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Because of this, the insurance company should have not immediately settled for $254,000 and should have only offered $9,600 as their starting settlement offer. Krog’s got a very good deal here.
The way that I figured out these numbers is by creating a regression to estimate the materials, labor, overhead, and I also created a model for overall cost estimation. The materials regression is a mixed cost model meaning that there are some fixed costs that we have but also have some variables costs that we are able to control based upon output. The R-square for this model is over 99% which is the goodness of fit which explains how well the model is able to explain the sum of the squared errors...
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