How much should public adjusters charge? How much is too much? This was a question I was asking myself after last night’s Road to Recovery workshop which I posted about in Superstorm Sandy Insurance Questions? Roadmap to Recovery Workshops Provide Answers.

A question was raised by a policyholder on what public adjusters typically charge. Two very reputable and experienced public adjusters were in the audience, Chris Aldrich and Mike Miller. So, I asked them for the answer. Both said ten percent and that the figure could be negotiable depending on the size of the claim. Larry Bathgate indicated that most of his clients signed up with public adjusters between 5-10% of a loss recovery. United Policyholder’s Executive Director Amy Bach indicated that most reputable public adjusters would sign up clients for 10% of the claim settlement.

One of the New Jersey policyholders in the audience indicated that he contracted with an out-of-state public insurance adjuster for 23.5%. This followed an earlier discussion about a public adjuster who was charging a 50% fee, although noting the fee was only for additional amounts over the amount previously paid. We queried how the claim could be financially litigated if he pressed with a 50% public adjuster fee. We hear of other public adjusters charging from 15% to 33 1/3% on Superstorm Sandy claims.

Freedom is an important value in the American way of life. I believe in the free market. I have been in meetings where legislators pondering public adjuster fees have the same view and think people should be able to contract for whatever sums they want. Yet, isn’t there a problem with a profession that allows members to gouge customers? How much is too much? When do the fees charged prevent policyholders from being able to retain additional professionals? Do public adjusters that charge 50% really provide greater service? What about the concern of those in the insurance industry who ponder if higher fees reflect incentives to commit fraud?

This issue is being publicly fought between two public adjusting associations. AAPIA posted a public article AAPIA exposes efforts of NJPIA and NAPIA to bring 12.5% fee caps to New Jersey and elsewhere:

We have been consistent in our position. The fee caps proposed by NAPIA and NJPIA will hurt the public adjusters and the consumers of New Jersey since public adjusters will not be able to help those with small claims. We appeal to you as members of NAPIA and NJPIA to contact the current Board and challenge them to defend their reasons for advocating for fee caps which will hurt their industry and the policyholders they are supposed to represent, and to instead support only laws that truly are fair and reasonable to all concerned.

Please support our efforts to defeat S 2472.

American Association of Public Insurance Adjusters

I have friends in AAPIA and NAPIA. NAPIA is a very longstanding association that has long lead the fight for licensing of the public adjusting profession. I think that NAPIA’s concern about "price gouging" is appropriate. I also think that AAPIA’s concerns about small claims needing professional help is appropriate. But, that begs the question–what is a small claim? And, what about all the other concerns raised above?

Our firm has been very supportive of public adjusters and will continue to educate how public adjusters can help policyholders reach a full, fair, and honest recovery that typically does not happen without professional assistance. Examples of this support are found in Three Reasons to Hire a Public Adjuster, Honesty is the Best Policy; Public Adjusters Need to Promote the Good Work of Their Profession, and Did You Know You Can Hire a Public Adjuster to Help?

Yet, as a consumer advocate for policyholders and a supporter of public adjusting, I am certain United Policyholder’s Executive Director Amy Bach is concerned about the price of professional help and price gouging. So am I. And so should all who view public adjusting as a noble and ethical profession rather than an industry looking to maximize profits at the expense of its customers.

  • Robert Fairless

    I pay my server at the restaurant 15-20%. Sometimes more for extra good service.
    I never had to pay them a percentage to make sure that the restaurant gave me all the food which I ordered. This is not the case with Insurance Companies.
    When a Policy Holder buys Insurance and pays the premium they expect to be covered for their loss as per their policy. Unfortunately, the policy is never truly understood until after a claim. Policy Holders need to wake up and accept who is really on their side and looking out for their interest. Legislatures need to protect and look out for the interest of the Policy Holders and not Special Interest of the Insurance Companies.
    Anyway, enough said. Insured’s either get it or they don’t.

  • I value your blog and always read your input. I am a Florida resident public adjuster who has been working both Florida and Louisiana. If you know anything about Louisiana laws surrounding public adjusting they can be summed up in a nut shell when I say they suck. Here we have to charge by the hour or by flat rate. Because the laws require we charge in that manner they then add the condition that either rate has to be reasonable. Is there any one that can give insight on any other hourly rate for public adjusting. The few that practice public adjusting have charged $300.00 per hour. A local mediation service offers umpire work for $375.00 per hr with an 8 hour minimum and a 2k one time set up fee. A few of us are fighting fee disputes with insurers like State Farm and Allstate who refuse to pay those rates durring depositions. Any input that can help establish hourly rates for the industry is greatly appreciative. My fear is not to have enough support and have an adverse result hurting the public adjusting industry as a whole!!!

