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Have you ever looked at a vendor’s quote for replacing a full rack of equipment due to a loss involving water, smoke or some other type of contamination?

It gets pretty complicated.

There are lines for hardware, software, installation, maintenance, warranties, licensing and all kinds of other assorted goodies that go along with technical equipment. The cost of the hardware alone can be just a fraction of the total bill. Just because some hardware gets damaged and needs replacing, other pieces and line items may not.

How do you know what is necessary for the recovery and what is not?

The answer is in the details…

I’ll give you a perfect example of what I mean.

A few years ago we were called out by a Risk Manager to take a look at a casino in Oregon that had a water main break in the basement. Of course, they had just built a brand new server room in said basement (the best place for technology). After bringing up the system for testing purposes, they were satisfied with the results and shut it down to finish up preparations for the launch of the new system. The very next night, an eight inch water main broke and flooded the basement to the tune of about twelve inches of standing water. Not good.

We were asked to do a few things.

  1. Make sure the equipment listed on the vendors quote was there
  2. Find out if the equipment was damaged
  3. Check the vendors quote to make sure it was LKQ

After a short flight and drive to the casino we were greeted by the IT admin and brought down into the bowels of the building and shown the server room. Yep, about 12 inches of muddy water line on the brand new server racks that was otherwise shiny and sparkly. As an IT person, I wept a little inside. These were really nice racks with APC chillers in between, sort of air conditioning for robots…

One of the reasons the risk manager got us involved was that the quote sent from the vendor (the same vendor that installed the system just a few weeks prior) was sitting at a respectable $750K. Not just a “let me write you a quick check for that” transaction.

So, we were left to do our assessment of the loss and document the equipment and their conditions. One of the things we noticed is that above twelve inches or so, there was no direct damage to the equipment at all, possibly only by high humidity. So why the need to replace all of it?

Warranty. Neither Cisco nor any of the other manufacturers were going to honor a warranty after such a loss, claiming that the loss had voided the warranty. OK, but this equipment was never used or put into operation to begin with. Surely there must be some way to mitigate the costs associated with this loss and still get the casino put back whole…

This is where digging into a quote can uncover some hidden possibilities.

After we gathered our information, took inventory, photos and checked the equipment thoroughly we headed back to Denver. Once back at the office we went through the vendors quote line by line. The hardware pricing seemed to be in line with LKQ, but only added up to about a third of the cost of the quote. The rest of the quote was installation, software licensing, maintenance contracts, etc.

So think about this, if the equipment had never been used, shouldn’t the software licensing, warranties, maintenance contracts, etc be transferred to new hardware?

Yes.

It was.

The quote went from $750K to about $300K. Not bad for a few days work.

We use this example to illustrate the need for attention to detail when dealing with claims involving technology.

 

10 Steps To Reduce Claim Costs Involving Technology:

  1. Create a detailed inventory of all equipment
  2. Complete an internal inspection to determine extent of damage
  3. Figure out what equipment is damaged and what is not
  4. Determine repair options for damaged equipment
  5. Get detailed quotes from vendors for replacement
  6. Verify vendor quotes for LKQ
  7. Separate the costs for hardware, software, licensing, etc
  8. Confirm the status of all manufacturer and extended warranties
  9. Consider the age of the equipment
  10. Contact manufacturer to verify replacement compatibility

Looks a little daunting? It can be. This type of claim is our specialty. We can save you time and money and provide detailed reports for all equipment involved. Need help? We do that.

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