Paying your homeowners insurance is a necessity for financial protection when unexpected home disasters occur. Roughly 1 in 20 insured homeowners file an annual claim, equating to an average of about 5%. In 2021, 5.3% of insured homes reported having a claim per these statistics from III.org.
But how do you navigate the claim process and determine the right compensation? This is where adjusters come in. Insurance companies have their own adjusters, but have you heard of public adjusters? Let’s explore the pros and cons of using a public adjuster compared to an insurance adjuster. Read on to learn more about handling insurance claims.
The Claims Process
Let’s use the example of water damage to explain the claims process. Imagine a scenario where a pipe bursts in your bathroom while you’re away, causing the bathroom to flood. Unfortunately, the bathroom is on the upper floor, so the water starts seeping through the ceiling into your kitchen, damaging your new hardwood flooring. The burst pipe results in significant property damage, prompting you to file an insurance claim to cover the repair costs.
To file the claim, you contact your insurance company and report the incident. They send their adjuster to assess the damages and determine the cost estimates. Once you both agree on the proposed amount from the adjuster, the insurance company provides you with the money for repairs.
But what if you can’t reach an agreement on the amount? This is when many homeowners decide to hire a public adjuster.
Distinguishing Between Public Insurance Adjusters (aka PA) and Insurance Adjusters
What sets apart an insurance company adjuster from a public adjuster?
The insurance adjuster represents the insurance company and handles claims by gathering information and estimating repair costs on their behalf. On the other hand, the homeowner hires and compensates the public adjuster.
Both assess and evaluate damage, providing repair proposals and cost estimates. The crucial distinction lies in who employs them.
Now, let’s delve into the advantages and disadvantages of both adjuster types.
Understanding the Role of an Insurance Adjuster
Here are some advantages of using the insurance company’s adjuster:
- Extensive Expertise: Insurance company adjusters often have broad experience, covering areas like plumbing, heating, cooling, electrical work, and finishing touches like drywall and paint.
- No Extra Cost: Hiring the insurance adjuster typically doesn’t incur additional charges for homeowners.
- Long-Term Relationship: Homeowners often stick with the same insurance company for years, so the adjuster is likely motivated to resolve issues properly rather than cut corners to save the insurance company money.
- Professional Reputation: Many insurance adjusters prioritize quality repairs over cost-cutting to maintain their professional reputation.
However, it’s important to remember that insurance adjusters ultimately work for the insurance company’s benefit, not the homeowner’s. So, in cases of substantial losses, some insurance companies might seek cost-saving measures.
How Public Insurance Adjusters Handle Claims
Many homeowners are unaware of public insurance adjusters, assuming that insurance adjusters work solely in their best interest.
A public insurance adjuster is hired and paid by the homeowner, usually receiving a percentage of the claim amount. Homeowners may choose to hire one, especially for larger claims, to ensure comprehensive coverage.
To make the most of a public adjuster’s services, it’s best to involve them early in the claims process, allowing them to communicate and work with the insurance adjuster from the start.
Finding a reputable public adjuster is essential. Start by examining their credentials, assessing their skills in damage assessment, experience in negotiating settlements with insurance companies, and their communication abilities. Check if they are members of the National Association of Public Insurance Adjusters (NAPIA), which upholds professional standards.
Benefits of Hiring a Public Adjuster:
- Knowledge and Professional Standards: Public adjusters undergo rigorous training and must meet state licensing requirements. They often belong to professional organizations that enforce skill standards. They are also typically bonded, fingerprinted, and subjected to background checks.
- Expertise in Insurance Claims: Public adjusters possess in-depth knowledge of home and business insurance claims and negotiation skills, ensuring they work closely with insurance company adjusters to achieve mutually agreeable settlements.
- Advocacy and Stress Relief: Dealing with a catastrophic loss can be overwhelming. Public adjusters act as advocates, relieving homeowners of the burden of negotiations and helping guide them through the process.
