Author: Chris Boggs

Hurricanes and other natural disasters draw public adjusters (PA) to the affected areas like sharks are drawn to the smell of blood. Another public adjuster likened the influx to a pack of wolves hunting prey.

Don't misunderstand, public adjusters can be beneficial in certain circumstances because of their property loss experience. A good, ethical public adjuster can be a valuable advocate for the insured because most insureds have never suffered a loss and don't know all the requirements.

But not every public adjuster is good and even fewer are ethical.  

In the wake of Hurricane Florence, count on at least some of your insureds being contacted by a public adjuster. Also, be prepared for the few who will contract with a public adjusting firm.

As the agent, you are still the primary contact following a loss, be ready to prepare your clients for the sales pitch coming from these public adjusters. Teach your clients to ask these 11 key questions BEFORE hiring a public adjuster:

• Does the adjuster have a state-issued public adjuster license? Public adjusters are generally required to be licensed in the state in which the property is located. Make sure the insured gets or sees a copy of the license.
• Where is the public adjuster based? Even if the public adjuster has a license issued by the state in which the property is located, is the adjuster domiciled in the state? There are state-to-state variations in coverage, if the adjuster does not commonly work in the state in which the property is located, he/she may not know all the laws and requirements.
• Is the adjuster a member of the National Association of Public Insurance Adjuster (NAPIA)? Although being a member of NAPIA does not guarantee the ethics of the public adjuster, members of the association are required to follow a strict code of ethics.
• Were references and qualifications provided? Yes, the insured's life is in chaos following a loss, but it's still important to check references if they are considering a public adjuster. The insured's agent may want to check references on the insured's behalf; in fact, this may be preferable because the same public adjusting firm may contact many of the agency's clients. If the agency checks the firm's references, every insured contacted by that firm must only call the agency for information. Again, make this about the services the agency provides.
• Did the public adjuster attempt to pressure the insured into signing the contract? Statements such as, “Just sign this and we will take care of the whole thing for you," sound innocuous, but it is actually a type of “hard-sell." Remember, even though a public adjuster is involved, the insured must still participate in developing the proof of loss.
• Did the adjuster fully explain the contract to the insured? Remember, public adjusters charge a fee for their service, often between 10 percent and 15 percent of total claim payment. If this and other provisions of the contract were not clearly explained, this is a red flag. One public adjuster interviewed said that fees over 10 percent are unacceptable. Some states have a limit of adjustment fees.
• Did the adjuster ask for money up front? This is not proper in any way. If the public adjuster asks for money up front, do not contract with them.
• Did the adjuster make any guarantees about the amount the insured will get paid? There is no way a public adjuster can guarantee anything, warn insureds against contracting with any public adjuster who guarantees a specific outcome.
• Is the same person who “sold" the service the same person who will adjust the loss? This is not an ethical consideration, but the actual adjuster and the sales person may have very different personalities. Also, is the sales person just a sales person or do they understand coverage? The insured needs to know the qualifications of the assigned adjuster.
• Does the contract address monies received prior to the hiring of the public adjuster? If the insurance carrier pays the insured “emergency money" or some other payment before the public adjuster was hired, that amount should not be a part of the calculation for payment. 
• Does the public adjuster seem honest? This could be and likely is very hard to judge, but some public adjusters may give themselves away by telling the insured things they can or will do to “make sure" the insured gets a certain amount of money. An ethical public adjuster wants to assure the insured gets everything they are owed, and no more. They are not in the business to increase the loss for sake of a little greater payout.

Once a public adjuster is hired, the agent must still provide guidance to the insured, not necessarily through the claims process (as that becomes the public adjuster's role), but through the relationship with the public adjuster. Get to know the adjuster, if possible, and keep track of what they do. An ethical public adjuster will welcome the relationship and happily converse with the agent as time allows, an unethical one will avoid agent involvement and any conversation with another insurance professional working for/with the insured.

If the public adjuster appears to be harming the insured, inflating the loss or otherwise acting in an unethical or illegal manner, contact the department of insurance. The agent's job is to protect the client and the insurance carrier from unethical public adjusters.

As a reminder, especially during wide-spread storm damage, out of state PAs can pose a particular problem. Beware after big storms. 

First Published: September 12, 2018

Updated: June 17, 2024

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