Not long ago, I was attending a deposition when the insurance company’s lawyer questioned my client about why he had hired a public adjuster.

The non-verbal reaction of my client spoke volumes. With wide eyes, he leaned closer to the attorney and explained that his world was turned upside down the day of the loss and he was not just completely overwhelmed by the destruction to his home, but, more than that, he was concerned for the wellbeing and care of his family. He knew he needed professional assistance because of the magnitude of the loss and his experience in dealing with his insurance company on a prior loss.

As more was learned about the circumstances of the loss, the sincere appreciation and respect the insured held for his public insurance adjuster was clear. At the time of the loss, he had more questions than answers and did not know where to turn until he hired his public adjuster.

Recently, I came across a blog written by KDhulkonen criticizing homeowners and cautioning against hiring public adjusters. The post, 3 reasons not to hire a Public Adjuster, lists three of the author’s opinions about public adjusters. However, insureds should not be discouraged from hiring a PA.

KDhulkonen’s Reason 1: Maximizing Settlement

KDhulkonen asserts “Homeowners adjusters pay whatever it costs (less deductible) to get your home and your personal property back to the way it was prior to the loss. This is really not an item in which a public adjuster can ‘maximize’.”

The author correctly quotes the principle of insurance, but the author provides no authority to support his assertion that seems to state that all claims are handled properly by insurance companies. This is an overreaching statement. If this information was correct, I doubt that public insurance adjusters would have a profession. However,there is data in Florida that shows the use of a public insurance adjuster does increase the final amount of the claim payments. I discussed this data and the OPAGGA report in my post “Public Adjusters and Sinkhole Claims.” The claim payment increase referenced in the OPAGGA report, however, is not limited to insureds who hire public adjusters for one particular kind of claim. Several insureds have explained that, but for the assistance of their public insurance adjuster, they would not have received the amount of their claim payment for their loss.

KDhulkonen’s Reason 2: The PA is paid a percentage of your recovery

Yes, a public adjuster is paid for his or her services. I don’t think homeowners are usually surprised or against paying for a professional to assist with the claim. Many public adjusters who assist claimants are paid on a contingency fee basis only, meaning, the insured is not paying an hourly rate for the services or having to pay any money for the services to begin. When an insured pays a public adjuster a small percentage of the claim payments collected by the PA or ultimately recovered, the PA can get started helping right away and should work diligently because he has a desire to see you get properly paid for your claim so that he receives payment for his services. If a public adjuster is wrong or doesn’t work hard to obtain a payment, he likely will not be paid. If this happened with great frequency, the work of public adjusters would be extinct.

KDhulkonen’s Reason 3: The Grief of the Claim

KDhulkonen argues that the grief caused to homeowners is not caused by the insurance company’s actions but by the traumatic loss itself.

No one doubts that damages to a home cause stress and grief to the homeowners. These difficulties are only compounded when a claim is not properly handled and the insured feels the insurance company is not standing behind the promises in the policy. Because a claim can be emotional for insureds, many policyholders hire help with their claims and the emotional burdens.

Other readers also pointed out why public adjusters are necessary-

Insurance expert said:

A public adjuster is licensed in the state they do business in by the State Dept. of Insurance. I have known several people that have suffered major fire, water and wind losses that received a huge recovery from their insurance policy verse what they might have gotten by not using a public adjuster. HIRE A PUBLIC ADJUSTER IN EVERY MAJOR INSURANCE CLAIM!

Another reader explained the need for representation by a PA:

Public Adjusters exist because of the inherent conflict of interest that exists when one person or entity attempts to represent two sides of a financial transaction…

If you have suffered a property loss to your home or business and are considering hiring a public insurance adjuster to assist with your insurance claim, you can rest assured that if you do a little research, you can likely find a public adjuster who will help you. As the PA will likely be paid a contingent percentage of your claim, the PA will work to increase the amount of the payment you are rightly owed from the insurance claim. Further, the PA will take over dealing with the insurance company and at least relieve part of your stress.

