In this column, I will analyze how fire can cause an extensive indirect damage to a business.
It is a known fact that a fire will cause serious and direct damage to a business and the building itself. However, the majority of Korean business owners do not know that indirect damages caused by a fire is equally damaging.
Most people don’t know this because they never experience how a smoke from a fire can damage their property. People falsely believe that they need only to do a simple cleaning once the smoke goes away.
Most businesses these days use equipment, machines, and computers that have either CPU or have electronic parts inside that are sensitive to smoke. Therefore, when the smoke penetrates into the machines, they will slow down, malfunction, and/or lose its power.
We represented a Korean business owner who bought a coin laundry. Even though the owner had taken over the business just 3 months ago, they were able to hire 2 employees because the business was profitable. The business was operating smoothly and the owner supervised the coin laundry 2-3 hours a day and came home.
One day, a fire broke out in a business just two units away. The smoke filled the empty spaces between the ceiling and the roof and infiltrated the surrounding units, including the coin laundry.
The firefighters came, and they broke the glass door and sprayed water at the ceiling and the walls to prevent the fire from spreading. Although the floor was flooded, the firefighters were able to successfully put out the fire.
Business owner quickly began cleaning the ceilings and the walls with the compensation paid by the building owner’s insurance. However, problems began to occur immediately after they resumed business. Dryers constantly malfunctioned, overheated and stopped working in the middle of a cycle.
Over the next several months, the business owner paid thousands of dollars to the repair company in an effort to fix more than 10 dryers. The repair company offered 30 day warranty for their service. However, repair company did not want to honor their warranty because the machines kept breaking down. So they delayed the scheduled repair or made excuses that there was a problem with parts and that they will not repair the machines unless the business owner paid more money. The customers began to complain to complain as well, due to frequent malfunction. The business quickly got worse and the owner had to let go of his employees as customers started leaving.
In the meanwhile, the insurance company paid 20% less than the operating loss prepared by the owner’s CPA. Furthermore, the insurance company did not compensate for the repair and notified the business that they will terminate the claim in 60 days.
In the midst of dire situation, the business owner came to us in hopes to fight the insurance company and receive the full compensation.
After reviewing the case, we decided that we will not settle the case until we received full compensation for the cost of repair and also for the cost to replace the dryers. This was because even if the dryers were fixed, the life of the dryer has already been shortened.
The claim at stake was the $100,000 to replace all the machines, $20,000 to replace the tiles, and other operating loss totaling $40,000. In my 17 years of experience as a public adjuster, I am seeing increasing trend of insurance company reducing the settlement amount. Business owners should be aware of this abuse. Our company is committed to fight for our client’s rights to receive fair compensation.
Jung Park, PA
Excel Public Adjusters