The Missing Inventory Records, the Proof of Loss, and the Moved Equipment

The first priority is the April 30 proof-of-loss deadline. Missing it can prejudice the claim, although the insurer's conduct and any written extension matter. By April 25, the adjuster should immediately request an extension in writing, explaining that the inventory records are incomplete and that the insured is making a good-faith effort to comply. In parallel, the adjuster should prepare and submit a sworn proof of loss based on the best available documentation, clearly reserving the right to supplement as records are found. The adjuster should not submit a knowingly inflated $410,000 contents figure; that exceeds the $250,000 limit and invites a misrepresentation allegation. The adjuster should also preserve all records, interview the owner and employees, and collect bank statements, purchase orders, tax returns, and vendor records to reconstruct inventory. The May 6 examination under oath is a second deadline: the adjuster should prepare the owner, but must not coach false testimony. The moved equipment must be disclosed before the EUO, because concealment is worse than the underlying fact.

The adjuster should build the contents claim from independent evidence rather than from the owner's handwritten estimate. Useful sources include federal and state tax returns, depreciation schedules, purchase orders, bank and credit-card statements, vendor invoices, inventory-management software, sales records, and photographs or video of the premises. The adjuster should prepare a schedule that lists each item, quantity, age, original cost, replacement cost, and supporting document. Where receipts are missing, the adjuster can use secondary evidence, but should label it as an estimate and explain the method. The $410,000 figure cannot be presented as fact; at most it is an unverified claim that exceeds the limit. The adjuster should also analyze the 90% coinsurance clause: if the contents value at the time of loss is, for example, $410,000, the required limit would be $369,000, and the $250,000 limit would produce a penalty. The adjuster should not assume the penalty applies until the value is properly established, and should discuss with the insured whether the valuation is defensible.

Moving undamaged equipment to a second location is not automatically wrongful, but failing to tell the insurer is a serious problem. The adjuster must not help the insured conceal the equipment or treat it as damaged. The adjuster should advise the insured to disclose the move in writing, identify the equipment, explain when and why it was moved, and provide access for inspection. At the examination under oath, the owner will be under oath; the adjuster may prepare the owner on the facts and the process but must not suggest testimony that is false or incomplete. If the insured refuses to disclose the equipment, the adjuster should document the advice and consider whether continued representation is appropriate. On coverage, the insurer may argue misrepresentation or concealment, and the adjuster should analyze the policy's fraud and concealment provisions and New Mexico law before responding. The adjuster should also preserve the equipment and its condition, because the insurer may want to inspect it. The ethical duty is to the insured's lawful interests, not to winning at any cost.