(Note: This Guest Blog is by Javier Delgado, an attorney with Merlin Law Group in the Houston, Texas, office. This is the fifth in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).
Yesterday, Michelle Claverol and I had the honor and privilege to speak before a large crowd of public adjusters at the Florida Association of Public Insurance Adjusters (FAPIA) Winter Conference. As Michelle and I were preparing for the presentation, “Tales From the Dark Side,” it occurred to me how difficult and challenging the job of an insurance adjuster is, whether representing the insurance company or the insured. I had felt this way before, about 15 years ago, while sitting in my cubicle working as an adjuster for Crawford & Company out of the Miami office. It’s been nine years now that I have been practicing law as both a defense and plaintiffs attorney, and in those nine years, I had not taken the time to reflect on my life as an adjuster until three days ago.
The job of a public insurance adjuster requires a great deal of knowledge of the law, but an adjuster must be careful not to practice law; a great deal of knowledge about insurance policies and principles; a thorough understanding of negotiation principles; the skill of insurance estimating; perfection in his/her analysis of damages; satisfying the needs of the property owner during one of the most difficult times that property owner will ever face. An adjuster is often required to negotiate against some of the most powerful companies in the world. This will be the first of several blogs that I will have the privilege of writing with respect to this topic, in hopes of assisting public insurance adjusters in their difficult and complex profession.
Insurance provides a great benefit to society, and in this day and age, it is extremely difficult to think about any profession or type of business that is not insured. However, if an insurance company is to remain in existence, it must make a profit. In making profits, insurance companies are insuring businesses and properties with the hopes of earning an underwriting profit. The property insured is referred to as a risk, and if the expenses and claim payments do not exceed one-hundred percent of the insurance premium, then the insurance carrier has earned an underwriting profit. In fact, many underwriters earn large bonuses at the end of the year after the insurance company has determined that the policies they underwrote have earned an underwriting profit. Insureds and public adjusters face a very difficult task, sometimes monumental, when filing an insurance claim in light of the insurance companies business motives and need for survival/profits.
The first step in preparing a claim for a property owner is to carefully interview the property owner about the ownership, maintenance, damage, and yes, even the cause of the damage. In today’s market, real estate ventures, investment properties, and even the homes of many families have gone into foreclosure, or are only a few months away from being served with foreclosure papers. Sometimes, resolution of the insurance claim is what’s needed to keep some of these properties from going into foreclosure, and time is of the essence. Other times, the public adjuster enters into a contract with a property owner that is too far into the foreclosure process and the property is lost before the claim can be resolved. In that instance, the only winner is the insurance company and the underwriter, because it may never have to pay claim–keeping the expenses below the underwriting premium and earning a profit.
In every property insurance policy, lack of maintenance is an exclusion to insurance coverage. Every insurance company adjuster is trained to look and identify potential maintenance problems. If the field adjuster does not identify this condition, his supervisor will question his ability to properly scope a loss. If the issue of maintenance is addressed up front during the public adjuster’s meeting with the insured and inspection of the property, then the issues of maintenance can quickly and easily be addressed during the first meeting with the field adjuster. Telling the adjuster that your interview with the property owner revealed that there was regular maintenance of the roof with documentation or names of service providers, for example, could dramatically shorten the time it might otherwise take to get a claim paid. If the issue of maintenance can be addressed during the first inspection, the filed adjuster will be satisfied that he has met his duty to address the issues of maintenance and will no longer be concerned about his/her ability to do their job.
A public adjuster should NEVER write their estimate in a way that the total damages do not result from damage caused by a covered peril. We cannot look back in time, but the property owner is one very important source when walking the property and preparing your scope of damage. Many times I hear, “I gotta write it as I see it”; I submit to you that this approach is taking a big risk and the bigger the property, the bigger the risk of having your own estimate used against you by the field adjuster, the claims supervisor, and the defense attorney in an EUO, deposition or trial. The credibility of a public insurance adjuster in the eyes of a jury, and even the field adjuster, is only as good as the accuracy of the estimate and detailed notes kept by that public adjuster. When it comes to negotiating with an insurance adjuster, you have the power of knowledge because you have total access to the owner and the property. The more accurate you are in providing the correct information to the field adjuster, the more powerful you become to that field adjuster. The easier it is for the field adjuster to make his/her recommendations for payment, the faster the claim should be resolved.