  • William S “Bill” Cook

    I have a much greater concern for governmental price fixing than I do for governments setting gouging standards. Although I am against both interferences by the price police. I strongly favor and advocate that the free market should be the arbiter to determine the fair value of products or services offered between willing and informed parties. If an out of work truck driver in North Carolinas decides to go to Home Depot and purchase ten portable generators and haul them to a distressed area with no power due to a hurricane, who is to say that he is gouging if he charges a powerless person double for a portable generator. His price must include the cost of borrowing the money to buy the generators, the cost of the truck to haul them, the cost of gas to get them there, the value of his time to make it all happen and a profit incentive to undertake the project. It has happened that the price police arrested such a person for gouging per the statutes and confiscated the remaining stock for their use and distribution as they saw fit. Rest assured that when the next hurricane power outage happens he will not be bringing portable power to the distressed folks at triple the price.
    In the event that I elect to leave the financial comfort zone of my home and working area to go to a disaster such as Sandy, I would be doing so for the hope of making the project a profitable venture. One of my silent partners (TAXES) cares not for the many extra burdens one incurs when working away from the comfort zone of home. My tax dollars are used to fund the price police. Having worked many catastrophes over the years, I found the big bucks that I was bringing in were diluted by the extra expenses and burdens while the home front bills were crying for payments. It appears to me where fee caps and expenses are controlled by the price police one must carefully evaluate undertaking the offering of one’s services as what I consider extra costs, may be considered gouging by the price police. The expenses of retaining an attorney, (with generous fee caps), to keep me out of the slammer is an unanticipated cost that I should have included in my possible extra expense burden to undertake the project.
    I respect and congratulate the PAs that have ovecome these bumps in the road but it is rough road that I very selectivly choose to travel.
    William S. “Bill” Cook
    Public Adjuster

  • Morse Agency

    This is an interesting article of the cost that adjusters charge – I think 50% is definitely too much, but there were some more realistic numbers in this article as well.

  • SHIRLEY HEFLIN

    Dear Chip:

    There’s so many different things to address in your post!

    Indeed, any time ANYBODY talks about – or attempts to talk about – a particular profession’s fee, one’s going to get flack.

    First, there’s flack from (some) P.A.’s along the lines of “Please! You’re an Attorney! What do you know about being a P.A. and the representation fee therein?”

    Second, there’s flack from insurance companies, however, their flack isn’t aimed at who’s charging what. Their flack is reserved for any profession that educates Insureds about their policy benefits. Insurance companies are also disgruntled with any profession that informs Insureds that what they’re carrier is doing during their claims adjustment is illegal, unethical and/or both, etc.

    HOW MUCH IS TOO MUCH?? I feel it should be addressed on a case by case basis. In fact, from what I’ve seen, aside from the “customary 10% fee,” any time this figure is adjusted, it’s usually done so on a case by case basis. For example, the policy limits and the loss amount are two factors considered when (some)P.A.’s set their fee.

    Further, how much is a Public Adjuster’s “competent knowledge” worth? KNOWLEDGE obtained by attending EUO’s, attending loss site meetings w/ins. co. adjusters, vendors, experts, attending educational seminars, preparing countless POL’s, completing Inventory/Contents forms, etc.

    How much is a P.A.’s WISDOM worth? WISDOM gleamed from walking and digging through disasters akin to SANDY, KATRINA, FIRES, TSUNAMI’S, SINKHOLES, BUSINESS INTERRUPTION, ETC., Said wisdom is priceless to an INSURED attempting to collect every penny due under an ins. policy it paid dear premium dollars for. Not only that, keep in mind that there are many scenarios where – but for said PUBLIC ADJUSTERS’ advice – various INSUREDS would not have even known that coverage existed for a particular loss, that coverage existed for “this” item and “that” item, etc.

    EVERY PROFESSION SHOULD BE PAID WHAT ITS WORTH and that said fees are flexible and can be adjusted according to the case/claim….if amenable to all concerned parties, of course.

    SHIRLEY HEFLIN
    (Tampa, FL)

  • Gary Greenfield

    There isn’t a “one size fits all” answer to this question. Concerns about price gouging are legitimate. I can’t imagine justifying a 50% fee for any claim, ever. But to suggest that 10% is fair compensation under all circumstances is also not realistic.

    Does this thinking only apply to new claims, or also re-opened claims for supplementation where the potential for recovery is significantly less, yet the overhead and expenses are the same as new claims. Some claims consistently require much more time. Any claim involving extensive contents valuation comes to mind.

    And sometimes there is simply no way of knowing beforehand with any degree of certainty, a claim’s potential for recovery and how much time or effort will be involved to secure coverage and a payment for the insured. Most adjusters probably have one or more horror stories of a claim that started off innocently enough, and then went down the rabbit hole of massive hours spent for unforeseen reasons.

