The Anatomy of a Property Large Loss: Part I

July 14, 2017Scope Of Loss

As many of you know 100 percent of GC3 assignments originate from the commercial insurance carrier. With most assignments, GC3 is asked to consult-on and provide a scope of loss and a rebuild estimate thus providing you (adjuster) the leverage needed to negotiate a fair and reasonable claim settlement.

However, there are property claims where GC3 is asked to provide construction management services “in support” of the large commercial property claim. Over the next few articles we hope to provide you with information to help with your claim handling and management responsibilities.

These three or four articles will focus on an actual large loss assignment given to GC3 to provide construction management services. Our hope is that these articles will give you take-away(s) which we believe will help with your claim file management and providing the best possible customer service experience for your policy holders.

This large loss assignment tasked GC3 to manage a very complex commercial loss that involved 130 homeowner units along with their owners and insurance companies; the homeowners association governing board; and local city building officials. This loss involved an explosion that caused varying degrees of damage to all 130 homeowners units.

Damages included everything from cosmetic repairs up to complete demolishing and rebuilding of multiple structures. To add to the vast property damage was the fact that several residents were displaced and relying on their homeowners insurance for their additional living expenses.  Other issues surrounding this assignment were mortgage lien holders, utility company cooperation, individual homeowner’s betterment and improvements, and the high profile of the loss to the community.

Finally, with the origin, cause, and subrogation investigation along with a couple of local contractor “false starts” (prior to GC3’s engagement) in getting the structural repairs started; pressure began to mount for the homeowners association governing board, the property management company, the homeowners, and the community; all centering on the lack of progress.

In identifying these pressure point issues, the insurance carrier for the homeowner association retained GC3 to provide a construction management control point for all parties. GC3’s immediate role had three functions: develop and manage the scope of loss (work); solicit and manage direct repair costs; and finally to manage policy holder and homeowner expectations.

Ok, this sets the large loss scenario for this article series. To conclude part one of The Anatomy of a Large Loss series here are a couple of takeaways:

Work to identify and understand the uniqueness of a large loss.
What we mean by this is that it is critical to know and understand your policy holder and the business they operate or manage. In this case, the policy holder had hired an outside property management firm. Through this common property management arrangement within the town home business; the insurance property insurance claim had an outside influencer on the logistics of the property claim development.

Next were the homeowners and their private homeowner insurance policies and carriers. In this case, we had 130 homeowners with different carriers and claims practices. The issue here becomes the time and organization needed to process the scope of work and values back to these homeowners and their carriers for the betterment and improvements, above and beyond what was covered by the homeowner association insurance policy. Lastly added into the mix of the property claim were the displaced homeowners and their additional living expense claims.

Large loss assignments require multiple functions or responsibilities immediately and simultaneously.
In this case, due to the lack of progress and displaced homeowner pressures, GC3 needed to develop and implement all functional requirements (listed above) simultaneously. More specifically, GC3’s needed to create a scope of loss; validate the scope of loss with the homeowner and document any differences, quantify costs and allocate between builder’s grade and homeowner betterments; set up an efficient repair process, and finally develop a communication protocol for “ALL”  interested parties.

Adjuster Benefit: When an adjuster can identify and understand the uniqueness and what has to be accomplished immediately then, at that point, the adjuster can start to think about the resources and the benefits those resources can provide to the claim file and their policy holder. 

In this case, the direct benefit back to the carrier was the management of the scope of loss and policy holder expectations; resulting in the stoppage of complaint phone calls to the adjuster by the homeowners. Finally a clear path in determining the loss value and subsequent reconstruction plan provided progress needed to assure “ALL” parties that their worlds would be rebuilt.

This first edition of The Anatomy of a Large Loss gives you a 30,000 foot view of our series and large loss assignment. Over the next few articles we will give a more in depth look into how we accomplished our functional responsibilities while meeting the goals that had been set by the insurance carrier and the homeowners association. Our next article will talk about how the team established a plan to develop and implement our functional responsibilities along with the communication needed to bring all interested parties together to start to move this project forward.


Paul Nilles is GC3’s Executive Vice President and is responsible for GC3’s business development and marketing. Paul’s background includes more than 30 years in the insurance and construction industries. You may contact Paul at 515-267-2490 (o) or 515-556-4906 (c) or by emailing him.