Overage Adjustments: It's (Almost) Never Too Late!

So you decided to try and negotiate your property insurance claim by yourself. Surprisingly, most people do. Though the option of hiring your own licensed, experienced public insurance adjuster is something many homeowners and business owners do not know much about, even after learning about them most insureds choose to go it alone. Why? And what if after first attempting to get a satisfying and complete settlement you decide you could use some professional assistance after all? Is it too late? Our new Blog answers all of these questions and might give you some good perspective on how to get help, at any time, with your property insurance claim.

"Public Adjusters Do What?"

If you were thinking of selling your home, you would likely first contact a real estate agent. If you were looking to buy insurance for your home or business, you would no doubt contact an insurance agent. Yet, when people suffer a loss to their property or business income and they are preparing to file a claim with their insurance company, how many stop and consider hiring a claim agent? You didn't know there was such a thing as a "claim agent"? Well, there is. They are known as public insurance adjusters.

But the truth is, as noted above, though public insurance adjusting is a licensed profession in the State of California and in many other states, most people have never heard of it. I've written before about how public adjusters are the "best kept secret" (see Chapter 4 of my Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition [Murrieta, CA: Premier Claim Consultants, 2007]). I have also writen here on this Blog about the differences between public, company, and "independent" adjusters. But the reality is an insured who has suffered a loss to his or to her property is often presented with a dilemma: Go with your insurance company and let their adjusters determine how much to pay you, or hire your own professional claim adjuster to prepare and settle your claim. Many insureds choose to go with their insurance company because the idea of paying someone to do what they believe their insurance should do (that is, settle their claim the way it should be settled) sometimes just doesn't seem right. Often, however, that feeling changes as the claim progresses.

It is a fact: Insurance company and their "independent" adjusters cannot legally represent your interests during a claim settlement. Only public insurance adjusters can represent you, and so only public insurance adjusters truly have the same interest as you in the outcome of your claim. Of course, it may be that you were not presented with the right public adjusting company at the onset of your claim or, again, you simply chose to see what your insurance company would do. Whatever the case, if you chose not to hire a public insurance adjuster before, but now after your insurance company has effectively settled your claim you think you could use some help, what can a public adjuster do at this point?

"Overage" Claim Adjustments

Your claim settlement is not final until you say it is, or until you sign a release that effectively ends the claim adjustment process. But in California you are not required to sign a release to get your insurance claim settlement. In fact, current California Regulations include the following requirement for insurance companies:

Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

(i) No insurer shall inform a claimant that his or her rights may be impaired if a form or release is not completed within a specified time period unless the information is given for the purpose of notifying the claimant of any applicable statute of limitations or policy provision or the time limitation within which claims are required to be brought against state or local entities.

In simpler terms, an insurance company cannot offer you a settlement that is contingent upon a release. That would, in effect, be impairing your rights to a fair settlement. But the truth is, many insurance companies use this tactic behind the scenes with their insureds. I know, because I witnessed it used several times in claim negotiations during the recent October, 2007, San Diego wildfires, and over the course of my 14 years in the claim adjusting industry, 10 of which were spent on the insurance company side. Don't be pressured into signing a release. You don't have to sign one to get a settlement.

Assuming you have not signed a release, and if in fact the offer presented by the insurance company is insufficient to settle your claim, you can always hire a public adjuter to take over from this point forward. Though I believe the sooner the better as far as hiring your own claim agent is concerned, it's (almost) never too late. The qualified public adjuster can concentrate on valuing and negotiating the remaining items or disputed costs. His or her fee should (legally) only attach to the amount that is negotiated above and beyond what the insurance company has already presented to you in settlement of your claim. So you have only to gain and really nothing to lose.

Now, because the public adjuster may have to spend a great deal of time going through the claim file and examine all of the documents generated to date, review estimates previously prepared and submitted, and then prepare or obtain another estimate for use in negotiating the overage settlement, the adjusting fee may be higher than what you would have paid had you hired the public adjuster from the start. But since the amount in dispute is only that which in excess of the insurance company's offer, you will likely still end up paying less even if the public adjuster's fee percentage is higher than it otherwise would have been. Let me show you how it works.