    It’s a Centrist’s position, but the free market + professional guidelines would seem to be the best choice. If we, as Public Adjusters, do a good job of conducting ourselves ethically and servicing our clients well, the need for legislative fee restrictions will be much less of an issue.

  • Chip Merlin

    Robert,

    I just hope they get more and get to keep more as well.

    Thanks for your comment.

  • Chip Merlin

    Anthony,

    I do not truly know an hourly fee which is accepted for public insurance adjusters. I have seen $500 per hour down to $75 per hour.

    Many attorneys charge less than $200 per hour doing insurance work for insurers.

    Happy you read the blog.

  • Chip Merlin

    Bill,

    Always good to hear from you.

    What do you think of the 50% fee that is being claimed even if the policyholder has to litigate?

    How do we inform policyholders about rates that public adjusters work for?

  • Bob Markovics

    Do some Attorneys charge to much? You get what you pay for. 50% is too much in my view but I do not know the circumstance nor the complexity of the claim so with open mind it may be correct (doubt it but maybe)

    I also see so many times where “I am the best” and only after I take over a file do I see just how awesome they were. That is both on the Attorney side and PA side.

    I actually worked a claim (PA I am . . .) for a State Farm Attorney and settled with the carrier for an additional 60K . . . anyone want to bet on that? Why didn’t the Insured who was an Attorney that worked for a major carrier do that for himself??

    Too little equals little results, too much and they should be pursued for gouging.

    How about the consumer never retaining any of us then repair their home on what the carrier gave them?? Good luck to that.

    My 2 cents

  • William S “Bill” Cook

    Chip
    I consider a 90% fee to be a reasonalbe fee under certain circumstances. I currently have an insured CGL claim where I am 75% sure that neither I nor the claim will ever be paid. I would have never agreed to take this claim under a limiting fee cap set by the guvvies. As imagined the client said, “I will be glad to be paid anything you can get me, I got nothing now.” Not being a Florida case what would your contingency fees be to represent this client on a 30K loss? As you may suspect, none of the local attorneys will take his case unless houly billing is involved. Addressing your rehtorical question of my thoughts on 50% fee where litigation may be necessary to effect any recovery at all, something is better than nothing! What other remedy is available to him but to pay my “gouging” contingency fee. What are your thoughts of litigating for this client where my 50% contingency fee is in place. Guvvies have said no allowance requiring insurers to pay attorney fees if they lose. I welcome your learned response to this actual ongoing case in North Carolina with my 50% fee in place.
    William S. “Bill” Cook

  • James Purcell

    I agree with Gary on the case-by-case basis. Among the other concerns listed above, I would also caution that employing a 10% (or similar) rate cap would make obtaining PA assistance on smaller claims difficult or impossible to obtain. Consider a small commercial claim underpaid by $18,000 including business income and inventory losses-at a 10% cap, such a complicated and time consuming process would not be attractive to the PA’s with the most experience and skill, as would be required. I like the basic concept NJ has adopted and outlined in their recent bulletin regarding PA fees. Essentially, NJ status require the fees be ‘reasonably related to the services performed.’ It goes on to state the PA can document this with time sheets, travel logs, etc. While I’m cautious when I see a punitive statute based on someone else’s definition of ‘reasonable,’ this would certainly root out any PA whose fees vs time invested worked out to $1,500 per hour, as I have witnessed here in NJ.

  • SHIRLEY HEFLIN

    Dear Chip:

    10 comments! I thought as I was driving in this a.m. “boy, there’s probably going to be a lot of comments to Chip’s blog about P.A. fees….” and – lo’ and behold – there are.

    You asked:

    How do we inform policyholders about rates that public adjusters work for?

    This is where being a Tampa native (or native in any state for that matter) really pays off because you can call the “IT” people in ANY INDUSTRY/PROFESSION and ASK QUESTIONS!! If more than one of said “IT” people have never heard of a P.A., then one may want to reconsider hiring them @ 10% let alone a fee beyond that.

    This “IT” test also applies to drs., lawyers, dentists, paralegals, landscapers, architects, etc.

    Aside from the “IT” test, how does one find out about a P.A. and/or his/her P.A. Firm? I’ve never seen an advertisement for a Public Adjusting firm. Sure see lots of TV commercials about being in good hands and _____Farm is there, but I never see any concerning:

    “DO YOU NEED HELP FIGURING OUT WHAT YOUR INSURANCE POLICY SAYS IN “REAL PEOPLE” TERMS?

