When peril strikes, you may find it tough to navigate the red tape and paperwork of filing a home insurance claim. You may also worry that some of the damage won't be covered.
Contacting a public adjuster is becoming a popular tactic to ensure an insurance claim is covered – and to avoid the headache of working with an insurance company.
There are three types of adjusters who work on insurance claims: company adjusters, independent adjusters and public adjusters. All three are regulated by their state's department of insurance and must follow the state's guidelines.
The first two types of adjusters review all coverages that may apply and work to settle the claim on behalf of the insurance company:
- Company adjuster. An employee of the insurance company who works directly for your insurance carrier. "Typically they are the final decision maker on whether to pay or deny a claim," says Ronald Reitz, past president of the California Association of Public Insurance Adjusters and second vice president with the National Association of Public Insurance Adjusters.
- Independent adjuster. An adjuster hired by an insurance company to act as the carrier's representative, but is not an employee, Reitz says. "Independent adjusters perform the fieldwork like inspecting the loss, investigating the facts of the loss and determining the extent of the loss and prepare a report for the home insurance company," he says. An independent adjustor can only work on behalf of an insurance company – not a property owner.
Public adjusters and their role
The third type of insurance adjuster – a public insurance adjuster – is the only adjuster licensed to represent the interest of the insured – not the home insurance company. A public insurance adjuster's sole function is to help you settle an insurance claim for the full amount due based on your home insurance policy.
"A public adjuster reviews all coverages that may apply to the loss to calculate and settle the claim on behalf of the homeowner," says Reitz. "Currently, 45 states require public adjusters be licensed to ensure they're capable of handling the claim."
Public adjusters only handle property claims. The claims can be any size and dollar amount, and can be the result of any type of damage (water, weather, fire, theft, etc.).
They handle residential and business property claims resulting from such perils as fire, lightning, wind, water, vandalism, theft, collapse, sinkhole, hail and flood, says Raymond A. Altieri, Jr., past president of the Florida Association of Public Insurance Adjusters and first vice president of the National Association of Public Insurance Adjusters.
A public adjuster can be hired at any point during the claim process. However, Altieri says it's better to bring one in early in the process.
Finding a good public adjuster
If you're considering hiring a public adjuster, Reitz says to look for an adjuster who:
- Has a website. An adjuster who doesn't have anything except a business card or whose address is a P.O. box may not be dependable or reputable.
- Is local. An adjuster who knows the local housing regulations and rebuilding costs can cut through the red tape and make sure you get your money sooner.
- Is an NAPIA member. Adjusters who are not members of the National Association of Public Insurance Adjusters may not have the legal or insurance knowledge to adequately represent you. NAPIA can provide referrals for every state that licenses public adjusters.
- Charges reasonable fees. Most public adjuster's fees range between 5 percent to 12 percent of the claim payment. The average is around 10 percent. Some public adjusters may charge higher fees on smaller claims or when hired midway through the claim process.
- Does not pressure you to make a quick decision. Hiring someone to represent you and get your home and life together is a big decision. Take your time.
Benefits of using a public adjuster
At least one study suggests that claims often are settled for more money when a public adjuster is involved.
In January 2010, the Florida Office of Program Policy Analysis and Governmental Accountability published a report that showed claims involving a public adjuster typically received higher settlements. The average non-catastrophe claim payment with a public adjuster was $9,379, compared to an average $1,391claim payment for home insurance policyholders who went it alone.
Of course, if you hire a public insurance adjuster, you're responsible for paying their fee. Normally, that fee is deducted from the claim's reimbursement.
"Since numerous claim payments are made throughout the claim process, the adjuster collects their fee directly from each check issued by the insurance company," says Ashley M. Hunter, a construction risk insurance specialist and owner of HM Risk Group, an insurance company in Austin, Texas.
Some public adjusters work on a contingency fee arrangement.
"In those cases the adjuster is only paid by the policy holder if the claim is paid by the insurance company," Altieri says.