What is a Public Adjuster

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Understanding what happens when you have an insurance claim is essential in making sure that you are treated right by the insurance company and that you receive all the compensation that is due under the terms of your insurance policy.  It is your job to protect your interests. Employing a public adjuster is one of the ways that you can be sure that your loss is properly compensated by the insurance company.

What is a public adjuster? A public adjuster is a trained professional claims handler who:

•         Works to protect the interests of the client.
•         Appraises the loss suffered by the client.
•         Manages the claim and the claims process.
•         Negotiates with the insurer for the claim settlement.

It is important to have someone trained in the process of claim appraisal, negotiation, and settlement to represent you in this process.  Many homeowners may only file an insurance claim once or twice in their life. Understanding the ins and outs of dealing with insurance companies is out of the experience of most homeowners and a public adjuster in your camp can be the difference in success or failure.

Understanding Your Insurance

Most homeowners carry insurance on their homes to protect against various types of losses that can occur.  It is important to have a basic understanding of what insurance is to understand what is involved in filing a claim and how a claim adjuster fits into that process.

An insurance policy is nothing more than a contract between you and the insurance company.  A contract requires two parts. 

•         An agreement between all the parties to the contract
•         An exchange of value for something else of value

In the case of an insurance policy, the agreement is between you and the insurance company.  The insurance company agrees to insure your property against damage and loss, and you agree to pay the policy premiums.  That constitutes the agreement and the exchange of value.

When you suffer a loss, in return for you paying your insurance premiums on time as agreed, the insurance company is required to pay you a just and reasonable amount of money to cover the cost of the repair or replacement of your loss.

Claims adjusters are trained to place a value on such losses.  There are many variables that go into assessing a loss and assigning a value to that loss.  It is this gray area in assessed value and recoverable costs that can become the issues of contention in an insurance claim.

Reading Your Policy

Start with the page of your policy, commonly called the ‘declarations page.”  This sheet in the policy is usually divided into different coverage categories such as:

•         Dwelling which is often labeled Coverage A
•         Other Structures which can carry the label Coverage B
•         Personal Property, Coverage C
•         Loss of Use or Additional Living Expenses often listed as Coverage D
•         And some other categories covering liabilities and medical payments
•         If you have valuable collections or lots of expensive jewelry, you may have an endorsement, which are additions to the policy for these extra coverages.

It is in your best interest to understand the figures that are listed in each of the categories.  These are the amounts that the insurance company has agreed contractually to pay if you suffer a catastrophic loss to your property. 

Coverage may be for replacement value or be based on the original value.  This is an important consideration, and you should understand how the insurance company will value your property in the event of a loss.

If you are having trouble understanding your insurance policy or the coverage that it extends to you and your property, most states have officials that oversee the insurance industry.  Many of the state agencies offer assistance in understanding your current insurance policy and coverages. The Insurance Information Institute has a list of every state's Department of Insurance.

Independent Adjusters/Insurance Adjusters

It is important to understand the difference in the way claims adjusters are categorized.  Not all adjusters are the same. The way they are defined is important to homeowners due to where the responsibilities of the adjuster lie. 

Claims Adjusters

Claims adjusters as a whole are professionals who have been trained to evaluate the damage that has occurred due to some calamity or accident, evaluate the cost to repair or replace the damaged property, and report those findings to the client that they represent.  Typically, claims adjusters fall into three categories.

•         Public Adjusters
•         Independent Adjusters
•         Insurance Company Adjusters

There are some subtle differences in these categories.  Understanding these differences is vital to any homeowner who must make a claim to their insurance company for a loss.  Not all claims adjusters have your best interest at heart. It is your responsibility to protect your own interests.

Insurance Company Adjusters

Most insurance companies have staff or company adjusters who work for the insurance company.  They are employees of the insurance company and their responsibility is to protect the interests of the insurance company for whom they work.   \

This is a crucial distinction.  When you file a claim with your insurance company, and the company adjuster comes to examine the damage or loss, they are not there to represent you.  The job of the staff adjuster is to evaluate the damage or loss and to file the claim in such a way that it meets the letter of the contract.

There are some important points to remember about staff or company claims adjusters.

•         Staff or company claims adjusters work for the insurance company, not you.
•         There is no legal requirement for the staff adjuster to do anything more than meet the minimum requirements of the insurance policy.
•         If you rely on the staff claims adjustor, you have no representation in the claims process.

You must remember that an insurance company staff adjuster has a professional responsibility to represent his employer and not you.  That staff adjuster has a legal responsibility to meet the terms and conditions of the contract, your insurance policy, and nothing more.  The staff adjusters' paycheck comes from the insurance company. 

