Should You Hire A Public Adjuster?

When professional athletes discuss multi-million dollar contracts with a sports team, they usually don't do it on their own. With rare exception, they use attorneys or sports agents who specialize in knowing contract law and the rules and regulations of the sports league in question, this so the athlete can enter into the best possible contract. In return for negotiating the best contract and representing the athlete in a variety of other ways, the athlete's sports agent or attorney is paid a fee based on the negotiated contract.

Consider, too, how you might go about purchasing or selling your house. In most cases it is common for home buyers or for sellers to use a real estate agent. Why? Because real estate agents are licensed to help people buy and sell houses. They have special knowledge of the value of properties on the market in a given area. They know the laws that have to do with buying and selling a house. They can tell you a good deal about the differences between neighborhoods and towns. And real estate agents can also help you find the right financing if you need it. In return for their services, real estate agents are paid a percentage of the money that you pay or receive for the property in question.

Now consider this hypothetical but very real possibility: Your home or your business has been severely damaged or even completely destroyed. You have insurance to cover your loss. But you are unfamiliar with the claims process and you do not have the time or the expertise to begin documenting, valuing, and settling your claim. Further, you do not know the full range of coverages, additional coverages, or extensions of coverage the may come with your policy package. Finally, your and your family's home life or business operations have been completely disrupted and it will be months, possible a year or more, before everything can be put back to the way it was before the loss occurred.

If an athlete needs a sports agent to help him or her negotiate and finalize the best contract, if a real estate agent is worth a percentage of the purchase cost of a house in exchange for helping you find or buy one, does it not make sense that you would need the best available, professionally licensed agent to assist you with the coverages, negotiations, and with the settlement of your and your family’s claim for damage to your house, your personal property, or to your commercial building and your business property and loss of income?

In California, like in many other states, consumers have available to them just such an agent. They are known as "public adjusters":

Any person acting as a public adjuster who has executed a contract as described in Section 15027 is the agent of the insured. [California Insurance Code, section 15027.5.]

Public adjusters can be hired by insureds to represent them in the preparation, preasentation, and settlement of their claim. In fact, they are the only type of insurance adjuster that can legally represent consumers in California. Public insurance adjusters are individually licensed and they must pass a State-administered exam. They are property claim settlement experts who know how to evaluate coverage, prepare and present your claim, and then negotiate a settlement for all of your covered loss and damages. As with other agents, they are usually paid in relation to the settlement they negotiate on your behalf and in return for performing a variety of difficult but necessary claim services.

But public adjusters are not the only type of adjuster who may be involved in your property insurance claim. There are actually three types of insurance adjusters defined in the California Insurance Code, namely:

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 defintions make clear the fact that insurance companies have two kinds of adjusters that may represent their interests: 1) company adjusters who work as direct employees of the insurance company, and 2) independent adjusters who are hired on a contract basis, again, to work only for the insurance company. Thus, the "independent" in "independent adjuster" does not mean this type of adjuster is not influenced by the insurance company for whom they work. They are. "Independent" here means that the independent adjuster does not “work exclusively for one [insurance] company” (Black’s Dictionary of Law, 5th ed. [St. Paul, Minn.: West Publishing Co, 1979], page 693, under "Independent"). Again, both "company" and "independent adjusters" work exclusively for insurance companies in the settlement of claims. Further, "company adjusters" are not tested by the State. In fact, many independents are also not tested by the State are as all public adjusters, depending on whether or not the independent adjuster has his or her own license or whether he or she works under the license of another "independent adjuster" for insurance companies.

Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only." Their license empowers public adjusters to assist you with the "preparation, presentation, and settlement of your claim." They do not work for insurance companies when adjusting claims. They can only legally represent your claim interests, and they negotiate with insurance companies and with their adjusters on your behalf. But just how do public adjusters represent insureds in the preparation, presentation, and in the settlement of property claims? Here are some examples:

• Public adjusters provide a comprehensive analysis of all coverages that might in any way apply to your claim: This is the essential "first step" for any property claim adjustment. You must know all of the coverages, and exclusions, that apply to your claim before you begin incurring claim-related expenses. The last thing you want to find out is that you paid for something that is not covered, or that you paid too much for something that may have certain coverage limits or restrictions.

