Do I need a public adjuster? An honest way to decide

You are never required to hire a public adjuster. One tends to be worth the fee when a claim is large, complicated or in dispute, and tends not to be when the claim is small, simple, or already being paid in full.

A public adjuster is someone you hire to document your loss and negotiate with your insurer, usually for a percentage of the payout. If the term is new, start with what a public adjuster is.

When does a public adjuster tend to help?

The common thread is room to move. A percentage fee only pays for itself if there is a real gap between what the insurer has offered and what the policy owes.

• The loss is large and takes a lot of documenting. United Policyholders, a consumer nonprofit, says that with a large property damage claim you may need professional help to recover what the policy owes. Proving a big loss is slow work. It involves leg work, paperwork, basic math, insurance terms and negotiation.
• You and the insurer are far apart. Your contractor’s estimate and the insurer’s estimate differ by a lot, you have already explained why, and the insurer has not moved.
• It is a business claim with lost income. A business interruption claim means proving what the business would have earned. That takes financial records and time that an owner trying to reopen may not have.
• You have no time or energy for it. After a major disaster, the NAIC says most people need at least 18 to 24 months to rebuild and replace their belongings. Some owners decide their time is worth more than the fee.

There is some government data on results. A 2010 study by a Florida legislative research office looked at claims filed with the state-created property insurer in 2008 and 2009. For non-catastrophe claims, the typical payment was $9,379 with a public adjuster and $1,391 without.

Read those numbers with care. They are before the adjuster’s fee. The study compared two groups of claims and does not show the groups had the same damage. It covers one insurer in one state, years ago. The same study found the claims took longer: a median of 115 days to close with a public adjuster, against 41 days without.

When is a public adjuster probably not worth it?

• The claim is small or close to your deductible. United Policyholders puts it plainly: the smaller the loss, the less sense it makes to hire someone on a percentage. If the damage is only a little more than your deductible, there is not much for anyone to add.
• The insurer is already paying the policy limit. Nobody can negotiate past the limit. If you are underinsured, United Policyholders warns that the fee just uses up part of the limited coverage you have. Some states write this into law. Texas bars a percentage fee when the insurer pays or commits to the policy limit under the state’s total-loss fire law within 72 hours of the loss being reported. Florida cuts the fee to 1% in a similar case.
• The insurer is paying what you asked for. If you agree on the list of repairs and the prices, there is no dispute to pay someone to win.
• The claim is simple. One room, one cause, one contractor estimate. The Illinois Department of Insurance notes that many of the services public adjusters offer can be done for free by the insurer’s own claim staff.
• The fight is about what the policy means. Public adjusters are not lawyers and cannot give legal advice. A dispute over policy wording, or a lawsuit, is work for a licensed attorney.

What can you try on your own first?

The first two steps below are free. The third has costs but no percentage. Trying the first two does not stop you from hiring a public adjuster later. If the insurer is slow to answer, the claim clock shows the deadlines it has to meet in your state.

1. Ask the insurer to look again

Tell the company in writing why you disagree, and send proof such as a contractor’s estimate. The Texas Department of Insurance points out that the company may have overlooked something and may adjust its estimate.

You can ask for a second inspection, and ask that your contractor be there to point out what was missed. If you cannot work things out with the adjuster you were given, Texas regulators say you can ask the company to assign a different one. If any part of the claim is denied, the NAIC suggests asking for the denial in writing.

2. Complain to your state insurance department

Every state has an insurance regulator that takes consumer complaints, and its help is free. The NAIC keeps a directory of state departments.

Know the limits. In Texas, for example, the department contacts the company and gives it 15 days to respond. It cannot make a company pay unless the company broke the law or the policy, and it cannot decide a factual dispute, such as whether a storm or ordinary wear caused the damage. That makes a complaint a better fit for delays and broken rules than for an argument over repair prices.

3. Use the appraisal clause in your policy

Your policy may include an appraisal clause. It is a way to settle a disagreement over the dollar amount without going to court. You and the insurer each hire an appraiser. If the two cannot agree, a neutral third person called an umpire decides.

Two cautions from the NAIC: appraisal only settles costs, not whether the policy covers them, and you pay part of the cost. In Texas, you pay your own appraiser and half of the umpire’s fee, and the result is binding. Your policy may also set a deadline for asking.

How do you run the numbers?

If the fee is 10% of the whole settlement, the adjuster has to raise your payout by more than 11.1% before you gain anything. At 20% it is 25%. The guide to public adjuster fees shows the math, and the fee calculator does it for your claim.

If you are still unsure, the two-minute quiz walks through the same questions for your claim. If you decide to hire, read how to choose a public adjuster before you sign. Rules on fees and contracts differ by state.