How "Overages" Work

Let's say you have a residential dwelling that was severly damaged and the insurance company offers you a settlement with a Replacement Cost Value (RCV) of $100,000.00, with 40% in withheld depreciation for the age and condition of the property in its used state (= .40 x 100,000 or $40,000.00), for a total Actual Cash Value of $60,000.00. But you and your General Building Contractor believe that the value of the covered damages is really $150,000.00, and that only 20% of this value should be withheld for depreciation. You advise the insurance company that you believe they have undervalued the claim, but its adjuster tells you that the insurance company is standing by their values. Since the contractor whom you are going to use for the repairs is usually not licensed to adjust a claim, you need a public insurance adjuster.

Under these conditions, since the insurance company has already valued the claim and offered you a settlement, the public adjuster will charge you a fee on the amount that is negotiated above what he insurance company has already offered you. If the public adjuster succeeds in getting you more than the $100,000 initially offered by the insurance company, then the public adjuster would only be paid a percentage of this "overage" amount. Consider the following calculation:

Insurance Company Settlement Offer: $100,000.00
Public Adjuster Overage Negotiation: $50,000.00
Less 15% Overage Adjusting Fee: ($7,500.00)
__________________________________________________________
Final Total: $142,500.00

In the above scenario (which is quite plausible), your public adjuster has succeeded in negotiating another $50,000.00 for use by your contractor in restoring your dwelling or building to its pre-loss condition. The net effect is actually $42,500.00, however, since the public adjuster does not work for free! As the California Insurance Code (section 15027[v][1]) clearly states:

Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of yourclaim. You hire them by signing a contract and agreeing to pay them afee or commission based on a percentage of the settlement, or othermethod of compensation. Public adjusters are required to be licensed,bonded, and tested by the State of California to represent yourinterest only.

And who can argue with the results? The public adjuster did not charge you a fee on the amount that was negotiated prior to his or her involvement, and even after the deduction of the public adjuster's fee you come away with .85 on every one of the $50,000 additional dollars negotiated! Additionally, if the public adjuster succeeds in reducing the withheld depreciation from 45% to, say, 25%, then the ACV payment will be an additional $52,500.00 (= new $150,000 [RCV] less $37,500 [25%] less original ACV payment of $60,000 [insurance company's first ACV offer]). But of this $52,500 you only pay the public adjuster's fee on the additional $12,500.00 that is above the $100,000 RCV agreed to previously by the insurance company (which amounts to $1,875.00). Only after work is complete and the remaining $37,500.00 is issued by the insurance company is the public adjuster's fee due on the amount withheld for depreciation, in this case the remaining $37,500.00. This way you and your contractor are not required to give up too much money before the work is completed, which will allow the repair entity to have more money available to finish your project, which can sometimes be an issue.

Overage claims make sense. If you have a property insurance claim, a qualified public insurance adjuster can make a difference at the start, in the middle, and even if you think you're at the end of the claim. Remember, it's never too late to hire your own claim agent!

For more information about the different kinds of adjustments a public adjuster can provide, including more about "overage" adjustments, see Chapter 5 of my book Property Claims Adjusting: A Complete Guidebook for the Consumer. For more information about public, company, and "independent" adjusters, your property claim rights, and how Premier Claim Consultants can assist you, visit my website at http://www.premier-claim-consultants.com/.

It's Not True

If you've filed an insurance claim and the adjuster assigned by your insurance company tells you that he or she represents your interests and works for you, it's not true.

In California, there are three types of property claim adjusters that may be involved in your claim. They are company, "independent," or public adjusters. Of these three, only public insurance adjusters are legally allowed to represent you during a claim adjustment or negotiation. Only public insurance adjusters work for you in the settlement of your claim. Consider the following definitions from the California Insurance Code for all three of these types of adjusters:

1. Company Adjusters: "Company adjusters means the insurance adjusters who are mployees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California." [California Insurance Code, section 15027(v).]
   
