You are the practice manager for a four-physician office. You arrive on Monday m

ID: 2655288 • Letter: Y

Question

You are the practice manager for a four-physician office. You arrive on Monday morning to find the entire office suite flooded from overhead sprinklers that malfunctioned over the weekend. Water stands ankle-deep everywhere. The computers are fried and the contents of all the filing cabinets are soaked. Your own office, where most of the records were stored, has the worst damage.

The practice carries valuable papers insurance coverage for an amount up to $250,000. It is your responsibility to prepare an estimate of the financial loss so that a claim can be filed with the insurance company. How would you go about it? What would your summary of the losses look like?

Explanation / Answer

The valuation should be done for all the damaged goods. The accumulated figure for all such valuation should be the amount of loss. Basically, there are three types of goods damaged—computers, materials, and documents. There is also a loss of profit, since the work stops. Reasonable monetary value for these losses should be calculated for executing the claim for damage.

Summary of losses is as below:

Heads

Amount

Computers (6 numbers)

$62,000

Materials damaged

$22,000

Loss of documents (original papers)

$58,000

Loss of profit

$65,000

Total

$207,000

Note: Loss of documents is the loss of original papers, for which the execution of work could not be possible in future. This is one type of monetary loss for the company.