After Hurricane Sandy, I started seeing newspaper articles about homeowners and businesses that needed the services of Public Adjusters. A public adjuster is an insurance claims adjuster who advocates for the policyholder (middleman) in appraising and negotiating a claimant’s insurance claim. Aside from attorneys and the broker of record, public adjusters licensed by state departments of insurance are the only type of claims adjuster that can legally represent the rights of an insured during an insurance claim process.
A public adjuster will be most beneficial when it is clear that the insurance company will pay the claim and the only issue is the proper identification and valuation of the loss. Unfortunately, they will still need you to document your loss. It was your house and you’ll still have to provide from memory or sift through debris to determine what you had. This is where a detailed Home Inventory and copies of all important documents, stored offsite of course, is so very important. If you’ve never documented your possessions you might find yourself doing more paperwork than you bargained for. Even with the public adjuster running interference between you and the insurance company you still must be 100 percent involved in the process. Only you know the extent of your loss!
Most public adjusters get paid a percentage of whatever they recover for you. You can negotiate percentage, and it generally ranges 15% to 25% although some states cap the fee. Primarily they appraise the damage, prepare an estimate and other claim documentation, read the policy of insurance to determine coverage and negotiate with the insurance company’s adjuster. Public Adjusters can be aggressive in soliciting clients after a disaster, so take your time and get educated before deciding to retain one.
There are three classes of insurance claims adjusters: staff adjusters (employed by an insurance company or self-insured entity), independent adjusters (independent contractors hired by the insurance company) and public adjusters (employed by the policyholder). “Company” or “independent” adjusters can only legally represent the rights of an insurance company.
The public adjuster’s main responsibilities are to:
- Evaluate existing insurance policies in order to determine what coverage may be applicable to a claim
- Research, detail, and substantiate damage to buildings and contents and any additional expenses
- Evaluate business interruption losses and extra expense claims for businesses
- Determine values for settling covered damages
- Prepare, document and support the claim on behalf of the insured
- Negotiate a settlement with the insurance company on behalf of an insured
- Re-open a claim and negotiate for more money if a discrepancy is found after the claim has been settled
Typically a policyholder hires a public adjuster to document and expedite their claims, obtain a more satisfactory claim recovery, more quickly, and completely restore their residence or business operations, and insulate themselves (although you still must be 100 percent involved) from the stress of engaging in an adversarial role with a large corporation.
However, the cost of hiring outside experts, no matter how well-earned, can be an added burden when they are borne entirely by the policyholder. The added burden can be alleviated by the work of a public adjuster. However, policy holders who are not properly indemnified (underinsured) by their insurance carriers may be left with little choice but to hire professional assistance to recover the claim payment to which they are entitled.
Public adjusters must be able to recognize claims that may be insubstantial and disputable and explain such problems to the client. The everyday meanings of terms like “collapse”, “partial collapse” and “extent of physical damage” might be entirely different from their legal interpretations, requiring the adjuster to clarify such terms for the client. Regulations regarding the uses of these terms are constantly in a state of flux, so it’s important for public adjusters to have a firm grasp of the law including the division of legal responsibilities between insurance companies and policyholders.
When to contact
While it is not always clear when a policyholder may benefit from hiring a public adjuster, the most benefit is likely to be realized if they are engaged immediately in case of a loss. Shortly after the insurance company receives notice of a loss, an adjuster representing the insurance company will visit the policyholder to gather facts about how the loss occurred the magnitude of the loss, and the possibility of subrogation (transfer of your claim to another insurance company). Incorrect, incomplete or inadequately expressed answers to the adjuster’s questions may reduce the amount that can be claimed. A public adjuster engaged early in the process, before the fact-finding stage, will have more opportunity to help the policyholder receive a fair settlement for all losses legitimately covered under the insurance policy. However, any time during negotiations with the insurance company and even after a settlement has been received by an insured; a public adjuster may be able to negotiate for a higher amount
There are dangers in the public adjuster business and not all home/business owners have a good experience. Insurance settlements are always slow to arrive, and it’s not unusual to have to wait for several months or even a year for that final check from your carrier after a major house fire. And not all of their clients have that kind of patience. Public adjusters can also be a godsend, if you lose everything, have no documentation or detailed inventory, and are underinsured you might need an advocate to act on your behalf and get a fair settlement from your insurance company.
If you need the services of a public adjuster please do your homework and select a good reputable firm. Consider the following criteria when choosing a public adjuster:
- Don’t hire the first adjuster that comes along. Their ability to find and market to you says nothing about their abilities to serve you.
- Make sure your public adjuster is experienced in his field. He should belong to a number of groups including, the National Association of Public Insurance Adjusters, (NAPIA) Windstorm Insurance Network (WIND), and United Policyholders of America. Many of these groups have strict ethical standards that members are held to and also have online directories that list their members.
- Make sure they obey the law.
- No public adjuster should make any promises of what they can do for you before first reading and carefully reviewing your insurance policy as well as looking carefully at the loss. Just as a good doctor must first look at a patient before treating them, the same should apply to public adjusting. They need to meet you, see your loss, and review your records (the policy among other things) before outlining a plan to get you back on track for a full recovery.
- Make sure the public adjuster is licensed by the state of Connecticut or other States where the loss occurred. Contractors or restoration companies posing as public adjusters who tell you they can adjust your claim or negotiate with your insurance company are committing a crime. Just as a contractor cannot adjust your claim, a public adjuster cannot have a financial interest in your loss except for their approved public adjusting contract fee.
- Do ask for and call any references a public adjuster might give you. Especially ask for references to clients with similar claims. Does your adjuster deal with your insurance company on a regular basis? Your public adjuster’s reputation with the insurance carrier can dramatically affect your claim. Make some calls and speak to references. You can usually find out about experience and reputation from folks in your community.
- Beware of local contractors and remediation companies that offer to file your claim and then fix the damage. There has been some serious abuse in this area. In some cases these firms’ contracts will require you to sign over your settlement check to them. Sometimes they will spend less fixing your property and pocket the rest. In other cases there has been overreaching and unconscionable bills run-up which the insurance company then refuses to pay because the policyholder alone signed the work authorization without authorization from the insurance company. This often results in a construction lien being placed against the property. In some cases, contractors offering to estimate the damages are practicing public adjusting without a license which is also against the law. The advice here is to be careful. Always maintain control of your settlement check and keep the estimating and repair parties separate. Read and understand any work authorization form presented to you before signing it.
- The adjuster is offering to handle your claim for a small percentage. Of course the type, size and complexity of the loss will impact the cost. Most reputable adjusters charge between 5% and 15%. Anything less should be a red flag that the adjuster will not put in the proper time or effort in handling your claim or that you don’t need an adjuster for this particular claim. Also be aware that in a declared state of emergency by an authorized government agency, public adjuster contracts are limited to the percentage that you can be charged.
- The adjuster pressures you to sign a contract on the spot. Don’t sign anything unless you have read it and understand it. Sleep on it – life experience is that a good night sleep will often help resolve any conflicts, questions, thoughts or concerns you may have.
- Note how long your adjuster has been in the business. During the hurricanes of 2004-2005 and Sandy in 2012, the number of licensed public adjusters increased significantly in New England. Unfortunately, many of these individuals were trying to make a quick buck on all the outstanding claims that occurred. Insurance companies like working with a reputable and ethical public adjuster. It makes their job easier and gets the claim settled faster. It also makes the process easier and less stressful for you.