2. Independent Adjusters: "Independent adjusters means the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee." [California Insurance Code, section 15027(v)(3).]
   
3. Public Adjusters: "Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only." [California Insurance Code, section 15027(v)(1).]

The above definitions make clear what I said at the start: Only public adjusters can represent you or work for you as your claims adjuster. Further, they are the only adjusters who are required to be tested and individually licensed after one year of serving as an interim public adjuster. You pay them, and they adjust your claim and negotiate a settlement for all of your covered losses and damages. This saves you both time and energy by releasing you from the difficult processes of inventorying, evaluating, and valuing your damaged or destroyed dwelling, buildings, other structures, and personal or business property.

"Independent" adjusters are not independent in the sense that they are "neutral," that is, impartial adjusters working for both you and your insurance company. They are only "independent" in that they work on a "contract basis" with your insurance company. But make no mistake about it: "Independent" adjusters, like company adjusters, work exclusively for insurance companies. They cannot legally represent or work for you.

Why, then, do many insurance companies and their claims adjusters present themselves as "your" adjuster, or one that works for you or on your behalf? The reason is clear: Though it is not true that they work for or represent you, they may tell you that they do in order to disuade you from hiring your own adjuster, a public adjuster. If insurance companies and their adjusters can keep you from hiring a public adjuster, and if you are made to believe that the insurance company or its adjusters are indeed "on your side" by being your representative and by working for you, then you will be completley reliant on them to settle your claim. If the insurance company is not only the party paying your claim but also the sole entity responsible for how much you should be paid, then the financial benefits to the insurance company are extraordinary. Further, if they alone are left to investigate your claim, then the full extent of investigation into coverage and value rests with them.

Having worked for insurance companies for ten years and having been a licensed public insurance adjuster for about three and half years, I can tell you that if you have a property insurance claim and if you do not consider hiring your own adjuster (a public adjuster), then you are taking an extreme and unnecessary risk with your claim settlement. I will also tell you that it's in your best interest to consult with a licensed and qualified public insurance adjuster for any property claim you file. Finally, I will say again that if any insurance company or "independent" adjuster tells you that he or she represents or works for you, it's not true.

For more information about public, company, and "independent" adjusters, your property claim rights, and how Premier Claim Consultants can assist you, visit my website at http://www.premier-claim-consultants.com/.

Premier Claim Consultants In 2008

Premier Claim Consultants is an advanced property claim consulting company specializing in residential and commercial property claim adjustments, coverage evaluations, appraisals, litigation support, and expert witness services. I founded Premier in 2006 in order to provide these and other services to an industry (property insurance claims) that in my view has not been very well represented by public advocates in several states, in particular in the State of California. I want to change that representation. I want to raise its social perception to a level deserving of a licensed profession, a profession that is supposed to represent those in need. I intend to do this in part by bringing together those people, companies, agencies, and resources that are committed to helping members of the public prepare and settle their property claims fairly, in a timely manner, and with integrity.

Premier is at the cutting edge of property claim adjustment theory and practice, providing services and educational materials that can assist all parties to a claim adjustment, insurance appraisal, or during litigation. To that end, and in addition to the resources and materials currently made available on our web site, you can expect the following from Premier Claim Consultants in 2008:

LIVECLAIM^TM: You've read about it for several months now and since November of 2007 we've been letting everyone know about the coming of LIVECLAIM^TM. Well, it's still coming! If you click on the LIVECLAIM^TM link on our main menu you'll be taken to the LIVECLAIM^TM page, which as of today is still undergoing some revision as it is being programmed and made ready for the complete presentation of LIVECLAIM^TM. Here all viewers will be able to see the progression of California insurance claims "live." LIVECLAIM^TM will monitor each insurance company's compliance with the minimum standards of the California Fair Claims Settlement Practices Regulations, and where appropriate documents and a Property Adjustment Report completed by Premier will be appended to each claim. Now members of the public will see firsthand just how seriously insurance companies take compliance with existing Regulations and with applicable insurance laws.