- Thorough Claim Assessment: Public adjusters have the experience to uncover hidden or less apparent damages, ensuring that no aspect of the claim is overlooked. For example, they can identify issues like mold formation or drywall damage resulting from concealed water damage.
- Maximized Settlements: Public adjusters often secure larger settlements for their clients. Homeowners may not be comfortable or confident in negotiating with insurance adjusters, and they might not even recognize overlooked claim possibilities. Public adjusters, with their expertise, know how to negotiate and request additional compensation where necessary.
In summary, hiring a public adjuster can be highly advantageous, especially when dealing with substantial insurance claims, as they bring expertise, advocacy, and the potential for a more comprehensive settlement.
Disadvantages of Hiring a Public Adjuster:
- Specializing in Major Claims: Public adjusters often focus on substantial claims, like total loss scenarios such as house fires. They prefer cases with significant payouts because their earnings are based on the final settlement amount. It can be challenging to engage a public adjuster for smaller claims, as they might not find them financially worthwhile. Before hiring one, research their preferred case types and request references.
- Payment Arrangements: Public adjusters typically work on a contingency basis, meaning you don’t pay them upfront; they receive a portion of the settlement amount. This fee varies by location and claim size, with an average of around 10%. Some adjusters may reduce their percentage for larger claims and increase it for smaller ones, which may influence their preference for taking on certain cases.
- Claim Settlement Time: While public adjusters can expedite some claims, involving more parties can potentially slow down the process. Increased negotiations between the public adjuster and the insurance adjuster may lead to delays. In cases where settlements can’t be reached, legal proceedings may be necessary, further extending the time it takes to resolve the claim.
It’s essential to weigh these drawbacks against the benefits when deciding whether to hire a public adjuster for your insurance claim.
Selecting the Ideal Public Adjuster for Your Needs
Choosing the right public adjuster is crucial for your insurance claim’s success. Here’s a simple guide to help you make the best choice:
- Check Licensing and Credentials: Ensure the adjuster is licensed in your state and holds relevant certifications to guarantee their expertise.
- Read Reviews and Ask for References: Look for online reviews and request references to assess the adjuster’s reputation and past client experiences.
- Understand Fees: Clearly understand the fees and compare them among different adjusters to find a fair rate.
- Evaluate Communication: Ensure the adjuster is accessible and communicates effectively to keep you informed.
- Review the Contract: Carefully review the contract, ensuring it’s clear and transparent about services and fees.
- Consider Relevant Experience: Choose an adjuster with experience handling claims similar to yours, as they’ll better understand the specific challenges of your situation.
- Consult your insurance broker for public adjuster recommendations, as they have encountered numerous adjusters and can advise you on who to avoid hiring.
Here’s a Pto-Tip
Avoid signing any documents or engaging the services of any business when you find yourself in the midst of an insurance claim, especially during times of heightened stress and uncertainty.
To safeguard your interests, consider the following steps:
- Contact Your Insurance Broker: Reach out to your insurance broker or agent as soon as possible after an incident. They can provide guidance on the initial steps to take and advise you on what information to gather.
- Document the Incident: Collect evidence related to the incident, such as photographs, videos, or written descriptions. This documentation can be invaluable when assessing damages or injuries.
- Review Documents Carefully: If presented with any documents, contracts, or agreements related to your claim, scrutinize them thoroughly. Ensure that you fully comprehend the terms and implications before signing.
- Consult Legal Counsel: In complex cases or if you believe your claim may involve legal matters, consider seeking legal advice. An attorney can help protect your rights and interests throughout the claims process.
- Take Your Time: It’s crucial to make informed decisions, so don’t rush. Consult with trusted professionals, gather information, and weigh your options carefully.
Your Local Independent Insurance Broker
Vargas & Vargas Insurance has assisted families and businesses with their insurance needs for over four decades. Whenever you need help, our team can contact you at 617-298-0655.