Whether your home suffered storm damage or you have a house fire, property losses are always stressful. If you expect to be reimbursed by your insurance company, a claim must be filed. This is the first step toward determining the value of your loss and getting paid by your insurance company. In cases of large-scale damage to your home, you may be forced to live elsewhere and may have lost all of your belongings. While you try to return to some sense of normalcy, you definitely want someone on your side making sure you get your claim settled quickly and that you get the money for which you are entitled. Some people recommend hiring a public adjuster, who can help you through the claims process and will be your advocate with your insurance company. But is this really necessary? Is there a better way to make sure your claim is settled quickly and fairly? Can hiring a public adjuster be more trouble than it is worth?
What happens after a loss?
Once your loved ones are taken care of, you will need to get your home back in order. When you have a damaging event to your home, for which a claim is submitted, one of the first things you should do is contact your agent or your insurance company directly. Your insurance company will record your loss and issue you a claim number. They will also assign an internal or independent adjuster to review your claim. This adjuster works on behalf of the insurance company and will schedule a visit to your home to inspect and assess the loss to determine coverage. This is a benefit to you as a policyholder and does not cost you anything.
Once coverage is determined, the insurance company’s adjuster will then discuss actions which need to be taken immediately, such as getting the home dried out or possibly boarded up if needed. They’ll then provide you with their assessed value of the loss. So now comes the question of whether or not to use a public adjuster.
The Role of a Public Adjuster
Public adjusters do not represent your insurance company nor are they assigned by your insurance company. Public adjusters are hired by individual policyholders (you) to work on their behalf. As an intermediary, the public adjuster can give independent opinions, help you reach a settlement, and deal with the insurance company’s adjuster. They will interpret a homeowner’s policy, assesses the damage and how much it will cost to repair.
Remember, a public adjuster can assist with the claims process, but cannot get you more money than you are entitled to under your insurance policy. They have no special ability to expedite a decision, nor can they do anything to improve the odds of an approval. You are simply entering into a contractual agreement for their services. If your insurance claim is denied by the carrier, that’s it, game over. The public adjuster can’t provide legal advice or have any legal authority as they aren’t attorneys. Some public adjusters make the mistake of advising their client to sue an insurance carrier if they don’t get their way. Other than being poor advice, it’s also illegal advice, and the public adjuster is at risk of losing their license if it is reported to the State Department of Insurance of their violation. All they can do is recommend that an attorney get involved. When one does, the public adjuster will still require payment out of the proceeds even though they personally weren’t able to get the claim paid.
Do the Math
Public adjusters will typically charge 10%-15% of your final settlement. So, for example, you had a fire loss, and your insurance company has assessed a $200,000 payment to cover the repairs. You may feel that you’re entitled to more money. You hire a public adjuster who charges a fee of 10%. He negotiates with the insurance company and is able to get $10,000 more for a total payment of $210,000. The fee will be $21,000 to the Public Adjuster, netting you $189,000.
You would have been better off accepting the initial payment offered by the insurance company.
Do You Need to Hire a Public Adjuster?
Although having one’s own public adjuster sounds like a good way to go, it is not always necessary. Insurance is regulated and if you aren’t sure of what is covered or not, you should always try and communicate with your insurance agent first to get clarification and help. The reasons things are covered or denied should be clearly outlined in the policy wording and insurance contract, based on the limits within the policy. Insurance companies work hard at adjusting claims and your carrier is legally and ethically bound to handle your situation under the terms of your insurance policy. It’s in their best interest to resolve the claim as quickly and fairly as possible, so give them a chance to do the right thing as they usually will.
Understand how a public adjuster is compensated. Public adjusters will always tell you that their fee is offset by their skills in securing a larger settlement in excess of what the average insured can obtain for himself. What they usually fail to tell you is that your insurance company is only obligated to pay for the actual costs incurred or what costs you will incur to have repairs done. The insurance carrier does not owe you any “excess,” and certainly will not agree to pay for the services of a public adjuster you hire. Remember that these outside contractual arrangements with a public adjuster will always be at your expense.
Your insurance company will never object to your hiring of a public adjuster as legally they can’t. But most good insurance companies will assign experienced adjusters to handle the files where a public adjuster is involved. A good insurance adjuster can spot where the public adjuster is falsely inflating a claim or estimate and quickly put a stop to it. Just because a public adjuster creates a massive estimate, does not mean that the insurance company will honor it. Most of the time the carrier issues payments based solely on the ‘insurance company’ estimate. They will review the public adjusters estimate to see if additional line items are warranted, but that’s usually where it stops.
Before You Sign a Contract
Don’t jump in to hiring a public adjuster. If you are happy with the services of your insurance agent and your insurance company adjuster, why give your money to someone else when you don’t have to? On the other hand, if you are unsatisfied with your insurance company adjuster, or you want to get a second opinion, you might decide to hire a public adjuster. But before you sign a contract, follow some simple strategies to narrow the selection.
- Don’t hire the first adjuster you meet; interview several to find the best service for the best price.
- Do not hire the person who goes door-to-door after a disaster in your community.
- Always avoid any Public Adjuster who tries to pressure you into signing a contract. Remember this a business transaction.
- Don’t hire a Public Adjuster who requests a large upfront fee.
- Avoid Public Adjusters who insist on using a particular restoration company or contractor.
- Hire only someone who is tested and licensed to practice as a public adjuster. Look for a Certified Professional Public Insurance Adjuster (CPPA). This means the individual has worked as a public adjuster for at least five years and has passed an exam to attain the certification. Those who have worked for over 10 years can be certified as Senior Professional Public Adjusters (SPAA) after taking a certification exam.
- Ask for references! Of which you need to gather three types to be safe: Prior clients. Contractors he/she has worked with and can vouch for their accuracy. Insurance or Independent adjusters who can vouch they are reasonable and skilled.
- Ask for a timeline provision in your contract. Specifically, request that they settle your claim within 45 days from being hired or the contract is void and no payment is owed. Unfortunately, many public adjusters will drag out files for up to 6 months or a year (even more at times).
- Try to negotiate their fee to a percentage that is more reasonable like 5%
- Don’t be afraid to write your own amendment to the contract and require that they sign it.
Learning what to expect in an insurance claim and keeping open communication will help understand the claim process with your insurance company and help you get the most money out of your claim. This may avoid having to spend any extra money paying a private adjuster. It is best to first try to see how the claims process goes with the insurance company and their company adjuster. There are many very experienced and fair insurance adjusters working for insurance companies that will do just as good of a job handling the policyholder’s insurance claim as a paid public insurance adjuster would. For more information about how to settle a property insurance claim, visit the Pennsylvania Insurance Department website.
Our Partnership with Insurance Professionals
Choosing a restoration company that is experienced with a variety of insurance companies is very important when dealing with a disaster or accident at your home or commercial property. There are many important factors that need to be taken into consideration. Put our knowledge and skills to use. When you work with Xtreme Home Improvement, you receive more than just our industry-leading restoration expertise. You’ll have a trusted partner who will make the process as simple and clear as possible. We work closely with insurance companies as your cooperative advocate to provide accurate, timely information, excellent service and fine craftsmanship.