Independent Insurance Adjusters

Closely akin to the company or staff insurance adjuster is the independent adjuster.  Don’t let the title fool you. The independent has no bearing on where the responsibility of the adjuster falls.  Very rarely do independent adjusters really act independently. Understanding how the system works reveals the reason.

When there are large numbers of claims, such as after a storm or other calamitous event, in which large numbers of homes are damaged or destroyed, insurance companies will hire independent adjusters.   Such events can overwhelm the ability of staff adjusters to handle the number of claims being filed almost simultaneously. 

These so-called independent adjusters are under contract to the insurance company, which means:

•         The independent adjuster is contractually obligated to represent the insurance company
•         Payment for all services by the independent adjuster come from the insurance company
•         The independent adjuster, while technically not an employee of the insurance company, must abide by the conditions and expectations set for in the contract with the insurance company.

The key here is to whom the independent adjuster is contractually obligated.  It isn’t the homeowner who has filed the claim. The independent adjuster is obligated to represent the insurance company.  That is a huge difference in what you can expect from the independent adjuster assigned to your case by the insurance company.

The Public Claims Adjuster

Like the independent claim adjuster, public claims adjusters work for a client.  However, you can be the client of a public claims adjuster and have the benefits that the insurance companies receive from their staff adjusters or independent adjusters.  The public adjuster works for you.

Having a public claims adjuster working for you gives you protections and guarantees.  Things you should be able to count on if you hire a public adjuster to represent you are:

•         The public adjuster you hire works strictly for you.  Your adjuster has no connection or contractual responsibility to the insurance company. 
•         You get a professional who is informed and understands the insurance industry and the claims process.
•         You get an advocate who can represent you to the insurance company and negotiate on your behalf.

Why Should I Get a Public Adjuster?

The overriding reason to hire a public adjuster is for your own protection.  The insurance claims process can be tedious and complicated. Most people don’t have a reasonable understanding of the insurance policy and the complicated contract provisions that are usually included.  Hiring a professionally trained public claims adjuster who knows the processes and the language of the insurance industry is paramount.

A good public adjuster will probably know the insurance company that issues your policy and have experience in their claim processing policies and rules.  He may even know from experience many of the people at the insurance company who will handle your claim.

The adjuster's knowledge and experience are what you are really paying for.  Trying to manage a complicated or large claim with an insurance company yourself exposes you to making mistakes that could potentially cost you large sums of money not recovered in the claim settlement because you weren't experienced enough to know for what to look or ask in the claims process.

You may find other reasons to hire a public adjuster including:

•         Less personal stress during the claim process.
•         A larger claim settlement than would otherwise occur
•         Professional representation in the process
•         Faster processing of the claim.

The other great disadvantage you face after a major loss due to a disaster is the total disruption of your normal existence.  More than likely, you are displaced in strange surroundings, perhaps even in strange local. You have lost much of your life and the comfort of your home and any sort of normalcy you might expect.

Hiring a professional public claims adjuster can relieve at least some of the stress as you try to rebuild your life.  Taking advantage of a professional's knowledge and understanding of the whole claims process can allow you to concentrate on other important demands.

Hiring a Public Adjuster

Public adjusters can be hired just like any other professional.  Some will work on a flat fee basis. Some will work hourly, and some will work on a contingency fee basis.  There are advantages and disadvantages to each of these options.

•         Hourly - Hiring a public adjuster hourly means that every time the adjuster performs some service related to your case, he will note that time and you will be billed accordingly.  Depending on the complexity of your claim and how adversarial your insurance company, the costs can vary. Hourly can get very expensive very quickly and can easily outrun what you expect to receive from the insurance on your claim.
•         Flat Fee – In relatively simple and straightforward cases, a public adjuster may take your claims case on a flat fee basis, offering you a figure at the beginning of your relationship to take your case and complete it.  The downside to this kind of arrangement can be associated with unexpected complications in the claim. If the claim becomes involved, the adjuster may simply lay it aside rather than incur losses to try and complete the process.
•         Contingency – Like attorneys, some public adjusters will work on a contingency basis.  Most public adjusters are well versed in the claims process and can estimate what a given claim is worth.  The public adjuster may offer to take the case for a percentage of the total payout by the insurance company.   If this is an option, it may be your best if a flat fee is not available but check around to see what other adjusters are charging.

What should I look for in a Public Adjuster?

If you do decide to hire a public adjuster, there are some things you should consider. 

