There are three kinds of adjuster and only one of them works for you. Understanding which is which is the first step in deciding whether to hire the third.
The three roles
A staff adjuster is an employee of the insurance company. They investigate the claim, apply the policy language and estimate the loss on the insurer's behalf.
An independent adjuster is contracted by the insurer, often to handle overflow after a catastrophe. Despite the name, they represent the insurer's interest, not yours.
A public adjuster is hired and paid by the policyholder, licensed by the state, and represents the policyholder in preparing, documenting, presenting and negotiating the claim.
The first two are not adversaries and are not there to cheat you. They are also not your representatives. That distinction is the whole reason the third role exists.
What a public adjuster actually does
- Reads the policy and identifies every coverage that may apply, including ones the policyholder did not know they had
- Documents the loss in detail, including damage a homeowner would not think to photograph
- Prepares the estimate and the inventory, which on a large contents loss is a substantial piece of work
- Prepares the proof of loss and manages the deadlines the policy imposes
- Negotiates with the insurer's adjuster on scope and price
- Manages the process, including supplemental claims as hidden damage is discovered
They do not decide coverage, they do not compel the insurer to pay, and they are not attorneys. A coverage dispute that turns on the meaning of policy language, or a bad faith allegation, is a legal matter rather than an adjusting one.
How they are paid
Public adjusters typically work on a contingency fee, a percentage of the claim settlement. Several points follow.
- The percentage varies, and many states cap it by statute, sometimes with a lower cap for claims arising from a declared catastrophe.
- What the percentage applies to matters. A fee on the total settlement including amounts the insurer had already offered before the adjuster was hired is different from a fee on the increase they obtained. Ask which, and get it in the contract.
- Some states restrict solicitation, including how soon after a loss an adjuster may approach a policyholder, and require specific contract language and a cancellation period.
- The fee comes out of your settlement. A better gross recovery is not automatically a better net recovery.
Your state's Department of Insurance publishes the licensing requirements, the fee caps where they exist, and a way to verify a licence. Use it.
When hiring one tends to make sense
A large or total loss. A house fire generating a structural claim, a full contents inventory and an additional living expense claim is a lot of work and a lot of money, and the effort is proportionate.
A complex contents claim. Reconstructing an inventory of an entire household from memory is genuinely hard, and the difference between a thorough inventory and a rough one is large. Much easier if you already did the home inventory work beforehand.
A catastrophe with many claims at once. After a hurricane or a wildfire, insurers bring in independent adjusters at volume, files move between hands, and the policyholder who is organized and represented gets more consistent attention.
A large gap between the estimate and the actual cost. Where a contractor's scope and the adjuster's estimate differ substantially and repeated discussion has not closed it.
When you cannot do it yourself. Illness, displacement, a business to run, or simply the scale of the work.
When it usually does not
A small claim. The fee comes off a modest settlement, and the arithmetic rarely works.
An auto claim. Public adjusters are overwhelmingly a property phenomenon, and several auto disputes have their own cheaper mechanisms, including the appraisal clause on total loss valuation.
A straightforward claim being handled well. If the scope is agreed and the payment is moving, there is nothing for a public adjuster to add.
Before you have tried the free options. Several steps cost nothing and often resolve the issue.
The cheaper options to try first
- Ask for the estimate in writing and read it line by line against your contractor's. Most disagreements are about scope, not about coverage.
- Ask for the denial or reduction in writing, citing the policy language relied on.
- Get a second contractor estimate with a detailed scope.
- Escalate within the insurer, to a supervisor or a claim manager.
- Invoke the appraisal clause if the dispute is about the amount of loss rather than about coverage. Each side appoints an appraiser and they select an umpire. It is generally cheaper than a public adjuster or litigation.
- File a complaint with your state's Department of Insurance, which is free and creates a record the insurer must respond to.
The full sequence is set out in when you disagree with the adjuster.
Vetting one
If you decide to hire, treat it as hiring any professional handling a large sum.
- Verify the licence with the state, and confirm it is current and in that state.
- Ask how long they have been licensed and what proportion of their work is claims like yours.
- Ask for references from prior clients, and call them.
- Read the contract fully, including the fee basis, what happens if you cancel, whether they have any authority to settle without your approval, and any assignment of your claim rights.
- Know your cancellation window, which several states require to be disclosed.
- Be wary of door-to-door solicitation after a catastrophe. Storm periods attract operators who are not licensed where they are working, and some states restrict solicitation for a period after a disaster. See insurance fraud awareness.
- Be cautious about a contractor who also offers to adjust the claim. In many states performing both roles on the same loss is prohibited, and the conflict of interest is obvious even where it is not.
Do not sign away your claim casually
An assignment of benefits transfers your rights under the policy to a third party, usually a contractor. It is a different document from a public adjuster contract and it has different consequences: the assignee, not you, may then deal with the insurer and control the claim.
Assignments have legitimate uses and they have been the subject of significant abuse and subsequent legislation in some states. Read anything described as an assignment, and do not sign it in a driveway.
The best preparation happens before the loss
Most of what a public adjuster adds is documentation and policy knowledge, and both are available to you in advance:
- Keep a current home inventory with photographs and receipts, stored off site
- Read your declarations page once a year. See how to read your declarations page
- Know your deductible structure, including any percentage wind or hurricane deductible
- Understand the claim sequence before you are in it. See filing a home insurance claim
Licensing requirements, fee caps, solicitation restrictions, contract disclosure rules and appraisal clause availability all vary by state, by insurer and by policy, and state law and the policy documents control. Nothing here is legal advice. For your own situation, speak with a licensed agent, an attorney, or your state's Department of Insurance. You can also request home insurance quotes and get connected with licensed providers in your area.