Property Claims Quarterly (PCQ): It was my intent to have this journal online and ready at the start of 2008, but that was too optimistic of a date as it turns out. It is more likely that PCQ will be ready later this year, possibly by mid-summer. PCQ will focus exclusively on three aspects of the property claims industry, namely, the adjusting, legal, and construction aspects. Almost every property claim will involve a claim adjustment and construction or restoration of some kind. Many moderate to severe property losses could also involve one or more legal issues. Premier Claim Consultants will use PCQ to publish opinions and information relative to property insurance claims from the perspective of those licensed in each of these fields. It is still our desire to have the first issue of this journal online in 2008, and published thereafter each quarter of each year.

Property Claims Adjusting, A Complete Guidebook for Businesses, California Commercial Edition: This is the companion volume to my Property Claims Adjusting, A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007). With these two books California consumers and businesses will have available to them important resources for use when they are faced with a loss to their dwelling, commercial building, a loss of business income, or a loss to their personal or business property. Both books discuss claim adjustment theory, the different types and respective roles of adjusters, and each volume contains a helpful glossary of key terms, informative appendixes, and a subject index.

Property Claims Review (Premier's Blog): In 2008 I plan on being more regular with this Blog. I try to publish something on it at least once a month, but I will try to put something up once a week starting in April. So keep reading! If there's something you would like for me to review or write about, email me at gregstafford@premier-claim-consultants.com and let me know about it.

As we go forward into 2008, be assurred of Premier's commitment to working with the best professionals in the property claims industry in order to give consumers the best claims, legal, and construction service and assistance possible, which is what the public needs most when misfortune strikes their property and other personal assets.

For more information about Premier Claim Consultants, visit my website at http://www.premier-claim-consultants.com/.

LIVECLAIM is Coming!

You may have noticed that on the main menu of the front page of the Premier Claim Consultants web site there is a new option: LIVECLAIM^TM. LIVECLAIM^TM is where Premier Claim Consultants adjusts claims "live" so that consumers and others can have the benefit of seeing firsthand how the claim settlement process takes place. It will also provide a window into the business life and activities of public insurance adjusters. Finally, it will give insurance companies an opportunity to show their quality.

Once LIVECLAIM^TM is ready for use you will be able to access it through Premier's main menu which will then take you to a listing of claim files organized by the date of most recent occurrence. The claims listed will also be labeled as to the type of loss (fire, water, vandalism, etc.), the insurance company involved, and the state and county in which the claim occurred. After selecting one of the claims on LIVECLAIM^TM, you will be taken to a listing of select documents sent between Premier and the insurance company during the course of the claim in chronological order. The documents chosen will be those that can be modified with respect to personal information but still capture and present the adjustment process from both the public adjuster's and the insurance company's perspective, allowing you to evaluate the claim and become more familiar with each insurance company's and with Premier's claim settlement practices.

Also listed next to each listing of claim documents will be a Claims Handling Barometer^TM that will show from the perspective of Premier Claim Consultants whether or not the insurance company is compliant during the course of the claim with the "minimum standards" (section 2695.1[a][1]) of the California Fair Claims Settlement Practices Regulations (hereafter, "CA Regulations"). These standards are in place to "promote the good faith, prompt, efficient and equitable settlement of claims on a cost effective basis" (CA Regulations, section 2695.1[a][2]). Therefore, LIVECLAIM^TM is not only a place where consumers can learn more about the process of property claim adjustments and the benefits of hiring a public insurance adjuster, but through it consumers can get a better appreciation for how different insurers meet, exceed, or fall below the standards in place in California for the settlement of claims.

LIVECLAIM^TM will have active and archived claims available for viewing after January 1, 2008. More information about the features and use of LIVECLAIM^TM will be given here on Property Claims Review, the official Blog of Premier Claim Consultants.

