ACRL News Issue (B) of College & Research Libraries ay 1986 / 325M Insurance settlem ent n egotiation By Cheryl T. Naslund and Susan C. George Assistant Physical Sciences Librarian Physical Sciences Librarian D artm outh College D artm outh College A case study following a library disaster. K r e s g e Physical Sciences L ibrary serves the D art- m outh College com m unity in the following subject areas: chemistry, earth sciences, astronomy, phys­ ics, m athem atics and the com puter sciences. The collection is composed of approxim ately 80,000 volumes w ith more th an 1,500 serial titles. From July through Septem ber of 1983 a series of w ater disasters, associated w ith the construction of a new addition on the roof, caused significant d am ­ age to the collection in Kresge L ibrary. Eight sepa­ rate flooding incidents occurred resulting in w ater dam age to a total of 1,217 volumes. (For full infor­ m ation regarding this disaster, see Susan C . George and C heryl T. N aslund, “ L ib rary Disasters: A Learning Experience,” C & RL News, April 1986, pp. 251-57). In an attem pt to determ ine, for insurance p u r­ poses, a dollar value associated w ith the loss of a li­ brary collection due to w ater dam age, the follow­ ing m ethod was developed. It represents an initial effort to determ ine quickly and effectively a rea­ sonable estim ate, based on replacem ent costs, of dam age in partial loss situations for purposes of in­ surance negotiation. The aim of this report is to serve as a catalyst for the developm ent of guidelines for the calculation of loss associated w ith w ater dam age th a t will be acceptable to both libraries and the insurance industry. W ater disasters result in varying degrees of d am ­ age ranging from m inor edge w etting to thorough saturation: the worst case scenario results in total loss of the m aterial. As a result of this disaster vol­ umes sustained varying degrees of perm anent d am ­ age ranging from mildly cockled pages w ith fully usable text, to usable text block requiring m inor re­ pairs or rebinding, to completely unusable fused text blocks in volumes w ith coated paper. A m ajor­ ity of the m aterial was restored to a usable condi­ tion; thus, the p rim ary consideration was to d eter­ mine w h at percentage of each volumes’ original useful lifespan had been lost. For ease of calculation, it was assumed th a t p a r­ tial dam age could be represented as some fraction of total dam age as represented by full replacem ent cost. In addition to visible dam age, p artial dam age estimates should also take into account the poten­ tial costs associated w ith the increased risk of mold and/or m ildew growth during the rem aining life­ span of the m aterial. Owing to the varied nature of the subject m atter and publishing origin of the m a­ terials dam aged, several procedures, described be­ low, were used to establish accurate replacem ent costs. D uring the disaster an inventory including call num ber, short title and date was made. This inven­ tory served as the basis for evaluation and was ini­ tially searched for m aterials identified as unique based on date. O w ing to the small num ber of vol­ umes involved published prior to 1950, the possi­ bility th a t such volumes m ight be of significantly greater value th an other volumes in the general col­ lection, and the small likelihood of replacem ent of these volumes w ith currently in-print editions, all p re -1950 volumes were evaluated separately and current replacem ent costs for these m aterials were provided on an individual basis by a rare and out- of-print book dealer whose credentials w ere ac­ ceptable to both the library and the insurance com- 326 / C& RL News TABLE 1 Sampling of Sources for Monograph Price Information American Book-Prices C u rren t (Dodd, Mead & Co.) Books in P rint (R.R. Bowker Co.) Books O ut-of-Print (R.R. Bowker Co.) British Books in P rint (R.R. Bowker Co.) International Books in P rint (R.R. Bowker Co.) O C L C database (OCLC Inc.) Publishers’ T rade List Annual (R.R. Bowker Co.) RLIN (Research Libraries Inform ation Network) database (Research Libraries G roup Inc.) TABLE 2 Sampling of Sources for Serial and Journal Price Information Single issue of publication Serial accounting system Ulrich’s International Periodicals D irectory (R.R. Bowker Co.) Irregular Serials and Annuals: an international directory (R.R. Bowker Co.) United States Book Exchange (USBE) pany. If com plete or nearly com plete sets w ere am ong items dam aged, these were treated on a unique basis owing to the frequent practice of dis­ count pricing for com plete sets. Once the unique titles th a t were likely to skew a representative sample of the collection had been re­ moved, a random representative sample was used to estimate the total replacem ent cost for the re­ m ainder of the dam aged volumes. In selecting a representative sample of the entire collection, it was