Electrical damage claims: what expert help costs

Two kinds of expertise, two kinds of invoice

An electrical damage claim involves a coverage and valuation question and a technical cause question. The public adjuster or loss assessor handles the first: reading the electrical damage extension or engineering policy, identifying sub-limits, assembling invoices and negotiating. The second is the domain of an independent electrical engineer, whose report on cause can determine whether the claim is paid at all.

Adjusters tend to charge a percentage of the settlement. Engineers usually charge by the hour or day, or a fixed fee for an inspection and report. Some adjusting firms include the engineer's fees in their percentage; others pass them through. Clarifying this at the start avoids double counting.

Tasks included in the fee

Typical tasks include gathering maintenance and test records, coordinating inspections with the insurer's engineer, securing damaged components, collecting utility and weather data, obtaining repair or replacement quotations, and dealing with obsolescence and betterment arguments. Where downtime causes a loss of income, the expert may also prepare the related business interruption claim.

• Policy and sub-limit analysis
• Evidence collection: logs, utility data, test certificates
• Joint inspections and component examination
• Repair versus replacement costing
• Negotiation and settlement

Indicative amounts, to be checked with each expert.

Indicative percentage bands

The table on this page is an indicative order of magnitude observed on the market, not an official scale. It applies to the claims representative's fee; engineering fees are discussed separately below. Electrical claims are frequently smaller than fire or flood losses, so minimum fees play a larger role.

In the United States, public adjuster fees are subject to state law, and some states impose caps; check the rules where the equipment is located. In the UK, Ireland, Canada and Australia, fees are generally set by contract within conduct and consumer protection rules.

What engineers typically charge

Independent electrical engineers commonly quote a fixed fee for an initial inspection and short opinion, then hourly or daily rates for laboratory examination, detailed reports and meetings. Laboratory testing of components and specialist analysis, such as oil analysis on transformers, are charged on top.

As a broad guide only, a desk review of the insurer's engineering report might cost a few hundred to a couple of thousand pounds or dollars, while a full site investigation with laboratory work and a detailed report on a complex installation can reach significantly higher amounts. Always request a written estimate.

Factors that push the price up or down

Several features of an electrical loss move the fee. A disputed cause requires engineering input and more negotiation; an accepted cause with a simple repair invoice requires little. Obsolete equipment adds research into equivalent replacements and arguments over betterment. Multiple sites, specialised systems such as medical imaging or data centre infrastructure, and parallel downtime claims all add hours.

Conversely, a well-organised maintenance file, a clear utility fault record and prompt photographs reduce the work considerably. Policyholders who prepare that material themselves can often negotiate a lower percentage or a fixed fee, because the expert's risk and effort are smaller.

Is any of this covered by the policy?

Engineering and electronic equipment policies sometimes cover the costs of investigating the cause of a covered breakdown, and property policies may include professional fees for reinstatement design. These clauses rarely extend to the policyholder's own claims representative or to an engineer engaged to challenge the insurer's findings.

A claims preparation costs extension, where present, may contribute to the cost of producing figures. Read the limit and any requirement for the insurer's prior agreement. In practice, expect to fund most independent advice yourself and weigh it against the amount in dispute.

From a single device to a full installation

For a single item worth a few thousand pounds, independent help rarely makes economic sense; a well-documented repairer's report is the best investment. For a surge that disables a building management system, lifts and IT equipment, with a claim of around £120,000, a representative charging 10% would cost about £12,000, plus perhaps a few thousand for an engineer's review.

For a major event, such as damage to a substation or a production line's control systems with a claim exceeding £1 million, the representative's rate typically falls to a mid single-digit percentage, while engineering costs grow with the investigation. A combined budget should be agreed.

Worked example on a disputed cause

An insurer declines a £250,000 claim, citing wear and tear. The policyholder's engineer, at a cost of £6,000, demonstrates a utility switching surge, and the representative negotiates a £210,000 settlement after agreeing depreciation on two older items. At 9%, the representative's fee is £18,900; total advisory cost is about £24,900, or roughly 12% of the recovery. These figures are illustrative.

It also helps to ask how the firm has fared on similar disputes: how often it has commissioned independent engineering opinions, how those opinions were received by insurers and what proportion of its electrical files ended in negotiated settlements rather than formal disputes. Honest answers to those questions say more about value than the percentage itself.

Comparing proposals sensibly

Ask each firm who will provide the technical opinion and what qualifications they hold. Compare total expected cost, combining percentage and engineering fees, rather than headline rates. A firm that never challenges the insurer's engineer may be cheaper but less effective on contested causes.

Read the engagement letter for the fee base, any minimum, VAT or GST, engineer costs and termination terms. Be wary of guarantees: no adviser can promise that a wear-and-tear exclusion will be overturned.

• Combined budget for representative and engineer
• Minimum fee and fee base
• Laboratory and testing costs
• Fees if the claim is declined
• Ownership and storage of removed components

For electrical claims, a modest investment in solid technical evidence often matters more than the headline adjuster rate. More guides on technical losses are available on expertdassure.com.