For more information about the California Fair Claims Settlement Practices Regulations, public insurance adjusters, property claims adjusting, appraisals, expert witness services, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

California Regulations and 'Unfair Claims Settlement Practices'

The California Fair Claims Settlement Practices Regulations state the following when it comes to their purpose:

Section 2695.1. Preamble

(a) (1) To delineate certain minimum standards for the settlement of claims which, when violated knowingly on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h);

I have underlined "knowingly on a single occasion" because this shows that, while any insurance company licensed to handle claim in the State of California who violates these "minimum standards" of the California Regulations may be guilty of "an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h)," it only takes "a single" violation of the Regulatons committed "knowingly" for there to be a determination by the Insurance Commissioner that the insurance company has performed an "unfair claims settlement practice." How, though, can such violations be committed "knowingly"?

These same Regulations require California insurers licensed to handle claims to do the following when it comes to their claims agents (which includes their claims adjusters):

Section 2695.6 Training and Certification

(b) All licensees shall provide thorough and adequate training regarding these regulations to all their claims agents. Licensees shall certify that their claims agents have been trained regarding these regulations and any revisions thereto. However, licensees need not provide such training or certification to duly licensed attorneys.

A licensee shall demonstrate compliance with this
subsection by the following methods:

…
(B) that clear written instructions regarding the procedures to be followed to effect proper compliance with this subchapter were provided to all its claims agents;

(3) where the licensee retains insurance adjusters as defined in California Insurance Code Section 14021, the licensee must provide training to the insurance adjusters regarding these regulations and annually certify, in a declaration executed under penalty of perjury, that such training is provided. Alternately, the insurance adjuster may
annually certify in writing, under penalty of perjury, that he or she has read and understands these regulations and all amendments thereto or has successfully completed a training seminar which explains these regulations;);

The underlined sections from the above quoted California Regulatons show that there must be annual certification or training with respect to these Regulations, such that the adjuster or claims agent "understands these regulations and all amendments thereto or has successfully completed a training seminar which explains these regulations." Therefore, there should be no excuse for any California insurer's claims agents or adjusters when it comes to whether or not they 'know' the regulations. The California insurer is required by the State to make sure that their claims agents and their adjusters know them.

But having worked for several of the nation's largest property insurers I can tell you that while there is some emphasis on select Regulations, and while some companies do provide a rather brief annual discussion of the Regulations, there is rarely an ongoing implementation of all of the Regulations that may be applicable to property insurance claims in California. I can also attest to this from my having been a licensed California public insurance adjuster for over three years. So what can be done about this lack of ongoing training and/or implementation of all applicable Regulations?

Consumers can become better educated about the California Regulations when they have a property insurance claim. One way to do this is by reviewing the Regulations themselves, a link to which has been provided at the beginning of this post. Another way is by reading publications such as my Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), or reviewing the Blog articles and other materials on my web site.

But it would sure be nice if more California insurers dedicated themselves to making sure that they not only provided annual training concerning the Regulations, but in fact made the ongoing understanding and implementation of the Regulations the focus of the claims settlement practices. By proactively looking out for the rights of California consumers and not trying to put in the place of the Regulations company standards and procedures that do not meet the "minimum standards" of what is required of California insurers, there would be less instances of 'knowingly violating them on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h),' and thus fewer claims of bad faith on the part of consumers against insurance companies.

For more information about the California Fair Claims Settlement Practices Regulations, public insurance adjusters, property claims adjusting, appraisals, expert witness services, and litigation support, visit my website at http://www.premier-claim-consultants.com/

Two Legitimate Answers To Two Legitimate Questions Based On One Condition

In property claim settlements involving damage to a dwelling or to a commercial building, someone or some entity is likely going to be contracted for all or part of the needed repairs. In most cases the owner of the property will hire a General Building Contractor. In this article I will refer to such contractors and their sub-contractors together by means of “repair individual or entity,” since this is the description used in section 2695.9(d)(3) of the California Fair Claims Settlement Practices Regulations (hereafter, “CA Regulations”). Similar wording is also used in section 2695.9(b)(c)(1)(2) of the CA Regulations, which sections read:

Section 2695.9. Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies

(b) No insurer shall require that the insured have the property repaired by a specific individual or entity.

(c) No insurer shall suggest or recommend that the insured have the property repaired by a specific individual or entity unless:

(1) the referral is expressly requested by the claimant; or

(2) the claimant has been informed in writing of the right to select a repair individual or entity and the insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and repaired in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by these regulations.

