Fee for Estimate Calculations if Constructco does not carry out restoration project.
Examples of Fee for Estimate provided AFTER Adjuster’s Initial Appraisal
Example 1. Adjuster’s Initial Appraisal: $30,000. Claim Settlement Amount: $32,500.
(i) (Deposit) $30,000 x 2% = $600, which is less than $695, so (i) = $695
(ii) (20% of difference) $32,500 (Claim amount) – $30,000 (Initial Appraisal) = $2,500 x 20% = $500
$695 (i) is greater than $500 (ii), so Fee is $695. Net pre-tax benefit to Owner: $1,805 ($2,500 – $695).
Example 2. Adjuster’s Initial Appraisal: $37,500. Claim Settlement Amount: $41,250.
(i) (Deposit) $37,500 x 2% = $750, which is greater than $695, so (i) = $750
(ii) (20% of difference) $41,250 (Claim amount) – $37,500 (Initial Appraisal) = $3,750 x 20% = $750
(i) and (ii) are equal ($750), so, Fee is $750. Net pre-tax benefit to Owner: $3,000 ($3,750- $750).
Example 3. Adjuster’s Initial Appraisal: $45,000. Claim Settlement Amount: $50,000.
(i) (Deposit) $45,000 x 2% = $900, which is greater than $695, so (i) = $900
(ii) (20% of difference) $50,000 (approved Claim) – $45,00 (Initial Appraisal) = $5,000 x 20% = $1,000
$1,000 (ii) is greater than $900 (i), so Fee is $1,000. Net pre-tax benefit to Owner: $4,000 ($5,000 – $1,000)
Examples of Fee for Estimate provided BEFORE Adjuster’s Initial Appraisal
Example 1. Claim Amount: $17,500
(i) (Deposit) $895
(ii) (20% of difference) $17,500 (Claim Amount) x 5% = $875
$895 (i) is greater than $875 (ii), so Fee is $895.
Example 2. Claim Amount: $30,000
(i) (Deposit) $895
(ii) (20% of difference) $30,000(Claim Amount) x 5% = $1,500
$1,5000 (ii) is greater than $895 (i), so, Fee is $1,500.
(If Constructco provides its Estimate before the Adjuster’s Initial Appraisal, the net pre-tax benefit to Owner cannot be calculated, but Owner can fairly assume the Claim settlement will be higher than it would have been without Constructco’s Estimate.)