  • Don Phillips

    Chip:

    When I first entered the claims profession as a trainee adjuster with GAB in the mid 70’s I was trained to adjust a claim. That meant sitting down with an insured and explaining their coverage to them and actually looking for ways to cover a loss. As my career progressed and I got into claims management I trained my adjusters to do the same thing.

    Back than I would have whole heartedly agreed with KDhulokonen’s views. By and large I truly believed that on the great majority of the claims I was involved in the insurer did the right thing. They paid the insured fairly and quickly and I saw no reason why a public adjuster was needed. There were exceptions but that is exactly what they were – exceptions. However somehow after Hurricane Andrew the way insurers handled claims changed. Adjusters were sent out not looking to find coverage but rather looking for a way to deny coverage.

    I became disillusioned with what I saw and eventually moved from representing insurers to becoming a public adjuster. I can honestly look at myself in the mirror and know that I am providing a much needed service to each and every one of my clients. If I did not think that my client would benefit from retaining me I would not represent that client and I think the majority of the professional PAs out there feel the same way. Sure there are some bad apples that reflect poorly on our profession but show me a profession that doesn’t have bad apples.

    To sum up I know one thing for certain. There are very few insureds out there who have the expertise to match the claims professionals working for the carriers. Without the assistance of a professional public adjuster the insured is simply outgunned and stands no chance of knowing whether their claim is being adjusted fairly or not.

  • Nicole:

    I think your advise for a policyholder considering on hiring a public adjuster to do some research is right on point.

    Knowledge is power and the more knowledge and information a policyholder has, the better prepared they are to deal with the many issues and difficult decisions they will have to make following a property loss.

    For obvious reasons, the insurance industry always focuses on the public adjuster percentage fee coupled with the belief that this in and of itself will result in over reaching. From my experience, the service aspect of this profession is the most important reason an insured should retain a professional public adjuster. Having an experienced, skilled and trained advocate on your side at the very difficult time of a loss is of immense value. Someone to answer questions, help with the decision process, document the loss and detail the road ahead to recovery all on a personal basis based on years of experience cannot be attacked.

    There simply is no good argument that can be made to dispute this.

  • Nicole Vinson

    Thanks Don for reading and posting.

    Also, thank you for explaining how the industry has changed and your own personal experience. I think your point about matching expertise is very important. Many people hire tax professionals to help file their taxes or real estate agents to help sell their home. Real estate agents and accountants are hired because consumers know they need to have an expert help with the complexities of the processes.

    On the surface, some types of insurance claims may seem straight forward or perhaps, the insureds do regard the insurance company as their hired pro. It is advocacy and comments like yours that help insureds understand that if they want to know if the claim is being properly handled, it is worth consulting with a professional policyholder avocate.

  • Nicole Vinson

    Hi Dick-

    Thanks for reading and for your comment. The service provided by public adjusters is very important. There is no disputing that a loss to a home or business causes policyholders stress and worry. In my experience, the worry and concerns of the insureds start with questions– what happens next and how do I get back to normal?

    I think that an experienced public adjuster can be instrumental in ensuring that the policyholder can get back to a normal life and that is so important after a loss. Getting the property back to its pre-loss condition does take time as the adjustment process is done, but the insured can rest and handle their own personal affairs because they can trust the professional hired to help them is advocating and adjusting the claim with their insurance company. This is a very valuable service.

  • Wayne D

    Interested in becoming a Public adjuster. I run a small home improvement/repair buss. I recently had a job that involved water damage due to a improperly installed roof. The insurance adj. was so off base that it got to a point that he would pay an additional 3 day or so without even coming back to review the situation. I would not deal w/ the home owner in person, I ended up dealing with the agent personelly. We really do need more independent Public adj.

  • Jackie Arlen

    You will not get justice without a PA. The insurance companies DO NOT want to pay for your losses – PERIOD!

    You want to fight with an entity that does not care about its policy holders? Good Luck trying by yourself.