There are two critical facts here: 1) the insurance company cannot require an insured to use a particular repair individual or entity; and 2) the insurance company cannot even "suggest or recommend" a "specific individual or entity" unless the referral is "expressly requested" by the insured or unless the insurance company first informs the insured in writing of his or her right to choose the repair individual or entity.

Obviously, though, insurance companies are not obligated by the above CA Regulations to pay any estimate from any repair individual or entity chosen by an insured. At the same time, they cannot refuse to "reasonably adjust" (CA Regulations, section 2695.9[d][3]) the estimate obtained by the insured from the repair individual or entity of their choosing. Insurance companies cannot price-fix the insured out of making his or her own choice by adjusting only their own estimate or that of some other repair individual or entity not chosen by the insured. The focus must be on the estimate obtained by the insured from the repair individual or entity chosen, since that is the estimate that needs to be negotiated in order to maintain the insured's rights, in this case, his or her right to choose a repair contractor.

But since insurance companies often obtain or write their own repair estimate for a comparative evaluation of the estimate obtained from the insured's chosen contractor, two legitimate questions naturally arise from the perspective of both the insurance company and from the insured:

Insurance Company: Is the estimate from the insured's chosen contractor grossly inflated or out of line with costs in the construction market local to the affected structure?

Consumer/Insured: Is the estimate written or obtained by the insurance company a "low- ball" bid that is only suitable for an insurance company's "preferred vendor" but too low for a quality public construction company in the area where the loss occurred?

There are two legitimate answers to these two legitimate questions and both of them depend on one condition: What kind of contractor did the insured choose?

If, for example, the insured has chosen a repair entity or individual that works regularly for or with insurance companies or with their adjusters and because of this regular work association they are able to accept lower unit costs or eliminate certain common repair estimate items like the cost for a project manager, base service charges relating to the size of the job, or other conditions necessary in order for a particular repair individual or entity to receive referrals from insurance companies, then it may be that such a contractor, if chosen by the insured, can work with the costs and the scope limitations that insurance companies require of those vendors who work for or with them.

However, public contractors, whom I define in my book Property Claims Adjusting: A Complete Guidebook for the Consumer: California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), page 138, as "Licensed General Building Contractors who do not work for or with insurance companies," have no such relationship with an insurance company such that they must accept the same reductions in pricing and scope of work commonly expected by insurance companies for insurance company contractors, defined in my book, page 136, as repair entities "who work primarily or exclusively for or with insurance companies." These are two different types of contractors, and their typical costs and the scope of work they usually prepare for similar jobs will often differ in certain key respects.

That is why when a consumer gets a repair estimate from a public contractor, one who does not work for or with insurance companies, and then the adjuster for the insurance company gets an estimate from an insurance company contractor, they are almost always different with the public contractor usually higher than the insurance company contractor. But since the insured has the right to choose his or her own repair contractor, and since insurance companies are required to "reasonably adjust" the chosen contractor's estimate (not their own estimate or one obtained by a contractor friendly to the insurance company), then the focus should stay on the insured's contractor, not on any estimate prepared by any other individual or entity. But as any public insurance adjuster will tell you, in property claim settlements today the insurance company is focused almost exclusively on their adjuster's or on their preferred contractor's estimate, not on the estimate prepared by the repair individual or entity chosen by the insured. Thus, the exact opposite of what should be happening is what's happening more often than it should.

But it's a legitimate question to ask: "Is the estimate from the insured's chosen contractor grossly inflated?" It's also legitimate to ask: "Is the estimate from the insurance company adjuster or from the insurance company's preferred vendor a 'low-ball' bid?" The answer to each question will most likely depend on one condition: Which type of contractor did the insured choose: A public contractor or an insurance company contractor? You cannot look at one as if it is the other, and you cannot require one type of contractor to accept the pricing and scope limitations or parameters of the other, either. In any event, it is the estimate from the insured's chosen contractor that must be 'reasonably adjusted' (CA Regulations, section 2695.9[d][3]). Not anyone else's estimate.

