The Pros and Cons of a Public Adjuster
Insurance is a basic and important aspect of life, covering potential damage on everything from cars to homes and commercial properties. When covered property is damaged an insurance policyholder files an insurance claim, and the insurance company will send an agent or claims adjuster to assess the damage, analyze the insurance policy, decide what is and is not covered by the policy and decide a settlement amount. What many people don’t know is that the policyholder has a say in this process and can have an ally in a public adjuster. A public adjuster represents the policyholder in negotiations with the insurance company. With the burden of proof on the policy holder, having a diligent and experienced public adjuster working to discover what damage has been done and that the damage is covered under your policy is often an invaluable asset when negotiating with the insurance company.
Public adjusters are unique in representing the policyholder in an insurance claim. Though it might seem like they represent the best interest of the policyholder, all other claims adjusters and insurance agents represent the insurance company and have the ultimate goal of maximizing profits for the company. They do this by minimizing their loss ratio, or making the lowest possible payments when settling claims. Only a public adjuster can legally represent a policy holder in negotiations with an insurance company over a claim to maximize the policy holder’s settlement.
In Florida, public adjusters must be licensed and there are a number of requirements to earn a license. These requirements are similar to or more stringent than other states, and include a one-year apprenticeship, passing a written exam and background check, and posting a surety bond. Additionally, to remain licensed public adjusters in Florida must have at least 24 hours of training every two years. Even with these fairly stringent requirements, the number of public adjusters in Florida has more than quadrupled since 2003, in part because of bad hurricane seasons that caused widespread damage and increased insurance claims, thus increasing demand for public adjusters. Florida law also sets a cap on the fees that public adjusters can earn. A public adjuster can only be compensated at up to 10 percent of the final settlement or 20 percent if it is a re-opened or supplemental claim due to the additional work required for these cases. Though it is not a requirement for public adjusters to have a background in construction or contracting, those with this background have experience that allows them to assess damage, especially the more dangerous damage that is not immediately visible or that is easily overlooked by the untrained eye.
Public adjusters working in tandem with lawyers often have the best outcomes. While lawyers can review insurance policies to evaluate what is and is not covered, public adjusters with experience evaluating property damage have a fuller understanding of what can be covered by the policy. An insurance policy often contains a number of nuances that the insurance company uses to not cover certain damages, but other nuances can also be used by an experienced public adjuster to cover damage that is not explicitly mentioned in the policy. For example, some policies do not cover termite damage but do cover structural damage. A public adjuster with experience looking for all potential damage would be sure to look for structural damage and then would be able to find it if there was any such damage. Public adjusters would also be able to prove and defend the claim for structural damage against an insurance company’s adjuster or agent. Thus, public adjusters can often find additional damage that should rightfully be included in a settlement.
As a result, settlements that involve public adjusters are higher on average than settlements without public adjusters. For example, for damages and claims that were caused by the 2005 hurricane season, policyholders that were represented by a public adjuster received settlements that were 747 percent higher than those who did not employ a public adjuster. Even with up to 20 percent of each claim going to the public adjuster, claimants who used a public adjuster received more on average than policyholders who were not represented by a public adjuster.
Claims involving public adjusters also take longer on average than other claims because claims adjusters from the insurance company and the public adjuster must negotiate the terms of the settlement. Because public adjusters often have more insight into the insurance policy and the damage done than a policy holder or lawyer, negotiations are often longer and more complex.
Though the claim may take longer to settle, an insurance adjuster would likely save a law firm time. The bulk of the work surrounding claims, from appraising damage, preparing estimates and other claim documents, reviewing insurance policies, and negotiating with insurance adjusters from the insurance company, is done by a public adjuster who likely has experience to expedite the process. A lawyer would become involved only to take the case to court, because a public adjuster cannot sue an insurance company. This is a good reason for a public adjuster to work with a law firm. In addition to the law firm benefiting from the expertise of a public adjuster, the adjuster would benefit from the ability to bring an insurance company to court. This combines the most beneficial attributes of public adjusters and lawyers and leads to the highest likelihood of larger settlements and bad faith cases decided in the policyholder’s favor, which is a higher penalty than a normal insurance settlement.
Despite the advantages of being represented by a public adjuster, many people do not know that they can and should have such an ally to deal with their insurance company. Because settlements are higher with a public adjuster, insurance agents will dissuade individuals from hiring an adjuster to represent their needs. As a result, many people will not seek a public adjuster for their insurance claims. This means that law firms that employ public adjusters may need to do some outreach to ensure that individuals know the resource that is available to them.
Public adjusters with background in contracting and damage assessment can be an enormous resource for individual policyholders and law firms. With knowledge of structures and insurance claims, a public adjuster will often secure a higher settlement from an insurance company, and when teamed with a lawyer a public adjuster can make a solid case if the company is acting in bad faith.