  • Insurance companies are loaded with high paid lawyers and know all the in, outs and fine print of your policy. The more they have to pay out for claims, the less their share holders get. So don’t think you can go after them alone. Yes depending on the size of the claim make a lot of difference in how difficult it will be to get it resolved, but having a private adjuster on your side is necessary and it doesn’t cost you a dime.

  • It is interesting how the timing of the insurance industry changes coincides quite closely with the revelations of the McKinsey report. I believe that this report changed the business of insurance and the insurer’s relationship to their customers by turning claims into a profit center. In this report, they refer to claims as a “zero sum game”, i.e. the policyholder must loose if the insurer is to win. Not the traditional relationship these two parties had enjoyed for decades. In the McKinsey PowerPoint presentation they make reference to new opportunities to increase profits stating that represented claims payout 3-5 times more than unrepresented claims pay. I cannot think of a better advertisement for public adjusting than the insurance industry’s consultant’s own words.

  • Rick Anderson

    As an independent agent who takes pride in helping and guiding our clients throughout the claims process, I do not like when our clients hire public adjusters following a loss because it removes us from the claim and we can not even sepak with our client regarding the claim. That being said I have seen instances where a client hired a PA for reasons that made sense. The client was a CPA, he was just beginning his busy season when the loss occurred and he knew he would have no time to deal with the insurance company.

    My main problem with public adjusters is the fact that they are allowed to try to sell their services at the time of loss. When someone’s house is burning down they are not in the proper state of mind to make a substantial financial decision.

    I also do not think that most policyholders realize that a public adjuster can be hired at any time in the process. Why not intiate the claim and get a feel for how your agent is going to help you and how your insurance carrier is going to treat you, before you decide to give thousands of dollars away to the Public Adjuster.

    • Tom Sasiadek Moran

      Rick, you should also mention that insurance companies leaving homeowners in wet moldy houses without payments on covered losses is sickening. They do this to the old, black, Latin and other forien homeowners. Common Rick

  • Great Article Nicole, I can tell you from 30+ years in the industry things have changed drastically. The days have long since pasted where someone should handle a property claim on their own unless it is very small. Most folks will hire a professional to file the simplest of tax returns yet will try to settle a claim that is far more complicated on their own. Letting the insurance company adjust your claim is like letting the IRS file your tax return for you. I’m glad you also referenced OPPAGA which clearly shows the benefits of having a Public Adjuster on your side. Though as a former P&C Agent, Adjuster, Claims Manager and now as a Public Adjuster I can understand how some in the industry would have a carrier bias until they actually have claim of the own. I sure I am NOT the only PA who have had clients that work for the Insurance industry and hire us to get a fair shake. Again great article.
    Hal Geoffrey

  • Jason Wilhelm

    I am going to have to disagree with hiring a public adjuster in more situations than not. If a legitimate loss is sustained to your dwelling, “most” insurance companies will work best to bring you back to your life prior to that given loss. If there are major problems/differences between the homeowner and their insurance carrier then the idea of hiring a PA may be logical. My experience dealing with PA’s from over 10+ years as an adjuster and since manager for a major insurance carrier are as follows:
    -PA’s don’t work for free, no matter how much greener they make the grass sound on the other side, they’re going to get their cut one way or another. Whether it be a given percentage of your total claim or directing you to hire a contractor.
    -In one experience, I had a homeowner have approximately $20,000 worth of damage to their home. They hired a public adjuster and when the dust settled, contacted us expressing their misunderstanding of why they only have $15,000 to complete the $20,000 that was written on their estimate…. The insurance company paid what they owed in this situation and the PA received their agreed upon percentage of the total claim, leaving the homeowner to rely on their own finances to obtain the difference.

    All in all, do your research on PA’s prior to signing on the dotted line… Remember, if it sounds too good to be true, it probably is…..