For more information about how to successfully negotiate your property insurance claim, how to evaluate public insurance adjusters, choosing repair contractors, and understanding many of your rights and obligations in a property claim settlement, see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters in general, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

Beware of Unlicensed Public Adjusters and Contractors

It happens almost every time there's a natural disaster involving loss of personal or structural property: Someone tries to take advantage of those who have suffered already from the disaster itself. During the recent Lake Tahoe (California) fires several unscrupulous and unlicensed contractors were arrested by a sting operation conducted by the California Department of Insurance and El Dorado County investigators. A July 5, 2007, Press Release by the Department states in part:

On July 4, the California Department of Insurance's Enforcement Branch partnered with investigators from the El Dorado County District Attorney's Office and the California Contractors State License Board to identify unlicensed public adjusters as well as unlicensed and uninsured contractors. The operation resulted in five arrests. The El Dorado County District Attorney's Office is prosecuting the cases."Preying on fire survivors is unconscionable," said Commissioner Poizner. "My department will continue to do everything possible to ensure residents aren't burned twice by contractors unwilling to protect their employees and customers from unnecessary liability."

Though to date no unscrupulous public adjusters have been found soliciting people who have suffered loss by fire in the Lake Tahoe area, the Department is concerned with reason, since it has happened in the recent past. While the public insurance industry, especially in California, has earned a bad reputation, good public adjusters are doing their best to changes things. But there are still nefarious contractors and public adjusters out there. So, since you will likely need the services of one or both of these entities should you have a property insurance claim, how can you know whom to choose?

In my book, Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), I offer simple checklists for evaluating and choosing both contractors and public adjusters. Here is what I suggest:

When it comes to choosing contractors, there are three critical steps:

• Check to make sure the contractor is licensed and bonded.

• Make sure the contractor has workers compensation and liability insurance.

• Check the contractor's references.

The first two steps can be accomplished by visiting the California Contractors State License Board and inputting the license number provided to you by the contractor. You can obtain a list of references from the contractor and call them to see if their project was similar in scope to yours, and then ask them if they were satisfied with the service they received, or perhaps even asking if you can stop by and take a look at the work the contractor completed.

Once you decide which contractor you want to use, then there are several important steps you need to take to make sure the contract you sign protects you:

• Be sure the financial terms of the contract are clear. The contract should include the total price, when payments will be made, and whether or not there is a cancellation penalty.

• The contract should specify all materials to be used, such as the quality, quantity, weight, color, size, or brand name as it may apply.

• Your contract should specify an approximate starting date and completion date for your project. However, external factors such as the weather or the availability of supplies might cause delays.

The above points are taken from the publication, What You Should Know Before You Hire A Contractor (California: Contractors State License Board, 2004), pages 14-16.

When it comes to choosing a public insurance adjuster to represent you in settling your property claim, I recommend you consider the following:

• Is the public adjuster licensed?

• Does the public adjuster have references you can check?

• Do the references supplied provide credible, positive feedback on their experience with the public adjuster?

• Does the public adjuster appear professional and does he or she seem genuinely concerned with your interests or are they eager only to “sign you up”?

• Has the public adjuster patiently answered any relevant, claim or coverage questions you have asked?

• Does the public adjuster take the time to provide a general summary of what you can expect?

You can check a public aduster's license by visting the web site of the California Department of Insurance and inputting the license number provided to you by the public adjuster, or by calling the California Department of Insurance License Bureau at (800) 967-9331 or (916) 322-3555.

After a loss to your home or personal property, the last thing you need is for someone to take advantage of your situation when what you need most is honest, reliable, and productive service. Likely, you will need the assistance of a contractor and a public insurance adjuster. But while you may need them, you only really need the ones who are legitimate and who will make your situation better, not worse. You can protect yourself by following the above suggestions when it comes to choosing repair contractors or public adjusters.

For more information about how to successfully negotiate your property insurance claim, how to evaluate public insurance adjusters, choosing repair contractors, and understanding many of your rights and obligations in a property claim settlement, see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters in general, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.