Creating RCBAP Penalty Worksheet Simsol for Adjuster s (SFA)

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Nathaniel Reed
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1 Creating RCBAP Penalty Worksheet Simsol for Adjuster s (SFA) Creating and applying RCBAP Penalty has never been easier in Simsol For Adjusters Program. Simsol RCBAP Penalty Worksheet easily displays the correct penalty amount to posted to all the related Flood Forms including Proof of Loss and Final Report. The Penalty Worksheet has a built-in Wizard to determine if the loss qualifies for a penalty or not. RCBAP Penalty Worksheet tests for the various conditions: 1. Does the risk carry at least 80 percent of its replacement cost? a. The Penalty Worksheet acquires the (I-2-V) Replacement amounts and compares it to the insured s Policy Amount to determine if it meets the 80 percent of its replacement cost. b. If the risk is below the 80 % percent replacement cost, then the worksheet will test for the 2 nd. condition. 2. The second condition checks to see if the insured carried the maximum amount of insurance for each unit. a. (Number of Units) x Policy Maximum of $250,000 b. The worksheet then compares the Total Amount of Policy Maximum Insurance carried to the Insured s current Policy Amount. c. If the Policy Maximum does not exceed the Insured s Policy Amount then the worksheet will proceed to the third condition Appling a Penalty to Loss. 3. The third condition determines the penalty amount if it does not meet the conditions listed above and posts the amount to the Worksheet Recap Sheet. The adjuster will then apply the penalty manually to the various flood forms and estimate. Please note, the penalty amount will be an addition to the insured s deductible to applied to the (Insured s Participation) against the claim payable resulting in a net claim payable of the loss. Please follow the steps listed below to create an RCBAP Worksheet and Apply the Penalty to the claim. 1. Complete an Insured-2-Value (I-2-V) on the Property: 2. Complete Adjusters Estimate including OH&P and other Prorates. 3. Select the Building Information Screen from the Claim Enclosure Tree. 4. Click icon to bring up Building I-2-V Information Screen. 5. Step 1. Click the Down-Arrow in the Description Box listed below. This ties the evaluation to the estimate to determine if the property is valued at 80% or less. 6. Step 2. look at the I-2-V Status Box to see if the risk qualifies for RCC. 7. If not, proceed to step 3.

2 Determining if RCBAP has a Penalty 8. Step 3. Click Force Qualify to activate the RCBAP Penalty Worksheet Form. a. Please note all RCBAP claims are Full Replacement Cost and if conditions are not met, a Penalty will be applied to the Insured s Participation including Deductible. 9. Select Done to exit screen. Sample of Building Valuation Screen

Determining if RCBAP has a Penalty Once the Adjuster has determined the Insured did not meet the 80% Insured to Value (I-2-V) clause as stated in the RCBAP Form, the second condition must be run to

3 Determining if RCBAP has a Penalty Once the Adjuster has determined the Insured did not meet the 80% Insured to Value (I-2-V) clause as stated in the RCBAP Form, the second condition must be run to determine if a Co-Insurance Penalty applies to the claim s Deductible/Participation. To test the second condition and determine if a penalty applies, select the Building s RCBAP Penalty Worksheet from the SIMSOL s Form Library for either (NFIP) Direct w OMB Numbers or (WYO) without OMB Numbers. Please follow steps listed below to accomplish this task: 1. Select Forms Library from either the Claims Enclosure Tree or Icon located the Claim Sub-Menu Screen. 2. Note, Force Qualify must be selected on the Building Information Screen before opening up the form. 3. Select either NFIP Direct or WYO Form group. 4. Select from the appropriate Form Group Sample of RCBAP Penalty Worksheet 10. The RCBAP Penalty Worksheet is displayed. 11. Make sure the Force Qualify check box is activated before the form selection. Force Qualify activates the form for use. 12. The Form Wizard will test the loss for RCC Compliance or determine penalty if applicable.

Determining if RCBAP has a Penalty 13. Select Form Wizard to determine if all the conditions have been met for RCBAP. The RCBAP Form Wizard is divided into three distinct sections. a. Section One Address automatically the Building Coverage which can be overridden by the Adjuster at any time.

