Whether you are in a car accident or you have a house fire, receiving compensation for auto and property losses can be stressful. To be reimbursed by your insurance company, you have to submit a claim. This is the first step toward determining the value of your loss and getting paid by your insurance company.
If you experience large-scale damage to your home, you may be forced to live elsewhere and may have lost all of your belongings too. While you try to return to some sense of normalcy, you will definitely want to have someone on your side making sure you get your claim settled quickly and that you receive the money you are entitled to.
Some people recommend hiring a public insurance adjuster to help you through the claims process and advocate for you when dealing 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 insurance adjuster be more trouble than it is worth? Read on to find out.
What Does an Insurance Adjuster Do?
If your loss is large enough to require you to file a claim with your insurance company, the first thing you should do is call your insurance agent. They will help you get the claims process started, and can answer any questions you have. After your claim has been initiated, the person you will probably have the most contact with during the claims process is the insurance adjuster.
An insurance adjuster, or claims adjuster, investigates insurance claims in order to determine the value of your loss and the amount that the insurance company is required to pay you based on your applicable insurance policy.
There are three types of insurance claims adjusters:
- Company insurance adjusters are employed by insurance companies to handle claims for their policyholders.
- Independent insurance adjusters are not employed by insurance companies. They are independent contractors who are hired by insurance companies to help insured persons get through the claims process.
- Public insurance adjusters, also referred to as private insurance adjusters, are hired by individual policyholders (you) to work on their behalf.
How Do Public Adjusters Get Paid? And How Much Does a Public Adjuster Charge?
If you hire a public insurance adjuster, you will have to pay them out of the compensation you receive from your insurance company. Here's how it works:
- Public adjusters get paid a percentage of the amount that they recover for you, usually between 5% and 20% of your claim payout.
- Fees vary based on the size and nature of the loss, and they are usually negotiable.
- In some states there is a cap on what public adjusters can charge, such as 10% to 15%. In other states there is no cap, so you must shop around for the best deal.
- In cases of large-scale natural disasters (tornadoes, hurricanes), state insurance departments may set a cap on the percentage that public adjusters are permitted to charge.
A claims adjuster should never ask for a deposit or down payment on their services. Your adjuster will be paid when the claim has been settled.
8 Reasons Why Hiring a Public Adjuster Might Not Be a Good Idea
While it may seem like a good idea to hire a public insurance adjuster to help you maximize your claim payment and get it settled quickly, there are many reasons that working directly with your insurance agent and your insurance company is better.
- A public insurance adjuster performs tasks that your agent and insurance company adjuster can and will do (for free!). In most cases hiring a public adjuster is an unnecessary expense that will not lead to a better result for you.
- There is an incentive for a public adjuster to prolong negotiations with your insurance company and falsely inflate claims payments. The more you are paid, the more the public adjuster will be paid.
- Hiring a public adjuster ultimately reduces your reimbursement, because you have to pay a percentage of it to the adjuster. You will have less money to make repairs and replace your belongings than if you worked directly with your agent and insurance company.
- Some insurance claims adjusters have relationships with attorneys and contractors who intentionally inflate their prices after disasters.
- If the amount of your loss exceeds your policy limit, you may need to hire an attorney to settle your claim. A public adjuster cannot help you if an attorney must get involved, yet you still have to pay the adjuster’s fee.
- You know your home and belongings better than anyone else. You are the best person to fill out paperwork and quantify your losses, and you probably don’t need the help of a middleman.
- Public adjusters often discourage good relations between claimants and their insurance company. This may actually prolong the process and delay your ability to rebuild.
- A public adjuster does not work for your insurance company, so they might not have the best information about your policy’s coverage, requirements, and restrictions. The public adjuster might offer poor or incorrect advice and lead you down the wrong path, adding time and frustration.
How Hiring a Public Claims Adjuster Can Go Wrong
Let's say you have a homeowners insurance policy with limits of $300,000 for your dwelling and $125,000 for your personal property (contents), and your home is destroyed by a tornado. Your insurance company determines that the cost of the property damage exceeds $300,000. The value of your destroyed belongings exceeds $125,000. You are paid $425,000, the maximum coverage according to your policy.
You are underinsured. You do not have enough to rebuild your home or replace your belongings to their full value. You hire a public insurance adjuster to help you with the claim before finding out that your claim payment will be less than what you really need to rebuild. The public adjuster does very little work, but you must pay 10% of your insurance payout, or $42,500, to the adjuster. Your ability to rebuild your home and replace your belongings is even further reduced.
What to Look For If You Must Hire a Public Adjuster
Don’t jump in to hiring a public insurance adjuster for auto claims or homeowners claims. 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 if you have a very large claim and want to get a second opinion, you might decide to hire a public adjuster. Likewise, if you are simply too busy to handle the claims process on your own and need some help, a public adjuster may be an option for you.
If you feel you must hire a public adjuster:
- Do not hire a person who goes door-to-door after a disaster in your community.
- Only hire a claims adjuster who is accredited, properly trained, and experienced.
- Hire only someone who is tested, licensed and bonded 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.
- Don’t hire the first adjuster you meet; interview several to find the best service for the best price.
- Don’t pay too much; carefully consider how much of your settlement you are willing to part with for the adjuster’s services.
- Don’t let the insurance company write checks out to both you and the adjuster.
- Limit your contract to a specific period of time. If the claim isn’t settled during that time, you can walk away from the adjuster.
Other red flags to look for include:
- Unreturned phone calls
- Time passing with no progress made
- Insists on using a particular restoration company or contractor
- Fraudulently inflates the claim and asks you to participate
- Cannot show you a license or offer current references
- Makes promises without ever looking at your policy or knowing the facts of your loss
- Requests a large upfront fee, then disappears without handling your claim
- Refers your repair job to a dishonest contractor for a kickback
- Attempts to get access to personal information like your Social Security number or bank account information
Before you hire anyone, check with your state’s department of insurance to understand the laws that govern insurance adjusters in your state.
Need Help with Your Claim? Call Your Independent Insurance Agent First
No matter how you decide to handle your claim, be sure to first call your independent insurance agent. When you need to report a loss, your agent can get the claims process started for you, will answer your questions, and will be your advocate throughout the process—at no extra charge.
Need help finding the best insurance coverage at the right price? An independent agent is the answer. Get started by contacting an independent insurance agent now.