Public adjuster fees: what they charge and when it pays

Most public adjusters charge a percentage of what your insurer pays on the claim. United Policyholders, a consumer nonprofit, puts the common range at 5% to 15%, and some states set a legal maximum.

How do public adjusters charge?

There are three common fee types. Which ones are allowed depends on your state.

• Percentage (contingency) fee. The adjuster takes an agreed share of the insurer’s payments. This is the most common setup.
• Flat fee. A fixed dollar amount for the job.
• Hourly fee. You pay for the time spent, whatever the result.

Texas law lists all three as options. Louisiana law does not allow a percentage fee at all.

Whatever the type, the fee is yours to pay. Insurance policies do not cover it, so it comes out of your claim money.

Is the percentage charged on the whole settlement or only the increase?

This one line in the contract can change the fee by thousands of dollars. Read it before anything else.

Say your insurer has offered $40,000 and a public adjuster gets the claim to $50,000. A 10% fee on the whole settlement is $5,000. A 10% fee on the increase is $1,000.

The NAIC’s Post-Disaster Claims Guide says that if you hire a public adjuster after the insurer has made an offer, the contract should say whether the fee is based on the total the insurer pays or on the amount the adjuster negotiates for you.

State law sometimes answers the question for you:

• In Texas, the Department of Insurance says the fee can be up to 10% of the total the insurer pays, not only the amount you are disputing. Its example: the insurer pays $100,000, you dispute $20,000, and the adjuster could charge $10,000.
• In Florida, a public adjuster cannot charge anything on amounts the insurer paid, or agreed in writing to pay, before you signed the contract. On a reopened or supplemental claim, the fee can only be based on the new money.

When you read the fee clause, look for these points:

1. What the percentage is charged on: every payment, or only payments after you signed.
2. Which parts of the claim count. United Policyholders notes that some adjusters do not charge on additional living expenses, which is the coverage for hotel and meal costs while you are out of your home.
3. Whether expenses are billed on top of the fee, and what they are.
4. What you owe if you cancel partway through.

Our contract check tool lists what the contract has to say in your state.

What do state laws cap fees at?

Rules differ by state. These three have been checked against the statutes. Do not assume your state matches any of them. See rules by state.

Two details in the Texas and Florida statutes matter when the insurer pays quickly:

• Texas. If the insurer pays the policy limit under the state’s total-loss fire law, or commits in writing to pay it, within 72 hours of the loss being reported, the adjuster cannot take a percentage. They can charge only reasonable pay for time and expenses.
• Florida. The caps above are written for residential property and condominium policies. The fee drops to 1% on any part of the policy where the insurer pays or commits to the full limit within 14 days of the loss or 10 days of your contract, whichever is later. The fee cannot be based on your deductible.

The NAIC also publishes a model law that states can adopt. Its current version suggests a 15% cap, and 10% for catastrophe claims. It is a template, not the law in your state.

How much does the adjuster have to add for you to come out ahead?

When the fee is charged on the whole settlement, the adjuster first has to earn back their own fee before you gain a dollar. If the fee is F percent, the payout has to rise by more than F divided by (100 minus F).

Here is one example. Your insurer has offered $40,000. The contract says 10% of the whole settlement.

• Break-even: the claim has to settle above $44,444. At that figure you pay $4,444 and keep $40,000, the same as before.
• If it settles at $44,000, you pay $4,400 and keep $39,600. You are $400 worse off.
• If it settles at $50,000, you pay $5,000 and keep $45,000. You are $5,000 ahead.

If the fee is charged only on the increase, any increase leaves you ahead, as long as extra expenses do not eat it. You can put your own numbers into the fee calculator.

Can you negotiate the fee?

Yes. United Policyholders says fees are negotiable in every state, and that the fee should reflect the size and type of your loss and where the claim already stands. The Illinois and Texas insurance departments both tell consumers to negotiate.

Things you can ask for:

• A lower percentage, especially on a large loss.
• A fee charged only on money above the insurer’s current offer.
• No fee on additional living expenses.
• A fixed dollar amount. Texas regulators note you can ask for the fee to be written as a dollar figure instead of a percentage.

A state cap is the most an adjuster may charge. It is not a standard rate. For what else to settle before you sign, see how to choose a public adjuster.