Hiring a Public Adjuster for Your Home Insurance Claim
One of the best ways to prepare for the possibility of having to file a homeowners insurance claim is to know your options. During the claim process, most homeowners have two options. They can 1) work directly with an adjuster from their homeowners insurance company or 2) hire a public insurance adjuster.
This topic can be a bit of a polarizing issue in the home insurance industry, but there’s no reason a customer shouldn’t feel free to hire a public adjuster to act as a representative during the claim process. At Security First Insurance, customer satisfaction is our top priority; providing information to our customers helps them make educated decisions and keeps them involved in the process.
As with any contracted business arrangement, consumers should educate themselves about both the benefits and potential risks involved with hiring a public adjuster (PA).
What is a public insurance adjuster?
A public adjuster is an independent contractor who is hired by a homeowner to work on their behalf after they’ve filed an insurance claim. Public adjusters do not work for, or on behalf of, the homeowners insurance company.
Why do homeowners choose public insurance adjusters?
Every situation is unique. Some homeowners choose to hire public adjusters because it seems like their only realistic option. For example, if the homeowner lives in another state, it could be difficult to assess damages remotely. There may be other physical limitations, or perhaps there’s a language barrier. Although Security First Insurance has bilingual representatives, resources for all companies can be limited after a major storm. Plus, insurance lingo can be complex in any language.
According to Paul Handerhan, Senior Vice President of Public Policy at FAIR, the most common reason someone hires an adjuster is time. “A busy business professional will weigh the opportunity cost and seek someone to handle the claim on their behalf,” he says. “For claims of low to moderate severity, policyholders with the appropriate time and technical requirements are recommended to work with their insurance carriers before seeking third party representation.”
What homeowners need to know when choosing a public insurance adjuster
When you experience damage to your home, the first step is to call your homeowners insurance company. The company will send one of its adjusters to your property. While you do not incur any cost for the adjuster to assess the damage, if you hire a public adjuster, you’ll have to pay them to represent you in a claim.
In Florida, the fee may be up to 20% of the indemnity, which is the compensation you receive from the home insurance company. Handerhan, who is also a former president of FAPIA (Florida Association of Public Insurance Adjusters), advises consumers that the fee “is more a ceiling than a floor.” He says that when dealing with a very large claim, most PAs should not be charging 20%.
This cost is outlined in the contract the consumer signs with the public adjuster and is required for the insurance company to pay before it cuts a check for the claim. As the insured, you are also obligated by statute to forward a copy of your contract with the public adjuster to your insurance company.
To help ensure you choose the right person to represent you in a claim, choose a public insurance adjuster who:
- Is licensed
- Is a member of the National Association of Public Insurance Adjusters (NAPIA) or Florida Association of Public Insurance Adjusters (FAPIA), which require members to meet high industry standards
- Is recommended to you by trusted friends, family members, and colleagues
Tips for working with a public adjuster
- Identify your needs and expectations for what the PA will do for you. Communicate and set those expectations in advance.
- Understand the costs involved before signing a contract.
Consider finding a reputable public adjuster before you need one. This lowers your risk of making an important decision under duress.
Watch out for this Big Red Flag
The cost of hiring a public insurance adjuster is where a potential issues may arise.
Some public adjusters may tell you that you won’t have to pay a fee if they can get more money from your insurance company. That’s a big red flag. They’ll often bring in their own estimators to artificially inflate the cost of damages. Unless there has been some unintentional oversight by the insurance company, a public adjuster shouldn’t “find” more money to cover his or her fee. Florida homeowners insurance companies like Security First are contractually and legally (not to mention ethically) obligated to pay the insured every dollar that is owed.
Like the proverbial “ambulance chasers,” unscrupulous public adjusters may seek out consumers who need to file a claim and contact them directly. Some consumers have a mistrust of insurance companies, and there are public adjusters who will take advantage of that uncertainty.
If a public adjuster contests a claim in an attempt to secure more money, the overall claims process will take longer. Even if the public adjuster hasn’t mentioned an attempt to secure a larger payout, contesting makes it difficult for a homeowner to know if the adjuster is simply trying to correct a possible compensation disparity or only trying to make a bigger personal profit. If a claim is contested, there is no guarantee the insured will get more money; the only guarantee is the homeowner will still have to pay the public adjuster.
Working in Your Best Interest during the Claims Process
Overall, about one in five of the claims placed with Security First Insurance are represented by public insurance adjusters. Sometimes working with a public adjuster during the claims process can prove more costly, in both money and time, due to the back and forth that may occur between the adjuster and the insurance company. But top-notch public insurance adjusters who deal professionally and ethically with homeowners and provide trustworthy advice will help the policyholder and their home insurance company settle a claim fairly and efficiently.
And that is a claim all parties involved would be happy to make.
