Don’t fall victim to copper theft!

With copper currently trading at over $4.00/lb and scrap yards paying $3.25/lb or more, copper is becoming an increasingly attractive target for theft. And, to make matters worse, increasingly thieves are “scrapping” actively used copper to sell.

Most of us have heard of thieves breaking into vacant homes buildings to steal the wiring and old plumbing to sell for scrap value, but with higher prices thefts have become increasingly brazen. Currently, there is an uptick in theft of copper condenser coils from building air conditioners. The Des Moines Register reports on a case that a police officer said was his first experience with air conditioner copper theft, but I can personally testify it is common in Chicago.

Air conditioners contain a large copper coil that is used to exchange heat from the building with the outside. While home air conditioner coils typically weigh in the range of twenty pounds, commercial coils can weigh far more. This makes small and midsize commercial buildings attractive targets. Thieves cut the coils from the units at night. To operate these units must be located outside, and are often behind the building or on the roof. They have a flimsy sheet metal cover that is easily cut away even if locked. Coils are rarely removed delicately, often destroying the unit in the process. Building occupants often go unaware of the theft for days or weeks, until the air conditioning is turned on. The cost to replace the unit often runs into the thousands of dollars for what, at most, is a few hundred paid on the scrap value. To make matters worse, replacing the air conditioner on a commercial building can trigger that the system is brought into compliance with current HVAC building codes, costing thousands more.

As an insurance broker, I have personally been a party to three copper thefts from air conditioners this year. The smallest claim was for just under $6,000 and the largest was for over $25,000. No thief made off with over $1,000 of scrap metal. The economic impact of these crimes is large and growing.

So how can we protect ourselves? Most steps to prevent general vandalism and burglary will also discourage copper theft. Good lighting at night is a must. Exterior recorded cameras are better, and roving watchmen are best, but usually impractical. Don’t leave ladders around the exterior of your building, and fire escapes should be secured to prevent access from the street. When able, often building a fence around exterior mechanical units or the entire roof can discourage theft. Thefts are effectively discouraged not when it is impossible to commit, but when it is substantially harder than other similar targets.

Also – scrap yards enable this problem. Without scrap yards, thieves would have nowhere to sell their take. Scrap yards however provide a needed service for the community and should not be overly regulated. Most scrap yards are already required to record identity and take pictures, as well of keep a record of what was purchased. However, a balance should be struck. Clearly, scrap yard staff must be suspicious of condensers removed with bolt cutters still dripping with refrigerant. Law enforcement can partner with scrap yards to discover and prosecute offenders.

Until that happens, we must all remain vigilant and protect our own property from this rising cause of loss.

What is subrogation?

Sometimes the topic of subrogation comes up with a claim and people aren’t quite sure what it is. Subrogation is the process through which an insurance company makes a payment either to their insured or on their insured’s behalf, and than tries to recover that payment from a more culpable party.

Many people have seen the subrogation process work but may not have heard the term. Most everyone has car insurance, and many people have been in an accident that isn’t their fault. When someone is not at fault in an accident, they can go to their own insurer and collect under their collision insurance. But since they aren’t at fault, their insurer will try and recover from the responsible party. A claimant might never realize this happens, but for the fact that they get a refund check for their deductible if the insurer is successful in making the responsible party pay.

So why should a business owner care about subrogation? Well, there are a number of reasons. First of all, if the business paid a deductible, they could receive that back. Secondly, and possibly more importantly, subrogated claims are not used when calculating policy loss ratios. Policy loss ratios are simply a calculation of losses paid divided by premium charged. Low loss ratios lead to favorable renewals and discounts; high loss ratios lead to higher rates and even non-renewals.

Sometimes a business owner might not want subrogation to occur against a particular party for some business reason. For example, a nonprofit may have a below market lease as a quasi donation. Most insurance policies grant the insurer the right to subrogate at their discretion without your explicit consent. To prevent subrogation, this must be negotiated in advance with the carrier and a small additional premium may be charged. In fact, some landlords or clients may require a waiver of subrogation before letting a business operate at their location.

As usual an ounce of preparation is worth a pound of after the fact damage control.

What happens to stolen property recovered after insurance paid a claim?

This question comes up from out clients time to time. A client has something stolen; a car for example, and the insurance company pays the claim. The insured buys a new car with the insurance money. A month later, the police find the stolen car. Except for a broken window and needing a new ignition it’s in pretty good shape.

So what happens? Does the insured have to take it back? But they have a new car already. Do they have to give back the insurance money? I’m always able to alleviate a lot of stress when I tell my client that it is their choice. They can keep the money and the insurance company keeps the car, or they can give back the money, less the cost of repairs, and take their car back.

With a car, almost everyone keeps the money. But this holds true for any property claim. Let’s say it was a piece of art that was stolen, not a car. Then, many more people will return the money and take their artwork back.

So if you ever find yourself in this situation take a breath and remember it’s your choice. You don’t have to give back the money and no one can make you take your recovered property back. But you can if you want to.