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Do You Need a Public Adjuster?
A public adjuster is an insurance claims adjuster who is an advocate for the policyholder in appraising and negotiating a first party insurance claim. Aside from attorneys and the broker of record, public adjusters licensed by state departments of insurance are the only type of claims adjuster that can legally represent the rights of an insured during a property insurance claim process.
A public adjuster will be most beneficial when it is clear that the insurer will pay the claim and the only issue is the proper identification and valuation of the loss. Most public adjusters charge a percentage of the settlement (with the percentage being lower for larger losses (over $250,000), with the average charge being between 10% to 15%, although some states cap the fee. Primarily they appraise the damage, prepare an estimate and other claim documentation, read the policy of insurance to determine coverages, and negotiate with the insurance company's adjuster.
There are three classes of insurance claims adjusters: staff adjusters (employed by an insurance company or self-insured entity), independent adjusters (independent contractors hired by the insurance company) and public adjusters (employed by the policyholder). "Company" or "independent" adjusters can only legally represent the rights of an insurance company.
Currently, 45 states (and the District of Columbia) have in place some form of statutory and/or regulatory scheme which licenses public adjusters. It is important to note that on October 14, 2005, the National Association of Insurance Commissioners (NAIC) adopted the Public Adjuster Licensing Model Act (MDL-228), which governs the qualifications and procedures for the licensing of public adjusters. It defines a public adjuster as "any person who, for compensation or any other thing of value, acts on behalf of an insured", specifies the duties of and restrictions on public adjusters, including regulations for the following: examination, bond or letter of credit, continuing education, public adjuster fees, contracts, record retention, and standards of conduct. In addition, the model act states that public adjusters may only act or aid on the benefit of the insured in first-party claims.
Holding a license in one state only permits the licensed adjuster to practice in that state. Although the regulations vary from state to state, the model act states that a non-resident can obtain a license in another state if their home state allows non-residents to apply for a license on the same basis. This reciprocity agreement means that in many cases one can apply for a license in another state without having to pass that state's examination or pre-licensing education requirements.
Generally, public adjusters only work with insurance claims related to property damages and the business losses that they trigger such as business income, builders' risk, mechanical and electrical breakdown, extra expense and expediting expense, and leasehold interest. Although it is uncommon for public adjusters to handle health insurance claims, in some states such as Florida they are legally authorized to handle claims in all lines of insurance except life and annuities.
The public adjuster's main responsibilities are to:
-Evaluate existing insurance policies in order to determine what coverage may
be applicable to a claim
-Research, detail, and substantiate damage to buildings and contents and any
-Evaluate business interruption losses and extra expense claims for businesses
-Determine values for settling covered damages
-Prepare, document and support the claim on behalf of the insured
-Negotiate a settlement with the insurance company on behalf of an insured
-Re-open a claim and negotiate for more money if a discrepancy is found after
the claim has been settled
Typically a policyholder hires a public adjuster to document and expedite their claims, obtain a more satisfactory claim recovery, more quickly, and completely restore their residence or business operations, and insulate themselves from the stress of engaging in an adversarial role with a large corporation.
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