance before a loss occurs, an insured, who would expect to use outside professionals in claim preparation, would do well to seek broader language that clearly includes coverage for the cost of outside professionals.

12. “Cost of Preparing a Statement of Loss. You may extend the insurance provided by this coverage form to apply to the cost of a statement of loss or any other exhibits required under this policy. The most we pay for the cost of preparing a statement of loss or any other exhibits is $5,000 for any one claim. No deductible applies to this extension.”


This clause is part of a basic property form, rather than an endorsement. It does not limit coverage to specific types of professionals. The $5,000 limit is stated, in a later clause of the form, to be a separate amount of insurance, applying as excess over any other applicable coverages.

13. “Loss Data Preparation Costs. We will pay up to $5,000 for reasonable costs you incur in preparing loss data required by policy conditions. This includes the cost of taking inventory, making appraisals and preparing other data to determine the extent of your ‘covered loss.’”


This endorsement, with a fixed limit of $5,000, is offered without charge to contractors, manufacturers/processors and wholesalers/distributors. The coverage applies to anyone providing the claimpreparation service, including public adjusters and consultants. (Note that this insurer has taken the position that, while not stated in the endorsement, they will not pay fees for public adjusters calculated as a percentage of the loss.)

14. “Inventory or Appraisal. You may extend the insurance provided under this coverage form to apply to the following expenses you incur … (1) the cost of taking inventories; (2) the cost of making appraisals; and (3) the cost of preparing a statement of loss and other supporting exhibits. The most we will pay under this extension for any claim is $5,000. We will not pay for the expenses billed by and payable to independent insurance adjusters or for expenses to prepare claims not covered by this coverage part.”


This clause, with a $5,000 limit on coverage for loss data preparation, seems to exclude “independent” insurance adjusters. However, to avoid possible controversy, this should be clarified with the insurer.

15. “Cost of Preparing Proof of Loss. This form insures, subject to all its terms and provisions, for not more than $10,000, any reasonable expense incurred in preparing proof of loss data or any other exhibits required in connection with any claim covered under this form.”


This clause, with a $10,000 limit on coverage, seems to include the services of any professionals used in proving and recovering a loss.

16. “Soft Costs Extension. Subject to the limit(s) of liability and deductible(s) shown elsewhere in this policy and to all other terms, conditions and exclusions not in conflict herewith, this policy is extended to cover soft costs which result from a delay in completions of a building or structure beyond the date it would have been completed had no loss occurred. This delay must be caused by a Covered Cause of Loss insured against by this policy...