    DO YOU NEED HELP DETERMINING IF WHAT YOUR INSURANCE COMPANY IS TELLING YOU REGARDING COVERAGE – OR NON-COVERAGE – IS TRUE OR NOT? HOW ABOUT NEEDING HELP CONCERNING A “YOU MUST DO THIS OR ELSE…” LETTER YOU REC’D FROM YOUR INS. CO.? IF ANY OF THESE SCENARIOS SOUND FAMILIAR AND YOU NEED HELP WITH AN INSURANCE CLAIM, PLEASE CALL US….”

    I guess what I’m trying to say is that advertising and social media seems to go a long way promoting insurance companies, lawyers, politicians, etc., so why not Public Adjusters and/or organizations helping INSUREDS???

    SHIRLEY HEFLIN
    (Tampa, FL)

  • Chip,

    Thanks for the accolades in your blog. Our firm has had a long time stance of fee’s never to exceed 10%. This is fair to the client, and fair to the adjuster. A lot of these public adjusting firms charging greater than 10% are trying to hit home run’s, but what they fail to see, that in the current market & economy, anything over 10% is not being fair to the client, and sometimes leaving the client upside down on their recovery & rebuilding process.

    Which brings me to another topic, the public adjuster knowing when to walk away from a claim, that they can’t bring a benefit to. If I signed every single client I spoke to, I’d have my own private island in the Carribean somewhere. Public Adjuster’s have to have a moral compass where claims are concerned, because there are some people out there who need our help but sometimes can’t afford it. We spoke to 1000’s of people who were under-insured, uninsured during Sandy, and we wouldn’t take their claim not because there wasn’t any money in it, but because the people were upside down and we would cost them money. We come to find out later that some of these people hired PA’s charging in the 20-30%’s.

    Someone should teach the class on morals, because that right now after Sandy, is what most of the Public Adjusting arena is lacking. We do this day-in day-out as a profession.

  • Bob Cook

    Chip,
    Some Mechanics , Some Hairdressers, Some Retail Stores charge too much ,
    It is the responsibility of each Public Adjuster to fully explain his contract to his client prior to starting out,
    There are so many variables involved with every case,
    Simple scenarios
    House Fire Home almost destroyed , 5% will bring a substantial fee, V Bathroom Claim Prior Payment 10k Supplement claim for an Additional 4K Both Claims require Hours of Work and Travel , This makes it very difficult to Fix a firm rule.
    It is my experience that Public Adjusters who chose to consistently charge fees that some may consider high, Do not flourish, No Marketing can overcome a track record of leaving your client short.
    Look to Wilma and the ensuing class action suit against one large Public Adjusting company ,,,, They may have prevailed in Court , but they are no longer in business.

  • Tabatha G. Page

    I wanted to know as well how much public adjusters usually charge. I think they are necessary when trying to make an insurance claim, they can work things out to the policyholder’s advantage and because of that I think they can cost a high rate because they can be really effective.

  • Charles

    Talk about morals! What about a life saving drug like Harvony for Hepititus C a retail price of $1,000 per pill. A bargain for $96,000 WOW! And where are those price police, along with the havoc going on in the medical insurance industry for these pricey drugs. And with that said medical insurance is skyrocketing. Doing claims at 10% in many cases is ludicrous! I would not want to do business interruption for that kind of fee. Then there are attorneys who do property and talk about not wanting to touch a claim because it is in the insurance companies sweet spot “less than 60k”. Lawyers would not want their fees capped. Not many other industries are capped and overall it only hurts the little guy looking for help.

  • Brett Joseph Ray

    Chip-
    Love reading your articles and the articles by your staff and partners. Public Adjusting is a very enjoyable profession because every day you know you are trying to do the best for policy holder every time. Are there any laws (besides catastrophes) that state any fee caps in any states? Currently I have offices in AZ, NV and we plan on moving into Utah by mid 2018, but want to make sure our contracts, practices, fees, are sound. Any insight you can offer? Thanks in advance.

    • Chip Merlin

      Brett–there are, but that research would take quite a bit of work. If you are serious about public adjusting and want that type of information at your fingertips, please join NAPIA. And, you should know the property insurance laws thoroughly for each state you practice,

  • Jessica Somers Barbagallo

    I hired a PA for my house in New Bern, NC for Hurricane Florence. A day after signing the contract with the PA, my insurance adjuster from NC Joint Underwriting, deemed the house a complete loss. I was going to cancel the contract since there didn’t seem a point, but my PA assured me to keep him for a flat rate. I originally signed a contract for my PA to receive 10%, but that is to negotiate. Since there is no negotiation, how do I pay my PA? I have asked my PA over and over about this. While he said it doesn’t have to be the 10% (that would be like $10k for a few emails and calls) they tell me to pay what I want. HUH? How much is a few phone calls and emails worth? Can anyone please help me with this? Thank you.