Plan for the Unexpected, Part 3
In June, your first homework assignment was to train your staff in a number of areas, including spill control and countermeasures as well as fire alarm and notification procedures. By now -- if you are a good student -- you also should have designated a group of employees to serve as your response team.
In this installment, I have more Sobey-specified homework for you.
Assignment #2: Hazmat RegsCoordinate an Environmental Cleanup or Closure Site. The goal here is to be able to respond to EPA's and other state and federal agencies' requirements for timely cleanup or site closure and regulatory compliance. Sobey emphasizes a key point to remember is that after a disaster involving hazardous materials, the resulting debris is hazardous and must be handled as such. If the company was a Resource Conservation and Recovery Act (RCRA) hazmat waste generator, the hazardous waste must be removed within 90 days or you are in violation of your RCRA permit. If you were not a hazmat generator before the incident, you probably are now, and all associated regulations apply.
Assignment #3: InsuranceEstablishing Insurable Values. Once a claim has occurred, it is too late to contemplate insurance limits. An appraisal also will assist the business operator in providing the existence and specifications of property if they are damaged or destroyed. When the insured presents an insurance claim, there are many facts that will be requested by the adjuster. The purpose of insurance is to pay the insured dollars to return them to the position they were in prior to the loss. You must sell the adjuster on the fact that buildings, equipment and ancillary items existed. Further, the condition and age of the items prior to the loss will be evaluated.
The purpose of an insurance appraisal is to estimate replacement cost value of the assets to be insured. Replacement cost is defined as the current cost of a similar new item having the nearest equivalent utility as the property being appraised.
Asset Descriptions. A simple description like "one process heater" might seem sufficient to you; you know your equipment. To the adjuster, though, this generic description is insufficient. What was the model? What about the serial number, which will confirm the unit's age? Do you have a receipt for its original purchase? Did you buy it at an auction, from a used equipment dealer, or was it new? What attachments and optional features did it have? Had it been rebuilt or reconditioned? Are you going to replace it with a new machine or a used one? Will the cost to repair or recondition your damaged heater exceed the "actual cash value"? Will it exceed the replacement cost? Answering all these questions make up an accurate asset description.
In my next column, I will continue to explain the ins and outs of your third homework assignment. I will cover claim documentation, actual cash value, co-insurance, business interruption and extra expense insurance as well as contingency planning. I also will supply a glossary of appraisal terms.