Insurance Academy

Notes on Public Adjusters

By | June 19, 2019

I recently had a conversation about public adjusters. Here’s the short version of that conversation.

  • What is a public adjuster?
  • Would you recommend someone use a public adjuster?

That made me think that we could bring some of that conversation here. For those of us that are new to this conversation, let’s make sure we all know what we’re talking about.

What is an insurance adjuster?

An insurance adjuster works to investigate the facts of a loss when a claim is involved. If you’ve had an auto accident, you’ve probably had an adjuster come to wherever your car is, take some pictures, look around, and make an initial determination of what the claim is worth. If you’ve had a property loss, you may have had an adjuster come out, look at the damage, ask you a few questions, and create an estimate of the damage.

What’s an independent adjuster?

Insurance companies will employ adjusters. Those are staff adjusters. When there is a large volume of claims, such as after a hurricane, there aren’t enough staff adjusters to do all of the work. That’s when companies will hire independent adjusters to get the work done. The independent adjusters work for insurance companies.

Can we get to the public adjuster, please?

Fine. A public adjuster is an insurance adjuster that is hired by the customer. They adjust the claim, investigate the facts of the loss, estimate the value of the claim, and negotiation with the insurance company on behalf of the customer. The idea is that the insured isn’t an insurance expert. The insurance company has adjusters that work for them, why shouldn’t the customer have an adjuster looking out for their interests.

That sounds reasonable, doesn’t it? Maybe.

I will allow that there are times when company adjusters spend more time looking for ways to minimize or deny claims. I’ve seen it. I’ve experienced it. It does exist. On the other hand, it doesn’t happen nearly as much as many would like for us to believe. In fact, insurance companies tend to have very high satisfaction ratings with their claims handling process. I may not be that the problem is as widespread as many would have us to believe.

I know. You’ve heard public adjusters say that they see it all the time. Well, shouldn’t they? If their business is to help people get claims paid and get more money than the insurance company offers at first, they should see insurance companies “low-ball” offers all the time.

Would I recommend using a public adjuster?

That really depends, too. I tend to think that most of the time, I wouldn’t recommend it. Please, make sure you properly address your hate mail, email, etc. properly. I wouldn’t want to miss it. When you’re done being mad, hear me out.

I believe that an insured can indeed have the conversation with their insurance company. If the insured believes that the adjuster’s estimate is low, they can talk to a contractor and submit their own estimates. If an insured comes to an impasse with the insurance company regarding the claim, there are provisions in the policy that are designed to help with that. Take a look sometime at the appraisal or mediation provisions.

The problem isn’t that the policy doesn’t have contractual ways to work out disagreements nor is it that the company adjuster and customer shouldn’t be able to have a conversation and work out an agreement. It’s that we have come to the point where we don’t take the contractual route, nor do we sit down and listen to one another.

What appears to happen today is that the company adjusts the loss and sends what they believe to be a reasonable estimate or settlement amount to indemnify the insured or the claimant. The claimant disagrees and immediately skips steps and hires someone to represent them. Why? They’ve been told in all the advertising that the insurance company has the deck stacked against them.

When they talk with their friends and family, one of them knows of a person. The public adjuster. The friend says that her public adjuster got her so much more money than the company offered. It was great. So rather than letting a process play out, they jump to the answer provided. They hire the public adjuster.

Let me be very clear. I believe that there are public adjusters who do a great job for customers who just need some help. They are confused by the process. They don’t understand why their contractor said one number and the insurance company said another. Remember that I did write that maybe a public adjuster can help.

I think there needs to be very clear understanding.

If a customer wants to work with a public adjuster, make sure that they at least understand what they’re getting into.

  • How will they be paid? Usually a percentage of the total claim amount, but it could be a flat fee or hourly rate. The customer needs to know how much money they’re getting. If the public adjuster gets 10% of the total claim amount, he needs to be able to get you at least 11% more than the insurance company offered for the customer to come out better.
  • What do other people say about them? Again, I’m not saying that all public adjusters are bad. I’m inclined to think that most are honest and professional. However, before the customer signs an agreement with someone who will take control of their claim, they should do a little research. The internet is wonderful. I can look up anyone’s name and find out what the world thinks in minutes.
  • What happens if the customer changes their mind? Know what the customer can do. In Florida, a customer has three business days to rescind an agreement with a public adjuster. The customer could change their mind. She could decide to give it another go with the company directly.
  • What happens if the public adjuster and the insurance company can’t agree? The customer might be surprised to find out that their public adjuster and their insurance company can’t seem to agree and then what happens? I’ll tell you what happens in this state. It’s called a suit.

In the end, whether a customer uses a public adjuster or not is totally up to them. Are public adjusters good in the insurance landscape? They can be. Just like the rest of the industry, there are good, honest people and there are rats. I can’t tell you whether someone should use a public adjuster.

What I can tell you is that if we all acted right, we wouldn’t need them very often.

About Patrick Wraight

Patrick Wraight, CIC, CRM, AU, is director of Insurance Journal's Academy of Insurance. He can be reached at pwraight@ijacademy.com.

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