im portant to rem em ber th a t individual physi­ cal volumes were being replaced; therefore it was necessary to count all volumes individually rather th an as members of a given title. This step required m inor editing from catalog card inform ation of the original inventory list because, in the haste to com ­ pile it during the disaster, m ultiple volumes of a single title received a single entry. For purposes of obtaining an accurate random sample, each inven­ tory list entry th a t included m ultiple volumes was counted as if it were separate entries for each vol­ ume. This approach assumed th a t the cost of any volume in a set was equal to one divided by the num ber of volumes in the set (l/#vol in set) times the price of the set. Although this may not always be the case, in this situation these figures were not extrapolated to replace whole sets and any discrep­ ancies were assumed to accurately reflect replace­ m ent costs as incurred. The dam aged volumes consisted of monographs, serials and journal volumes. Because each of these categories were not equally represented in the col­ lection and their average replacem ent costs dif­ fered markedly, the percentage of each type among the dam aged m aterials was determ ined. In this case, the process was accomplished quickly by a student assistant who com pared the inventory list of dam aged volumes to a list of Kresge L ibrary journal holdings, m arking a “J” adjacent to the journal entries. The same process was then carried ut for the rem aining titles, m atching them against he serials catalog holdings and m arking an “S” ad ­ acent to serial entries. The rem aining titles repre­ ented m onographs. Professional guidance of the tudent assistant greatly reduced the num ber of ti­ les th a t required checking based on the lib rarian ’s xperience w ith the titles in the given subject areas. librarian further checked any titles which p re­ ented confusion. To obtain a random but representative sample of he dam aged collection, a selection of 15-20% of he volumes on the inventory was chosen. The 20 % ample size representing 243 volumes and every ifth item in the dam aged collection proved to be anageable. In this case a die was throw n to select he starting entry, and every fifth entry in each of he m onograph, serial and journal categories was hosen from inventory pages shuffled to reduce any rd e rin g effect resu ltin g from call n u m b e r a r ­ angem ent. In this situation, the inventory was ade in a relatively random fashion owing to the act th a t m any areas of the collection were affected o a small degree and to the fact th a t frequently nly a few books w ere dam aged on any given shelf. Larger scale dam age in a restricted area m ight re­ uire a different approach to avoid sam pling a sys­ em atic relationship between books and to ensure btaining a truly random sample. It may be possi­ ble statistically in some circum stances to use a maller sample size, but for the initial effort and in he likely event th a t this procedure w ould be used w ith other collections exhibiting differing degrees of homogeneity, a sample size of 20 % was consid­ ered, based on consultation w ith a statistician, to be statistically valid and large enough to include the variation expected from a diverse population. In any given situation it is recom m ended th a t con­ sultation concerning the statistical validity of a se- o t j s s t e A s t t s f m t t c o r m f t o q t o s t M ay 1986 / 327 lected sam ple size be sought. Each m onographic title in the random ly chosen sam ple was individually searched and a price es­ tablished (see T able 1). Volumes w hich w ere not located using these sources w ere then searched in out-of-print dealers’ catalogs. For journals and se­ rials, a cu rren t issue was exam ined to determ ine the availability and cost of back issues. T he sub­ scription price, p ro rated for the n u m b er of issues, was used as a last resort if single issue prices w ere unavailable (see T able 2). T he availability of each volum e was determ ined along w ith the cost. This becomes critical w hen volumes are to be replaced physically, and is of lesser consequence w hen th e to ta l rep lacem en t costs are serving only to establish a basis of calcula­ tion for a p a rtia l loss insurance settlem ent. W h en ­ ever possible and acceptable, how ever, replace­ m ent of the actual volum e w ith altern ate form ats was considered; m icroform s, reprints, Books on D em and service (University Microfilms), etc. If a volum e was available, its actual replacem ent cost was used. If a volum e was unavailable, b u t re ­ placem ent w ith an alternative form at was ap p ro ­ p riate, the actual cost of the altern ate form at was used. F or m aterials th a t w ere o u t-o f-p rin t, u n ­ available in alternative form ats and otherw ise u n ­ available from an out-of-print dealer, th e cost at tim e of publication was