    • Tom Sasiadek Moran

      Letting an insurance company decide how much they owe you is like letting the IRS decide how much you owe. Jason is clearly s shill for the insurance companies. It’s when $40,000 in damages occurs and Jason offers $12,000. We see their estimates, oops forgot to pay for baseboards. Oops forgot to input s whole bedroom. Homeowners can’t find mistakes in the estimate. They take the $12,000 and move on. Shame on you Jason, you know what really goes on.

  • Chad Conley

    Jason,

    While I appreciate your input into the matter. The facts simply don’t sit on your side. Do PA’s get a cut of the claim? Yes. In almost every instance. However, I can tell you that in EVERY case in which I have been hired to represent an insured the insurance carriers paid, at a minimum, 10-15% higher than their original offer. In most cases we see our clients payments increase 30-40%. I’m not a rocket scientist but if I charge 15% and I get my client an additional 30% they net a 15% increase. Double check my math there but I’m almost certain it’s right.

    Now, before you go on the “you’re ripping the insurance company off” tantrum please read carefully. Our firm NEVER asks for more than the policy provides. In fact, if our client asks us to do so we drop them. Unfortunately there are many times that the original estimate provided by the carrier is not accurate. Things such as O&L coverage, etc… get easily overlooked. O&P is not provided when it should have been. I could go on and on. Since most adjusters are not construction experts how would they know what to place on the estimate? Are they going to take the time to research the local building code? Scour through the required construction items and ensure all is accounted for? No. They have 50 other claims to adjust so they move on.

    For example, on one case I had a hail loss to a residential property that was estimated at $230k. There was 2.75″ hail impacts to the home’s stucco, custom copper dormers, trex deck on the rear of the home, the high grade asphalt shingles, trex deck on the boat dock (working over TVA water costs additional!), broken tiles on the pool deck / hot tub, broken landscape lighting, damaged metal roofing on the boat dock, damaged garage doors, and on and on. The insurance company’s first pass at the estimate was $100k. Why such a discrepancy? The insured was being taken “care of” by the carrier’s adjuster right? Not hardly.

    They had only accounted for a portion of the damages to start with. Then when estimating the copper they use Xactimate’s standard pricing. I got news for you, the custom metal guys charge more. Then they would not allow for O&P. There were a total of 6 trades associated with the repairs but the carrier’s reasoning was “there’s not any framing involved”. Since when was framing a prerequisite for O&P?

    All in all this insured would not have had a clue of what should have been covered and how without a Public Adjuster. Sure, I made about $13k on this job when it was all said and done. But do you think the homeowner was upset for having to pay me when he was paid an additional $117k for having his loss correctly adjusted? I think you know the answer to that question.

    • Donnie Marchione

      Chad,
      I am in the Real Estate industry as a agent and in only a year and a half was recognized as a top rookie of the year with 4 million in sales. I really appreciate reading your posts and see the reasons why I might be need a PA more because I have had some prior insurance dealings where I have had to reach into my pocket substantially, and when it comes to the rebuilding of my house, the building end I am so far happy with, but I am just overwhelmed with the contents side. Is it possible to only hire a PA to handle the contents side of the fire claim, and is there a registered list of PA’s, or an association where I can find some out of the Pittsburgh area? I am located in Zip Code 15446 about 45 miles from Pittsburgh. Thanks Much,
      Donnie
      412-520-2378

      • I know its been a few months Donnie, but the answer to your question is yes, you can hire a PA to handle just the contents side. That said, I would not suggest that, as PAs can nearly always improve the building side substantially (regardless of what Jason or others on the carrier side says). You can usually find a state-wide association of public adjusters online, or in Facebook groups. Good luck!

  • Cathy Takahashi

    I have a friend who suffered a fire loss recently in her office. There were extensive fire and smoke damage to her office and water damage to offices on the floor below her. Exact cause of loss can not be determined by fire department investigator. Landlord covers building and she only carries fire legal liability. Should she consider hiring a public adjuster in this case?