4 Determining if RCBAP has a Penalty 13. Select Form Wizard to determine if all the conditions have been met for RCBAP. The RCBAP Form Wizard is divided into three distinct sections. a. Section One Address automatically the Building Coverage which can be overridden by the Adjuster at any time. b. Section Two (B.1.) Automatically inserts the Replacement Cost Value for RCV and ACV from the Building s (I-2-V) screen. c. Section Three - (B.2.) Address the (Maximum Amount of Insurance) Carried for each Unit. i. Insert the number of Livable Units ii. Example, the property has (10 units x $250,000) Maximum Amount Insurance a Unit can carry. d. Select Done to exit the Form Wizard and return the RCBAP Penalty Worksheet Sample of Form Wizard RCBAP Worksheet 14. The worksheet screen is now complete and breaking the loss down and addressing the two conditions as per policy guidelines: a. 1 st. Condition (B.1.) Determines (I-2-V) status if the risk is in conformity to the 80% rule. i. Value of the Risk $2,499, x Co-Insurance Rate of (80%) = Amount of Insurance needed $1,999, to qualify for full replacement without a penalty being applied. ii. Compare the Amount of Insurance needed $1,999, to the Limit of Liability $1,800, In this example, the insured did not carry enough insurance and will have a penalty applied to the loss plus deductible. iii. View the Compliance Determination Section B.1. This shows the loss example as being Not Compliant and, therefore, see the 2 nd condition B.2. Maximum Amount Insurance is greater than Limit of Liability clause.

5 Determining if RCBAP has a Penalty b. 2 nd. Condition (B.2.) Maximum Amount Insurance is greater than Limit of Liability. i. View the Compliance Determination box section (B.2.) showing if the Maximum Amount Insurance exceeds the Insured s Limit of Liability in this example. The loss is still out of compliance, and a penalty will need to be applied in (addition to the insured s deductible) to the loss. ii. Building Coverage section amounts about the worksheet is acquired from the Loss Information Screen/Coverage Screen in Simsol for Adjusters (SFA). The worksheet test s the loss from the above conditions based on the Compliance Determination fields shown above. If the conditions fail for both, then the worksheet proceeds to section C Applying Co-Ins. Penalty to the loss.

6 Calculating RCBAP Penalty Once the two conditions fail based upon the information taken from the claim and RCBAP s Form Wizard. The RCBAP Worksheet proceeds to section C of the worksheet Applying Co- Insurance Participation Application. The worksheet displays the formula for the penalty phase with the current numbers associated with the loss and provides the penalty amount which will be added to the Proof of Loss and Final Report along with the Estimate Coverage Page. (Sample of Section C Co-Insurance Participation Application) 1. C.1 To determine what is the Percentage of Penalty, the worksheet Divides (Policy Limit of $1,800,000.00) by what is the (Required Amount of insurance $1,999,898.08) = 10% (Example of Replacement Cost Co-Insurance Calculation Screen in SFA) 2. C.2 We need to apply the 10% Penalty to the Adjusted RCV of the Loss. Please note, most adjusters get this step wrong due to they apply the Penalty to the Full RCV, not Adjusted RCV. You cannot penalize the insured if they are not eligible for unrecoverable items such as carpeting and appliances. 3. The Adjusted RCV is the {Full RCV of loss ($50, $4,000) Unrecoverable Depreciation} = $46, The penalty amount will be Adjusted RCV 46, x.1 or (10%) before deductible Penalty Percentage = $4, Co-Insurance Penalty Amount. 5. Section C.3. Add the (Co-Insurance Penalty Amount + to the Insured Deductible) = Total Co- Participation of the Insured. a. For this example ($4, $5,000.00) = $9, Total Co-Participation of the Insured. 6. Subtract the (Total Loss ACV - Less Salvage Amount Total Co-Participation of the Insured = NET ACV Claim Payable. Then add the Recoverable Depreciation.

Calculating RCBAP Penalty Total Loss ACV Salvage Total Co-Participation = NET ACV Claim Payable a. For this example ($43,100.00 0.00 - $9,6010.00) = $33,490 b.

7 Calculating RCBAP Penalty Total Loss ACV Salvage Total Co-Participation = NET ACV Claim Payable a. For this example ($43, $9, ) = $33,490 b. Add the $ 3,000 Recoverable Deprecation for a Net Claim Payable of $36, Example of RCBAP Recap Section of the Worksheet Please note this Penalty Amount is then added to claims deductible and applied to the NFIP Proof of Loss, Final Report and RC Poof of Loss Deductible/Co-Insurance Participation located for Direct Side as well as the WYO Forms in SFA. Warning If the Adjuster Amends the Building Estimate in any way the Penalty Amount will Change and the New Penalty Amount must be Manually updated for Proof of Loss, NFIP Final Report, and Claim Coverage Deductible.