used. Prices located in Books in P rin t (BIP) and other up-to-date sources w ere reported in cu rren t dollars and needed no adjustm ent. O th er prices w ere re­ corded in dollars based on th e year of publication and required adjustm ent for inflation. Price in ­ dexes and rates of inflation w ere based on national figures published for science m aterial. Published cost d a ta from the Bow ker A n n u a l for U.S. h a rd ­ cover science books, U.S. chem istry and physics p e­ riodicals, and U.S. science and technology serials w ere used. T he form ula applied is given as F o r­ m ula 1. In the case of pre-1977 titles, it was necessary to djust th e price for inflation in tw o steps to reflect h e 1981 re-scaling of th e price index by Bowker to a t a 1977 base year (i.e., published index scales cover the periods 1969-1980 and 1977-present). Prior to 1972 publication price indexes and inflation trends are less detailed and pose some additional p ro b ­ lems. In this survey only a few p re -1972 titles a p ­ peared in our random sam ple and prices w ere o b ­ tained from dealers catalogs in these cases. In this p a rtic u la r disaster, foreign volumes w ere not tre a te d separately as they represented only a small n u m b er of the m aterials dam aged and only three fell into the sample. If a significant num ber of volumes h ad been of foreign publication, it w ould have been im p o rtan t to calculate costs using the foreign price converted to U.S. dollars at the date of p u b lic a tio n (conversion figures are available from m ajor daily newspapers) and then to apply th e ap p ro p riate B ow ker A n n u a l d a ta depending on the country of publication. The Bow ker A n n u a l o f Library and Book Trade Inform ation covers aver­ age prices and price indexes for hardcover and p a ­ perback books, serials and periodicals by subject area for the U nited States and m any foreign coun­ tries. R eplacem ent costs for the collection w ere calcu­ lated by adding the replacem ent cost for the unique portion of the collection to the replacem ent costs for the 200 sam ple survey m ultiplied by a factor of five (see F orm ula 2). To arrive at a reasonable evaluation of dam age to d ate and potential fu tu re dam age ow ing to the increased risk of mold and m ildew grow th, it was necessary to determ ine w h a t percentage of each volum e’s life span h ad been lost. Such an estim a­ tion is approxim ate and m ust be based on profes­ sional judgem ent. M any books become ou td ated w ith the passage of tim e and for these, th e useful life of the book should be considered; other books become p a rt of a lib ra ry ’s p erm an en t research col- FO R M U LA 1 Adjusted cost Cost of volume Price index (current) of volum e to = at d ate of x Price index (date of cu rren t $ publication publication) FORMULA 2 T otal U nique title R eplacem ent Costs of R eplacem ent = R eplacem ent + 5 x 20 % sam ple survey of E stim ate Costs non-unique titles FORMULA 3 Final $ Actual P artial Loss L ab o r Process- Lost Settle- = Replace- + C alculation + Costs + ing Costs + O ppor- m ent m ent (% age of tu n ity Costs T otal Replace- Costs m ent Costs) 328 / C&RL News lection and for these, the shelf life of the book should be considered. Based on our assessment as p ro fe ssio n a l lib r a r ia n s a n d t h a t of P h ilip C ronenw ett, D artm outh College Library preser­ vation specialist, it was determ ined th a t the m ajor­ ity of titles suffered a 30 % reduction in their useful shelf life. For example, if a book would have lasted ten years, but was now expected to last only seven years, it should be considered 30 % dam aged and 30 % of its current replacem ent cost should be paid as compensation. This figure (30% of the total re­ placem ent costs calculated for the collection) was accepted by the insurance carrier as a reasonable estimate. In assessing a 30 % decrease in shelf life, it is use­ ful to note th a t no processing costs were included. This would be an im portant consideration if re­ placem ent value were being considered in a total loss situation. It would also be of value to note th at no costs were added for additional m aintenance th at the dam aged volumes might require (i.e. an ­ nual visual inspection, rebinding at a later date, mildew preventive treatm ent, fum igation, etc.). To avoid reopening the claim at a later date if fu r­ ther treatm ent becomes necessary, it is suggested th a t a portion of the settlement funds be earm arked for these purposes. The final settlem ent represented the summation of the actual replacem ent costs incurred, the p a r­ tial loss calculation based on total replacem ent costs, associated labor costs and in some cases, processing costs (see Form ula 3). Lost opportunity and inconvenience costs may also be negotiated. To avoid a lengthy procedure to determ ine the cost of the inconvenience and of ad ­ ditional efforts to secure