  • Jeffrey Chapman

    I agree with the concept of hiring a Public Adjustor, because in theory they will recover more $$$ for me, relieve me of some of the headache, etc. However, here’s my concern. Assuming the PA properly identifies what needs to be done to bring my home back to its pre-claim state and accurately costs it out and, further assuming that the insurer now pays that amount, I will still be well short of what I need to perform the repairs. For example, if the insurer agrees to pay $40,000 (after my deductible) and I, then, pay the PA $4,000 for his services, I will now have only $36,000 to perform the $40,000 in repairs. Though I agree that this $36,000 may be more than what I might have gotten on my own, I don’t know that for a fact, and am still unable to pay for the required $40,000 in repairs. What do I do now, if I do not have $4,000 of my own to contribute to the cause? Plus, there is no clear definition of the quality of the replacement? Replacing kitchen cabinets and granite, for example, can range in price from $10K on up to ???, based on the quality of the materials and installation. When I had a previous claim, I went to a contractor who has performed work for me. He was not the cheapest, but he performs quality work. He gave me a realistic estimate and I submitted it to my insurance company. They paid it and I was able to have the work done to my satisfaction (and only had to come up with the $1,000 deductible on my own). With my current claim I had the same contractor give me an estimate and it is about $4,000 over the cost developed by my PA. My PA is reluctant to submit it, because he says the job can be done for less. Once again, I’m sure it can, but I had a beautiful, quality kitchen and a high quality home. The job needs to be done right, with quality products and installation. And, this time I will be short the $1,000 deductible + the $4,000 PA fee. That leaves me $5,000 + the $4,000 (that my contractor says it will take to complete the repair) short.

    I find it difficult to believe that I would have been $9,000 short, if I had dealt with this on my own, particularly since I didn’t have any problems collecting a fair settlement on my previous claim with the same insurance company.

    Comments?

  • Ricky

    Jeffrey,
    It depends on the type of loss. Concerning hail and exterior trades the estimates can be extremely basic. Concerning covered losses with flood, fire, etc that damage interior components can be very tricky when estimating and alot more detailed. A discrepancy between contractors on price and the actual amount of the work being completed. The insurance company owes you for like and kind quality material, where a contractor might step up a grade of cabinets, floors, etc. If it is a complicated loss the insurance is quite easier to deal with because the chance of the adjuster out at the property actually knowing about construction is extremely rare. If you feel like the insurance company really treats you fair, you should go on your normal route of claim settlement. If you feel intimidated by the loss or have no time to deal with it, hiring a professional would be your best route. There should never be an instance that you have to come out of pocket more than your deductible unless you exceed your particular coverage noted in your policy or upgrade materials. If the contractor of your choice has an issue with the pricing, then at least get another bid to see if he is in the same ballpark. Either way, good luck with your loss.

    Ricky McGraw
    McGraw Property Solutions

  • Ray

    I have filled 2 claims with my insurance company both were substantial losses. The first claim I did not hire a PA but felt the insurance company adjuster was fair and handling of payments, communication, etc was excellent. My most recent claim has been the exact opposite experience. I did not hire a PA right away and tried to work with the insurance company. At that point I felt the insurance company was grossly under estimating the damages based on my own knowledge of repair costs and 4 seperate estimates. I am currently still in the middle of this claim so I can’t comment on the outcome. However at the point I hired the PA I had nothing to loss. With the current payment I will have to come out of pocket substantially so paying a percentage to the PA isn’t an issue and the relief provided because he is fighting for me. It is very disappointing as I thought my insurance company actually was looking to help but i know feel the individual field adjuster must get a financial bonus if they settle the claim at a low cost. I will update this blog with final outcome.

  • Rhonda JOHNSON

    Thank you for this article. Liberity Mutual has been very rude and unprofessional…yelliing with high tone voice in an admission they’ve wrong me…then I find out the people are not in my State nor City to reach out to me and my family immediately

    • Donna Adams

      I have Liberty Mutual also, what state are you in.

  • Ripley

    Hi,
    Does anyone know if the public adjuster comes out and provides an estimate or do I provide the estimate to the adjuster?

