When the production facility of the beloved Napa winery, Castello di Amorosa, was destroyed in a firestorm, its highly experienced business operations team worked to compile, submit, and negotiate the property damage insurance claim. After nearly a year, owner Dario Sattui — sensing that his team had done all they could do — consulted with the team at Adjusters International, ultimately deciding to engage Adjusters International's services. This savvy decision resulted in $1.2 million over the insurance company's original offer to the winery.
As a result of handling dozens of winery claims caused by wildfires in the region, the Adjusters International team knew exactly where to look for possible deficiencies in the insurance carrier’s proposed settlement. Following its forensic review, the team identified the proposal’s flaws:
- The insurance carrier had ignored inventory, which represented approximately 7,547 bottles of wine (equal to 7% of the claim), saying that this was not inventory owned by the insured. Although this inventory was excluded from the carrier’s inventory calculations, they included the stock for the purposes of calculating a lower average selling price per case.
- The carrier had based the inventory loss on a theoretical number—an annual perpetual inventory that counted what was supposed to have been sold or used, based on the numbers from the prior year.
- Decreases to unincurred expenses – carrier had made base assumptions, offsetting revenue with expenses.
Adjusters International successfully argued that the insurance policy treats the wine inventory as insurable if it is in the “care, custody & control” of the insured at the time of the loss. Additionally, Adjusters International added back the goods sold but not delivered revenue, increasing the average selling price per case.
The forensic accounting team at Adjusters International argued for a different inventory number — one based on the annual physical inventory. Going back three years, they compiled data that showed the difference between the perpetual inventory and the physical inventory (+) purchases (-) sales until the date of loss, ultimately prevailing and increasing the loss of inventory claim by $565,000.
The Adjusters International team successfully argued that some of the unincurred expenses did not relate to bottled wine. Some of them included gift revenue expense, tours and tastings, hospitality passthrough expense, and sales excise tax — all of which were removed from the calculations, increasing the revised claimed amount.