It’s estimated that up to 5% percent of Americans; possibly upwards of 15 million people, struggle with compulsive hoarding. People with hoarding disorder excessively save items that others may view as worthless.  They have difficulty parting with possessions, leading to clutter that disrupts their ability to use living or workspaces.  It is more common among older adults – three times as many adults 55 to 94 years are affected by hoarding disorder compared to adults 34-44 years old.  According to the American Psychiatric Association, the problem is expected to worsen in the United States as baby boomers get older

People that struggle with the disorder live otherwise normal lives.  They work jobs, own homes, drive cars – and buy insurance.  As a result, many claim professionals have or will experience the challenges of adjusting a “pack rat claim.”

An adjuster working one of these claims may find the house crammed from floor to ceiling with contents.  Anything of value is often covered over with accumulated junk or trash.  Narrow pathways between the deeply stacked items can be the only way to navigate from room to room.  In some cases, the accumulation issue can include animals, such as cats or dogs.  Hoarding environments can also lead to infestations of vermin and insects.  A property impacted by severe hoarding has health and safety concerns for the residents, emergency responders, the adjuster, and contractors.

After the property has incurred water or smoke damage the hoarded contents need to be moved out of the house just to obtain access for assessing damage and cleaning the structure.  The contents will also need to be sorted to determine what has value and what should be disposed of.  The mere process moving the accumulated contents out of the structure and creating an inventory of anything value can deplete the limit of contents coverage.

It is critical for the adjuster to immediately establish clear communication and provide direction to the insured or their representative.  The restoration contractor is also an important part of the process and must understand what their role and scope of work will be.  The primary objective is to find the best allocation of available funds and present practical alternatives for the insured to consider.

Here is some collective wisdom from experienced adjusters on how they have successfully worked through the challenge of pack rat claims:

  • Stabilize the situation early-on at minimum cost.
  • In the immediate aftermath of a loss, the property owner should not be expected to make wise on-the-spot decisions. If the insured is not able to perform their duties, then the adjuster should ask if they have a family member or friend who can assist in the process.
  • Remain aware of policy limits for Coverage A and Coverage C as you assess the overall direction of the claim. Are coverage limits low enough that a more streamlined adjustment and settlement process is worth exploring? What is practical and efficient to get to a mutually acceptable resolution?
  • Advise the insured of policy provisions relating to items not eligible for Replacement Cost because they were not maintained in good or workable condition, outdated, obsolete, stored or not in use. Even items that maintain value are subject to depreciation until replaced.
  • Action must be taken quickly to mitigate damage and avoid nuisance or theft issues. Seek to expediently find agreement on the path forward with the insured or their representative. Outside vendors will likely need to be involved.
  • Establish where items can be moved for proper inspection, documentation, and storage during structure repairs. It is advantageous if items can be sorted on site with a large dumpster on hand.  Items of value might be securely stored on premises in a garage or outbuilding minimizing potential storage or pack out costs.
  • Will the insured accept simply throwing out items deemed to have no value?  Request whoever is doing the sorting work to document the process by photograph or video.
  • All expenses related to contents, including pack out and storage are charged against the coverage limit. Encourage the insured to consider a plan of action that provides essential service but preserves the greatest flexibility for future decisions.
  • Restorers should not attempt to maximize the amount of work but provide the best value for the client. Test samples can be produced to the insured to establish realistic expectations for cleaning.

Packrat claims present unique challenges that require creativity and excellent communication to find the best alternatives and ways to resolve the claim.  One last guiding principle:  Always keep things moving forward.  These claims don’t get better with age.