  • Kim

    I was hit by a small tornado in 2014 in Oklahoma City. Having a $1000 deductible, my insurance company issued me a check for $300. I paid $600 to fix my roof, and still needed to replace all the drywall, insulation, re texture, paint, etc. I hired an public adjuster and a week later, I had a check for $3300.
    My now husband, got hit much harder by an F5 tornado in Moore, OK. , he received a check for $16,000 from his insurance and after hiring a public adjuster, received an additional $16,000. That should tell you how much the insurance companies screw you. Never make a claim without a public adjuster. The do HO-policies, DP, Business, Commercial, Auto, They are worth it. In Oklahoma, if the governor declares it a disaster area, they can only charge you 10%

  • Donnie Marchione

    Chad,
    My claim is still not settled and turned into a complete mess as my builder also has failed “Wayne Homes,” and I have not been compensated my second years living expenses or a penny of my Ordinance and Code which they keep denying even though the first State Farm Adjuster who was handling my claim and assured me several times with a complete loss and having to actually move my entire house a hundred feet away from my original structure, that I would easily max out the 10% O&C…. Also- if my base limit of my policy was
    $255K max and the estimate to rebuild was $403K and I have only been paid the ACV of the $255k but did rebuild the home, they the Pellet Harmon Stove for instance that they have estimated at 12k to have built in and reinstalled, but I was paid the $5400 ACV, am I at all entitled to that difference of $6600 that they said it would cost to be replaced because I did purchase it, but its on the floor infront of the fireplace because Wayne Homes would not install it, the building code enforcement officer wont occupancy certify the house until its handled, and Im out over 70-80K that is still owed to me and I am possibly going to lose my 95 completed house and have tom sell it at a loss. I probably need an attorney as well at this point, but I cojuld salvage this if they made good on the claim.
    As for Wayne Homes, they left my house under no covered roof for over 2 weeks and the rain and flooding of storms that first week were the wrost we have had in a decade from the measured rainfall that my subfloor absorbed an inch deep in some places for days. I have 1/2 to 3/4 inch gaps under a straight level every 16 or 20 inch joist and the lvc glue is wearing down more each day and you can visually see the ripples and almost stub your toe over how unlevel they are in my $400k new house that I could probably not get $250k if sold….
    I swear this could be a documentary on how to never use State Farm or Wayne Homes and how mthey bothnpass the back off to the other and my hands are tied…. Ive developed Shingles in my Retina’s at an extremely young age from the stress of all this and living temporarily for 25 months since Wayne Homes took 22 monhths and its still not finished…. smh NEED HELP IN PA please. 7 Springs / Champion PA 412-520-2378

    • Donnie, you definitely need professional representation (in my opinion after 30+ years in claims), especially after all this time. You need someone local, who knows PA state law related to first party insurance property claims. Whether an attorney or public adjuster, you must know you are in over your head on this, and need professional claim help.

  • Leonard Lamarsh

    Thanks for the information. Please share in more detail regarding public adjuster.
    Leonard Lamarsh

    • What details are you looking for? Check in your local area. Research them, ask them questions or interview them. Ask for references. See how long they have been licensed. Are they members of a professional organization? Due diligence is needed.

  • Von

    We are experiencing that now constant low balling and now we have to move from the apartment because the insurance adjuster approved a 3 month lease instead of the 6 month lease that he originally agreed to.

  • Von

    Thank you, we just got a supremely low ball offer from the insurance companies adjuster.
    Our home was struck by lightning and there’s significant damage, they sent us a check for 9k to repair 25k in damages.
    They dont want to rewire the whole house because of codes we are grandfathered in???
    Our adjuster told us we’d be out of our home for 6 months but then approved a 3month lease I stead of a 6 month lease and now we are having to find another short term lease for . Additional 2 months because the insurance person won’t t approve the rent increase.
    Our house has to be cleaned because they found “less than 1% of asbestos” which has been blown throughout the vents and all over everything…the cleaning company is charging $10 an item to clean.
    It’s a real headache and we can never get them on the phone.