inform ation during the di­ saster (staff time, interlibrary loan costs, online searching costs, etc.), we proposed to negotiate a flat rate figure (5%) to cover lost opportunity. Al­ though replacem ent costs are not proportional to, or in any way related to, lost opportunity and in­ convenience, this fee might be a m utually agreed upon percentage of the total replacem ent settle­ ment. This study served as the basis for negotiating a settlement w ith the contractor’s insurance com ­ pany. The estimate prepared using this procedure, which we believe to be conservative, was paid in full by the insurance company. The negotiation ex­ perience was conducted in a productive atm o ­ sphere of m utual cooperation and the insurance carrier is to be commended for accepting the p ro ­ posal w ithout the independent review initially p ro ­ posed. It is hoped th at, w ith diligent preparation, all disaster-stricken libraries will be so fortunate. It is expected th a t the money received in the settle­ m ent will be used to m aintain, repair and replace these titles as necessary in the coming years. Bibliography Bookstein, A braham . “How to Sample B adly.” Library Quarterly 44 (1974): 124-32. The Bowker A nnual o f Library and Book Trade Inform ation. New York: R.R. Bowker, 1969-1983. Brown, Norm an B., and Phillips, Jane. “Price Indexes for 1983: U.S. Periodicals and Serial Ser­ vices.” Library Journal 108 (1983):1659-62. U ngarelli, D .L . “Insurance and Prevention: W h y a n d H o w ? ” L ib r a r y T ren d s 33 (1984):57-67. ■ ■ WESS/Martinus Nijhoff grant awarded Frederick C. Lynden, assistant university lib rar­ ian for technical services at Brown University, has been selected as the first recipient of the M artinus Nijhoff In tern atio n al W est E uropean Specialist Study G rant. The purpose of the grant is to provide support for an ALA member to visit the N ether­ lands and then to spend ten consecutive working days visiting two other West E uropean countries in order to study some aspect of West European li- brarianship or bibliography. Lynden will use the grant to visit vendors, book trade association offi­ cials, and librarians in the Netherlands, France and Germ any in order to gather d ata on European book pricing and to encourage the production of academic book price indexes. The M artinus Nijhoff In te rn a tio n a l W est E u ro p ean Specialist Study G rant is an annual aw ard funded by M artinus Ni­ jhoff, Booksellers and Subscription Agents, The Hague, and is adm inistered by ACRL’s W estern European Specialists Section. ■ ■ Letter o the Editor: I have arranged an exchange w ith a librarian in ustralia as a result of the list published in C&R L ews, February 1983, of Australian libraries w ith taff interested in exchanges. I w rote to the deputy ibrarian at the University of Queensland last fall. o rre sp o n d e n c e fo llo w ed , an a g re e m e n t was eached, and on March 21 I left for Australia to pend six months in the Technical Services D ep art­ ent of the University of Queensland. Gillian Me- eyard, of the University of Queensland, will be pending six m onths as a catalo g er at E astern ashington University. I hope th a t you will con­ inue to foster exchanges by publishing the names f libraries interested.—Joan I. Tracy, Assistant ibrarian fo r Technical Services, Eastern W ash­ ngton University. f you or your library is interested in participating n an exchange, w rite to Mary Ellen Davis, A C B L / L A , 50 E. H uron S t., Chicago, IL 60611.— ME. ■ ■ T A N s l C r s m t s W t o L i I i A G ORLD WITH ESEARCH UBLICATIONS e News f The World n Microform The leading news publications of the world on microform are available for your library, in both backfiles and current subscriptions, from Research Publications • The Age, 1978-present • Neue Zürcher Zeitung, 1982- • Asahi Shimbun, 1888-present present • Bangkok Post, 1975-present • The Scotsman, 1965-present • Belfast Telegraph, 1976-present • Der Spiegel, 1947-present • The Daily Telegraph, 1945- • The Sunday Times, 1822-present present • The Times of London, 1785- • Far Eastern Economic Review, present 1946-present • Times Educational Supplement, • The Financial Times, 1888- 1910-present present • Times Engineering and Trade • Jewish Chronicle, 1841 -present Supplements, 1905-1967 • Journal de Geneve, 1975-present • Times Higher Education Supple- • Lloyd’s List, 1976-present ment, 1971 -present • Middle East Economic Digest, • Times Literary Supplement, 1960-present 1902-present • Le Monde, 1944-present • The Washington Post, 1877- present • Washington Post Book World, Write or call for a catalogue today: 1964-present Research Publications • Washington Post National 12 Lunar Drive/Drawer AB Weekly Edition, 1983-present Woodbridge, CT 06525 Toll-free: 1-800-REACH-RP Outside North and South America: Call collect in Connecticut, Canada, P.O. 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