Have you ever heard someone refer to a public adjuster and wondered what they do? You may be able to benefit by using one yourself one day. A public adjuster is basically an insurance claims adjuster who advocates for a policyholder in appraising and negotiating a claimant’s insurance claim. In other words, instead of relying on the insurance company to appraise an insurance claim you actually have the right to hire a third party public adjuster to appraise the claim on your behalf and negotiate the fair amount you deserve for the claim.
When To Hire A Public Adjuster
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 a case of a loss. Shortly after the insurance company receives notice of the 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. 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. Anytime 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.
A public adjuster would be most beneficial when it is clear that the insurer will pay the claim and the only issue is the proper identification and valuation of loss. Generally speaking, public adjusters only work with insurance claims related to property damages and the business losses that they trigger such as business income, builders’ risk, mechanical and electrical breakdown, extra expense and expediting expense and leasehold interest. Although it is uncommon for public adjusters to handle health insurance claims, in some states such as Florida, they are legally authorized to handle claims in all lines of insurance except life and annuities.
Public adjusters can often recognize claims that may be insubstantial and disputable and be able to 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. A good public adjuster will have a firm grasp of the law including the division of legal responsibilities between insurance companies and policyholders.
How Much Does A Public Adjuster Cost?
Most public adjusters are paid based on a percentage of a total settlement usually lower for larger losses over $250,000. The average charge being between 10% to 15% although some states cap the fee. Some public adjusters charge a flat percentage while others usse a regressive scale. For example: 25% of the first $100,000, 10% between $100,001 and $200,000 and 8% of any amount beyond that. Regardless of fee structure, the fee may be offset by an increase in the settlement amount. In many jurisdictions, the fee structure must be disclosed up front. The fees for a re-opened claim are higher due to the extra work involved. Some public adjusters won’t handle small claims. It is important to note that results cannot be guaranteed and a public adjuster cannot obtain more than the policyholder is legitimately entitled.
Primarily they appraise the damage, prepare an estimate and other claim documentation, interpret your insurance
policy to determine coverages and negotiate with the insurance company’s adjuster. The cost of hiring outside experts, no matter who 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, policyholders who are not properly indemnified 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.
3 Classes Of Insurance Adjusters
1) Staff Adjusters – Employed by an insurance company or self-insured entity
2) Independent Adjusters – Independent contractors hired by the insurance company
3) Public Adjusters – Employed by the policyholder
Company or independent adjusters can only legally represent the rights of an insurance company.
Licensing And Regulation
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. Currently, 44 states and the District of Columbia have in place some form of statutory and/or regulatory scheme which licenses public adjusters. The 5 states that do not are: Alabama, Alaska, Arkansas, South Dakota and Wisconsin.
On October 14, 2005, the National Association of Insurance Commissioners (NAIC) adopted the Public Adjuster Licensing Model Act which governs the qualifications and procedures for the licensing of public adjusters. If defines a public adjuster as any person who for compensation, or any other thing of value, acts on behalf of an insured, specifies the duties of and restrictions on public adjusters, including regulations for examination, bond or letter of credit, continuing education, public adjuster fees, contracts, record retention and standards of conduct. The model act states that public adjusters may only act or aid on behalf of the benefit of the insured in first party claims.
Holding a license in one state only permits the licensed to practice in that state. Although regulations vary from state to state, the model act states that a non-resident can obtain a license in another state if their home state allows non-residents to apply for a license on the same basis. This reciprocity agreement means that in many cases one can apply for a license in another state without having to pass that state’s examination or pre-licensing education requirements
Duties Of A Public Adjuster
The main responsibilities of a public adjuster are to:
- Evaluate existing insurance policies to determine what coverage may apply to claim.
- Research, detail and substantiate damage to buildings and contents and other expenses.
- Evaluate business interruption losses and extra business expense claims.
- 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 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 from the stress of engaging in an adversarial role with a large corporation.
When shopping for a public adjuster, it’s best to go by reference from someone you know who has had a positive experience