The largest area of confusion and conflict that I see in estimating damage to homes is the scope of work. The scope of work is the amount of work that is to be done, as opposed to the cost of the work. The first step in estimating damage repair is establishing exactly what we are going to do.
You would think that it would be easy. After all, damage to a home is visible, right? Anyone with eyes can see what should be done, as opposed to some soft tissue injury in a car wreck that is revealed only by a smudgy X-ray waved around by some sketchy lawyer. Yes, anyone with eyes can see, but what is seen is often determined by whose eyes we are looking through! You see, insureds, contractors, and insurance companies sometimes have competing agendas that tint the lenses that they look at the damage through! Everyone wants the damage repaired, but that means different things to the different parties involved.
Let's start with a definition of "damage." When we say that something is "damaged," what are we really saying? A good definition of damage is "An alteration that results in a loss of appearance, utility, or value."[1]
Insureds want the damage repaired, and that means that everything is at least as good or better than it was. Sometimes that means they want more "repaired" than is damaged, or that items unrelated to the claim be included in the repairs. Contractors want the damage repaired, and that means emphasizing the work that profits them the most. Insurance companies want the damage repaired, but in a manner that costs them the least, sometimes at the expense of the overall value of the home. How on earth are we going to reconcile these competing agendas? Let me introduce you to someone you need to know. His name is "The Reasonable Man." Now, ladies, before you start, I know you may believe there is no such thing as a reasonable man. But there is a "Reasonable Man," especially in the eyes of the law!
"The reasonable man" is an English common law term that originated in 1837 in the case of Vaughan v Menlove. In that case, the defendant (Menlove) was raising and cutting hay, and he built hayricks to hold his harvested hay. It was well known at the time that spontaneous combustion was a potential issue with stacked hay, and hayricks were built in a manner that reduced the possibility of spontaneous combustion. Menlove, however (and despite repeated warnings over time), did not stack his hay in the proper manner. Naturally, his hay caught fire and burned the land his hay was on as well as two cottages owned by his landlord (Vaughan). Vaughan filed suit, and the court ruled that Menlove had not acted with reasonable precaution. Menlove appealed, on the basis that he was of limited intelligence and that he had acted in his best judgment. The appellant court sided with the lower court, stating that:
"The care taken by a prudent man has always been the rule laid down; and as to the supposed difficulty of applying it, a jury has always been able to say, whether, taking that rule as their guide, there has been negligence on the occasion in question. Instead, therefore, of saying that the liability for negligence should be co-extensive with the judgment of each individual, which would be as variable as the length of the foot of each individual, we ought rather to adhere to the rule which requires in all cases a regard to caution such as a man of ordinary prudence would observe. That was, in substance, the criterion presented to the jury in this case and, therefore, the present rule must be discharged."[2]
Although this case was a "case of first impression" (a new case that would establish future precedent), it relied strongly on long held case law that "everyone has a duty to use their land so as not to injure others."[3] What Vaughn v Menlove established was that individuals have a duty to act in a manner that is consistent with what a reasonable person would do in the same circumstances. This theory of law evolved into what is known today as "The Reasonable Man Doctrine."
Today, the reasonable man is everywhere! We understand today that, as a society, we have an established set of standards that we are all held to. For example, if you shoot a gun into a crowd and injure someone, you may argue that you are not responsible for the injury because you didn't know anything about guns. However, it is understood that reasonable people know that if you shoot a gun into a crowd, someone could be injured, and as a society we expect that minimum level of understanding in others. Another example would be a young driver following too closely on a rain slick road and sliding into the car in front of them. The drivers' youth and inexperience will not relieve them of responsibility for the accident, because reasonable drivers understand that it takes longer to stop on wet roads. Interestingly, the reasonable man doctrine has a sliding scale; in a medical situation a doctor is held to a higher reasonable care standard than a layman due to his medical training.
So what on earth does all this have to do with your insurance claim and establishing a scope of work? Simple! If you will view your damage in light of what a reasonable person would do if they didn't have insurance, then you will almost always arrive at what to include in the scope of work!
Let's say that you have some shingles blown off the front slope of your roof. The repair options range from just patching in enough shingles to repair the damaged area to replacing the entire roof. Which is the correct option? Your adjuster may say that simply patching the roof will repair the damage, while your roofer says that the entire roof has to be replaced so that it "matches." The question to ask is "What would I do if I didn't have any insurance?" Let's think it through. If we patch the roof, then our damage is technically repaired, and the front slope of our home will have a patchwork quilt appearance. If we replace the entire roof then our entire roof is again the same age and appearance. The correct answer depends on which lens you are viewing the damage through. Your adjuster wants the damage repaired at the least cost, so he may prefer patching the roof. You want the damage repaired at your greatest benefit, so you want the entire roof replaced. The correct lens to use, though, is the one that the reasonable man wears. What would our reasonable man do if insurance was not involved? Would he patch the roof, technically solving the problem but damaging the home's value in the process? Or would he pay several thousand dollars beyond that to replace the entire roof? Now, Bill Gates might replace the entire roof, but the reasonable man does not have unlimited resources, nor is he dead broke. So the question I always start with is "What would the reasonable man, with reasonable resources, do in this situation?" I believe that the reasonable man would replace the entire damaged slope of the roof so it again has one appearance, saving a substantial sum of money over the cost of replacing the entire roof. In fact, I have seen this exact example played out in real life many times. In ordinary roof claims with a relatively small deductible the tendency is for insureds to demand more roof replacement. Once the insurance company pays for the total roof replacement, however, the owner begins to whistle a different tune as the money becomes "his." I have seen many, many owners partially repair their roofs after insurance pays to replace them, pocketing the difference. In coastal wind storm claims a separate wind deductible often applies that exceeds the cost of replacing the roof. In those cases the owners are paying for the roofs themselves, and guess what? They tend to be much more conservative in what they consider to be the proper method of repair.
The reasonable man approach will answer many of the questions that arise when scoping damage to a home. Would the reasonable man, after moving belongings from a room and prepping it for paint, simply paint one wall? Probably not! Would the reasonable man, if a wall in one bedroom becomes damaged, paint his entire home? Again, probably not!
[1] RIA Fire Damage Standard White Paper 2012, Page two, lines 61 and 62.
[2] Wikipedia.com, "Reasonable Man"
[3] Boston Law Review, May 1, 2003, Volume 44, Issue 3, Number 3, Article 1.