8 Preparing the Proof of Loss The NFIP Proof of Loss is one of the easiest forms to complete but with an RCBAP claim involved with Penalty, the adjuster must manually add the penalty to the form. Simsol has added a penalty field box to the Proof of Loss to easily identify the standard Deductible for the loss and the Penalty Amount. Please follow the steps listed below to accomplish this task: 1. Click icon from the Claim Sub Menu. 2. Select your proper Form Group either for NFIP Direct side or WYO (with or without Mentor). 3. Select NFIP RCBAP Proof of Loss from the Forms Library. 4. Proceed to Section 8.0 Less Deductible. 5. Refer to the NFIP RCBAP Penalty Worksheet for the recommended Penalty Amount. 6. Insert Penalty Amount to the Co-Insurance Participation field box. 7. Total of Less Deductible is amended which reflects the Total Participation by the Insured. 8. Click Disallow Changes to the Form Data. The adjuster must lock the form to preserve the penalty amount. Example of RCBAP Proof of Loss

Addressing the NFIP Final Report and Building Estimate The NFIP Final report does not have an individual Co-Insurance Participation section but does address the Less Deductible / Ins.

9 Addressing the NFIP Final Report and Building Estimate The NFIP Final report does not have an individual Co-Insurance Participation section but does address the Less Deductible / Ins. Participation in the Claim Summary Section of the form. To apply the penalty to the form and update the Buildings Deductible, the adjuster just needs to change the Insured s Building Deductible located in SFA s Loss Information / Coverage Section to reflect the Standard Deductible plus RCBAP s Penalty Amount for the loss. Please follow the following steps listed below to accomplish this task: 1. Before exiting the Proof of Loss, note the total amount of participation for the loss, i.e. $9, Proceed to the Loss Information Screen from the Claims Enclosure Tree. 3. Click the icon to display the Coverage Entry Worksheet screen. 4. Select Coverage A and insert the new Deductible Amount including penalty, i.e. $9, Good Idea to change the Coverage Description to RCBAP Building but this action is not mandatory. 6. Click Done to exit the screen. Example of Coverage Entry Worksheet Screen 7. Click icon from the Claim Sub Menu. 8. Select your proper Form Group either for NFIP Direct side or WYO (with or without Mentor). 9. Select NFIP RCBAP Final Report from the Forms Library. 10. Fill out the Final Report Wizard as usual. 11. Refer to the Less Deductible / Ins. Participation displaying the new amount including the (Standard Deductible + Penalty Amount) = Total Participation of the Insured. 12. The RCC Hold Back Amount is addressed in the Claim Summary Section of the form. 13. The Building s Deductible amount is changed and will reflect in the Buildings Coverage Page when printed. 14. Do not lock this form by checking the Disallow Changes to Form Data as the Proof of Loss of Form. a. As you change the deductible amount for the building, it will automatically update the NFIP Final Report and Buildings Coverage Section which properly displays the Insured s Total Participation Amount for the Loss. b. The Proof of Loss breaks out the Standard Deductible and Co-Insurance Participation for ease of use for the Insured and Examiner alike about the Total Participation by the Insured for the loss.

Compare the Total Page Less Deductible $9,610.00 to the NFIP Final Report Less Deductible / Insurance Participation $9,610.

10 Addressing the NFIP Final Report and Building Estimate Example of NFIP Final Report Claim Summary Section 15. To verify amounts in the Building s Estimate Section: a. Select the Building s Total Page from the Claims Enclosure Tree. b. Compare the Total Page Less Deductible $9, to the NFIP Final Report Less Deductible / Insurance Participation $9, should match along with all other Claim Payable (ACV) Totals. 16. The Proof of Loss amount should perfectly match the totals from the Total Page of the Claim and the NFIP Final Report. Example of Total Page

Addressing the NFIP Final Report and Building Estimate (Example of RCBAP Proof of Loss) Conclusion The RCBAP Penalty Worksheet will save countless time in properly preparing your RCBAP type claims

11 Addressing the NFIP Final Report and Building Estimate (Example of RCBAP Proof of Loss) Conclusion The RCBAP Penalty Worksheet will save countless time in properly preparing your RCBAP type claims and check for the mandatory conditions to apply a penalty if applicable. Do not forget to lock your NFIP RCBAP Proof of Loss and if a change to the estimate is warranted. Make the change and Unlock the Proof of Loss and update the new Penalty Amount for the NFIP RCBAP Worksheet and re-lock the form. Do not worry about locking the Final Report, due to the form will automatically update itself when the penalty amount is re-addressed in the Coverage Entry Screen. If you have any questions/comments, please feel free to give us a call at ext. 500 or , info@simsol.com Thank You for Your Support

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