Last week, we showed the events from “The Hobbit: An Unexpected Journey” from an insurance point of view. With virtual liability losses of over three million euros, it was a pretty large sum. But the property damage that takes place in the movie is much higher. When Gandalf and the Dwarfs escape from the Orks, their entire fortress is totally destroyed. After the tons of rubble are removed and the fortress is rebuilt, the insurance company has to pick up a much bigger tab. The imaginary claim “in accordance to the regulations of the authorities of Middle Earth” adds up to a grand total of 320 million euros.
Determining the total loss for the cathedral and fortress after the fire
Clean-up and demolition costs for the cathedral or fortress, which were destroyed completely:
- Disposal of 300,000 tons of stone and other materials (EUR 190.00 per ton) = EUR 57,000,000.00
- Demolition costs for 30,000 manual laborers working 8 hours a day for 7 days (approx. 10 tons in 7 days for each laborer) estimated at EUR 39.00/h = EUR 65,520,000.00
Total cost of clean-up and demolition = EUR 122,520,000.00 million
Replanting of five trees (20 meter pines)
As per the policy, we would compensate our policyholder with young trees only (ca. 80cm). According to Internet research, approx. EUR 40 per tree plus costs for the gardener (EUR 40/h for 10 hours). As the previous items were burned to the ground, no disposal costs are incurred.
Total for replanting = EUR 600.00
Restoration costs for the cathedral or fortress:
Due to the high policy deductible for stone fortresses hewn into mountains (EUR 1.5 million) in the event of fire, burst pipes, storm/hail and damage caused by natural hazards, our policyholder (the king of all dwarf tribes) has decided to opt for notional settlement. As we have received full approval from the SIGL, and ownership can be clearly traced back to the Dwarf King, according to an excerpt from the land register, there is no reason not to reach a coverage settlement.
- The restoration costs for the fortress, which measures 145 meters in length, 85 meters in width and 45 meters in height, were assessed by the experts that we commissioned to be EUR 199,000,000.00 for a standard fortress.
- This calculation takes into consideration the requirements imposed by the administrative authorities of Middle Earth.
Total restoration costs for the fortress minus deductible of 1.5 million = EUR 197,500,000.00
The evacuation of golden treasure was classed as salvage costs:
- Salvage costs for the golden treasure (2,000m3) underneath the debris were calculated on a notional basis. 10 days, with 100 laborers working 10 hours every day = 10,000 hours x EUR 39.00 = EUR 390,000.00.
- Another explicit reference to the limit of indemnity for valuables was made in the context of home contents insurance, with the comment that the underlying policy requires urgent amendment to account for the existing treasure.
Salvage costs for golden treasure = EUR 390,000.00
Total loss for the fortress: EUR 320,410,600.00 million
Determining the total damage to the residence. Suspected cause of damage: “Attack from manned or unmanned flying objects” or dragons
Larger building (5m*5m*10m) declared to be a multiple-family dwelling:
- Clean-up and demolition costs incl. disposal = EUR 80,000
- Restoration costs according to experts’ notional cost assessment = EUR 795,000.00
- Our policyholder would once again like a notional settlement, as he would like to leave the town in order to avoid a repeat occurrence of such a situation; he has, however, informed us that he would like to remain an Allianz customer in his new place of residence, “The Shire”.
Total cost of clean-up and demolition = EUR 80,000
Calculation of restoration costs based on settlement at 80% of the net loss = EUR 636,000.00
Total damages to residential building: EUR 716,000.00
Determining the total loss for 30 bridges
30 bridges inside the Orc fortress.
- In general, bridges on an insured property are not viewed as building components or land and appurtenances. We therefore assume that these are included in the scope of cover on an individual basis and are specified or listed in the insurance policy.
- On average, a bridge like the ones inside the subterranean Orc fortress has a length of 52.5 meters.
- Allianz Handwerker Services will carry out the restoration work, as the project leaders and their service providers are fearless and this is the only company prepared to work with the Orcs.
- Approx. EUR 65,000 as a fixed price per bridge, classed as a wooden construction, incl. scaffolding.
30 bridges at a fixed price = EUR 1,950,000
Total loss for 30 bridges: EUR 1,950,000.00
Calculation of the total loss for protective shields and wooden arrows
- As the protective shields and wooden arrows were damaged or shot at during a battle, this is a clear case of wilful intent. These objects also fall under the Military Weapons Act and will not be settled for reasons of decency, as a review of each individual combatant’s possession of a valid arms possession card (Waffenbesitzkarte) is no longer possible due to the high number of fatalities.
Total loss = EUR 0.00
Total loss for shields and wooden arrows = EUR 0.00
Determining loss amount for 5 uprooted trees (20m pines)
Clean-up and removal of the trees estimated by the adjuster to amount to = EUR 5,000.00
Replanting using young pines at EUR 40.00 each = EUR 250.00
Wage costs for gardeners to carry out the replanting, 10 h at EUR 40.00 each = EUR 400.00
Total loss = EUR 5,650.00
Total loss for uprooted trees: EUR 5,650.00
Determining total loss for 25 giant wolves
- The ‘giant wolf’ is not classed as a small animal, and is therefore not included in insured home contents within the meaning of the General Terms and Conditions of Home Contents Insurance (VHB).
- The Orcs’ accounting department must provide information on whether separate animal insurance is in place, or whether the wolves are insured within the framework of the existing home contents insurance (if this exists) as working wolves (dogs).
- This means that under the current circumstances there are no losses which qualify for indemnification, and no proof has been submitted of any insured hazard. At present, I am preceding on the assumption of clear wilful intent, as the holders (Orcs) deliberately sent the wolves into battle.
Total loss for wolves: EUR 0.00
Hufgard’s summary: From Allianz’s point of view, we can only hope that with the current loss amount totaling EUR 323,082,250.00 net, the risk has been distributed across a variety of companies. No liability is assumed for the accuracy of the information on the aforementioned figures.