Case 99-4: Evaluating Damage Following an Earthquake

The following is a summary of visitor responses and comments on the case study presented on the Web site between October 1999 and January 2000. It is intended to be a factual portrayal of trends and individual comments without editorial input from EERI staff.

Review The Situation:

Following a major earthquake, you are contacted by an adjuster representing Acme Insurance Company and asked to inspect a property damaged by the earthquake and prepare a report that includes repair recommendations. This is the adjuster’s first experience with an earthquake damage claim, so he is relying entirely upon you as an expert in earthquake engineering for guidance. Other than names, addresses, and phone numbers, the adjuster gives you no information or direction.

Your inspection of the property reveals moderate but readily repairable earthquake damage to the lateral load-resisting system. In addition, however, you discover what appears to be serious design or construction defects in the gravity system, although there is no indication of any distress associated with the defects.

A quick review of the building department file indicates that the building is about 40 years old. From prior experience with this vintage of structure, you are aware that significant retrofit of the lateral system is required to meet current life-safety standards. Doing a few simple checks, you also confirm your suspicions about defects in the gravity system, finding it has only about 70% of the strength required by current code.

What do you report to your client?

Response Summary:

Where the responses differed was in how to present the pre-existing conditions. Some felt that the engineer should inform the insurer and/or building owner independently of the evaluation report. The client had requested only an earthquake damage assessment.

Others wrote that all of the safety concerns should be included in the evaluation report. The engineer should go beyond the narrow focus of the earthquake evaluation in order to inform the concerned parties of the potential safety issues.

Recommended Actions:

Readers were asked to rate several possible actions – considering the interests of all stakeholders – based on the following scale. The actions are listed in no particular order, and the rating for each action is the average of the ratings gathered.

5 — Strongly Agree 4 — Agree 3 — Neutral 2 — Disagree 1 — Strongly Disagree

1. You report only the earthquake damage, as that was all you were hired to do. Average Rating: 1.9
2. You report only the earthquake damage, but suggest a detailed review of the capacity of the gravity system. Average Rating: 3.2
3. You report all your observations clearly distinguishing between earthquake damage and as-built defects. Average Rating: 4.2
4. You report all your observations without distinguishing between earthquake damage and as-built defects – determining causation is the insurance adjuster’s job. Average Rating: 2.0
5. You report both earthquake damage and as-built defects, but purposely word your report so that both appear to be earthquake damage with the intent that all repairs would be covered by the insurance policy. Average Rating: 1.8
6. For those components of the lateral system damaged by the earthquake, you provide recommendations to restore the damaged components to their original capacity. Average Rating: 3.4
7. Rather than merely repairing the existing lateral system, you recommend a complete upgrade because repair alone will leave the building in a deficient condition relative to current standards. Average Rating: 3.2
8. You provide a detailed scope of work necessary to restore the original capacity of the lateral system but also recommend that an upgrade of the lateral system be considered, independent of insurance coverage. Average Rating: 4.3
9. Before preparing your report, you call the adjuster and discuss the issue of repair versus upgrade and seek your client’s guidance based on insurance coverage. Average Rating: 3.7
10. Being somewhat uncertain as to what the client expects by way of a report, before finalizing your report you send the adjuster a draft copy for review and comment. Average Rating: 4.0

Readers were asked what additional information would have put them in a better position to pick an alternative.

Based on the readers’ comments, the following is a listing (in no particular order) of relevant information that would have assisted in making a better decision:

Readers were then asked to offer a suggested course of action for the engineer. The following is a brief summary of the suggestions. As is the nature of ethical dilemmas, there is no right or wrong answer, and many courses of action could be considered equally valid depending on individual values and/or interpretation of events.

One group responded that the engineer should "officially" report only the earthquake damage to the insurer, but should also attempt to inform either the insurer or the owner or a building official of the potential deficiencies. The engineer’s duty is to his/her client (in this case reporting damage from the recent earthquake), but he/she also ought to make the assessment of the pre-existing conditions available to concerned parties.

The other, slightly smaller group felt that the engineer should provide both the earthquake damage and pre-existing deficiencies in the "official" report. This seemed to reflect the opinion that the engineer has an obligation to report all risks associated with the building. Respondents in this group also felt that all of the information ought to be presented in order to assist all parties make informed decisions.

Comments on Questions for Further Thought:

Finally, readers were asked to respond to the following two questions:

Should engineers consider themselves as strong advocates for public safety and present earthquake damage findings in the manner most likely to yield insurance coverage for a full retrofit? Or, should engineers’ obligation to make truthful public statements supercede their interest in promoting public safety? Or, should engineers be strong advocates for their client’s interests?

One group can be described as favoring "objectivity over advocacy." These readers felt that the engineer should present all of the information in an honest manner (i.e. separating the earthquake damage from the pre-existing conditions) that will allow the responsible parties (in this case the insurer and the owner) decide how to proceed. Engineers should not dishonestly favor either party even if they have noble intentions.

The other group preferred the concepts of engineers as "advocates for public safety – and truthful." The engineer should prepare a truthful and objective report, but should not stop at that. In an open and honest manner, the engineer should encourage the concerned parties to investigate the potential pre-existing deficiencies. Supposing the building owner was interested in initiating a program of repair/strengthening work. Should you offer your services as engineer-of-record to the building owner given your detailed knowledge of the building gleaned from your extensive investigation? Or, should you, in fact, refuse the owner’s request to hire you as engineer-of-record, as a dual retention would create a conflict of interest? Or, can you work for both the owner and the insurance company, as your opinions are objective and independent of which client is paying your bill?Most respondents felt that the engineer should decline the work to avoid a conflict of interest, even if this conflict was only perceived.Others noted that the engineer could do both as long as the contractual obligation to the insurer was complete prior to the beginning of the upgrade project.