• Public adjusters assist you with locating and setting up temporary residence or business operations: This is one of the most urgent items after a severe claim event occurs: you need to restore stability to your normal personal life or to your business operations right away. This will allow you to carry on as usual, to the extent possible under the circumstances, while the claim is adjusted and the damaged or destoryed property is restored or replaced. Again, such a process can take months or longer. A public adjuster will know what your coverages are during this time and he or she can help make sure that you have the best possible residence or business location, and all the furniture or equipment you need for each, during the course of the claim.
• Public adjusters complete an inventory of all your damaged or destroyed business or personal property: This is actually a policy "duty" with which insureds must comply, and one that will help document a significant part of your loss in preparation for your settlement demand to the insurance company. But are you prepared to spend several days inside your smoke or fire damaged property to complete the inventory? Are you ready to dig through all of the debris and ash to make sure that your inventory is complete? Are you prepared to price each and every item (which now represents settlement money to you) and to provide supporting documentaiton for the values claimed? Further, do you know where best to turn for help with restoring any salvageable personal property, such as valuable papers, family heirlooms, and other items that may not be replaceable? Public adjusters are of invaluable assistance in all of these areas.

• Public adjusters compute any necessary reduction in value ("depreciation") for affected property: Your insuance company will in most cases withhold money for the age and condition of the items damaged in the claim event. But how much they withhold is often subjective and you can almost always challenge the insurance company's withholdings so that you receive more money up-front for any property that you may or may not choose to replace. Since in most property claims there are always items you will decide not to replace, then the amount of depreciation withheld will directly correspond the money you get to keep for the used value of these items. Therefore, you need someone representing you who knows property values and how depreciation is properly calculated for each item, in order to make sure you are getting the best property settlement possible. New California Regulations are in place that will definitely benefit the consumer in these areas, provided that you understand them or that you have someone representing you who understands how to apply these new Regulations.
• Public adjusters negotiate payment for any damaged structures: Public adjusters are also very familiar with what is justifiable for residential and commercial construction projects, and how to negotiate the best possible settlement for you to use in restoring the damaged or destroyed property. To do this, they will use repair estimates that are not written with the limitations often imposed by insurance companies on their adjusters or on their preferred contractors. The public adjuster will also likely have to have numerous discussions and on-site meetings with the company or independent adjuster and with their contractor, as well as review and submit regular correspondence to the insurance company concerning differences of opinion that may need to be resolved prior to concluding your claim settlement.

• Public adjusters can give you peace of mind: Public adjusters can provide all of the above and many other services should you suffer a loss to your personal or business property. These services usually result in a settlement for your entire covered loss and damages that is based on costs for goods that match your standard of living. Public adjusters also adjust claims so that you have enough money to choose your own repair contractor, which is a California consumer's right (see California Fair Claims Practices Settlement Regulations, section 2695.9[b][c][1][2]). In providing these services to insureds who have had the misfortune of experiencing a property loss, public adjusters can provide you with peace of mind during a time when a good deal of your life may be turned upside down due to an unforeseen occurrence.

Should you hire a public adjuster? Would you hire a sports agent if you were a professional athlete? Would you hire a real estate agent if you were looking to buy or to sell a house or commercial property? With all that is involved in making sure that your property claim settlement is complete, equitable, and that it leaves you with enough money to repair or replace all of your damaged or destroyed property with your own contractor, if the answer to the last two questions is "yes" then it is hard to imagine answering any differently to the first question.

For more information about how to evaluate and hire a public insurance adjuster, choosing repair contractors, and understanding many of your rights and obligations in a property insurance claim 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, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.