•         Be Selective – Don’t hire the first adjuster that you talk to.  Do your due diligence, including checking reputation and professional qualifications.
•         Don’t be taken in by promises – An ethical adjuster will not make boasts or promises about how much money they can get for you. 
•         Check out the adjusters licensing and permits – Licensing requirement and permitting differ from State to State.  An adjuster should have no problem showing you licenses and permits that may be required.
•         Get some references – Find out from others who have used the adjuster's services their feeling about the performance and outcomes of their cases.
•         Trust your Own Reaction – After you meet with a public adjuster and talk about your claim, what was your feeling about how he reacted and his comments.  Sometimes your first impression is the truest measure of the situation.

Industry associations are great places to get recommendations for professionals. The National Association of Public Insurance Adjusters can help you find an adjuster in your area.  Most national associations have a code of ethics to which their members must adhere, which can offer some legitimate assurance that you are dealing with a quality adjuster.

Whichever public adjuster you decide to hire, you should insist on several things in the agreement.

•         Don’t be pressured into signing a contract until you consult your attorney, especially if a large claim settlement may be in the works. 
•         Make sure the agreement is clear about the scope of the work, the responsibilities, and the fee structure that is involved.
•         Insist on frequent and clear communication with the public adjuster.  The adjuster should be willing to meet with you at your request, provide copies of all documents or correspondence held with the insurance company, and regularly report the progress of your claim,

Finally, stay involved in your claim.  Don’t simply hand it over to the public adjuster and forget it.  Keep tabs on the progress. If possible, attend any meetings that occur between the adjuster and the insurance company.  Being a presence in the process keeps everyone aware that you have a larger interest in the claim.

What does a Public Adjuster Cost?

Fees charged by public adjusters varies greatly across the United States.  There some common factors that can affect the charges you can expect from a public adjuster:

•         Flat rate fees should be negotiated upfront with the adjuster.   The adjuster probably does not have a fee schedule but makes decisions on a flat fee case based on his understanding of the claim, the size of the recovery, and the complexity of the case.  Most adjusters won’t take flat fee cases on any but the smallest and most clear-cut claims case.
•         It is rare for a public adjuster to work on an hourly rate.  I would be wary of an adjuster who suggests an hourly rate for a case.  Based on the rate found across the country, hourly rates for public adjusters can range from $325 to $750 per hour.  In some areas of the country, you can hire an attorney for less.
•         Most public adjusters work on a contingency fee basis. It isn’t unusual for the fee schedule to slide up and down based on the payout.  Generally, fees on claims expected to pay between 20 and 30 thousand dollars will be in the 20 percent range. On claims expected to pay out more, the fee schedule can drop as low as 12 percent.

Do I Need a Public Adjuster or an Attorney?

In most instances, a public adjuster is a better choice to work for you at the initial stages of an insurance claim.  Public adjusters are in the business of managing and negotiating claims with the insurance industry and know the key issues and problems that can arise.  Typically, the contingency paid to a public adjuster is lower than the contingency fees charged by attorneys.

You should be able to rely on your public adjuster for advice on the need to involve an attorney in the claim.  Some instances that may need the involvement of an attorney are:

•         The negotiations are stalled. 
•         You don’t feel that the claim compensation from the insurance company adequately covers your losses.
•         The insurance company has failed to meet its contractual obligations under the policy.

Should any of these situations occur, the only recourse may be to hire an attorney and sue the insurance company.   Careful consideration must be made because the additional expense of an attorney and going to court can often reduce the final compensation you receive to a level that is below what the insurance company earlier offered.

If I do experience a loss, what should I do?

If you experience a catastrophic loss, there are some things you should and should not do.  Whether it is an area-wide disaster such as a hurricane or tornado, or a devastating house fire that leaves you homeless, knowing what to do in the time between your loss and the claim can make a huge difference in what you can expect as a payout from the insurance company.

You should:

•         Try and recover all your important documents, especially your insurance policy. 
•         If you are evacuated, insist that you be housed in a hotel.  Most insurance policies provide for reasonable additional living expenses and transportation costs in the event of a mandatory evacuation notice.
•         Never accept any claim offer based on the report of a company or independent adjuster, especially if it is a whole house claim. 
•         Don’t sign any sort of release on your insurance policy or accept any checks that have a statement such as ‘full and final settlement’ written anywhere on the check.
•         Hire your own public adjuster familiar with your area and the values of properties to handle your claim.

Disclaimer

Nothing in this article should be construed to be legal advice.  This article is for informational and educational purposes only. If you suffer a loss and are looking at an insurance claim, consult with professional advisers before making any decisions. 

When the time comes

Hopefully, you won’t ever have to face the challenges of a large insurance claim on your home.  However, having an understanding of how the claim process works and the advantages of hiring a public claims adjuster as your advocate in such a terrible time can mean the difference in recovering everything that is due to you from your insurance company or accepting a less than a favorable offer.