Independent, Staff, & Public Adjusters
There are essentially four (4) basic types of adjusters involved in the average insurance claim for property damage. The use of independent adjuster, staff adjusters and field staff adjusters varies with the risk that the insurance carrier is insuring. Public Adjusters, which are rarely needed or required in the average property or homeowner’s claim for damages, are hired by the insured (property owner). We’ll be reviewing why Public Adjusters aren’t really necessary in the near future.
Let’s start with the average property owner’s claim for common cause of loss perils not in a catastrophic situation. In small to mid-size insurance carriers there is usually a staff of adjusters based out of a home office that are commonly or duly known as carrier claim representatives. The carrier claim reps usually work out of a central office and handle the administrative portion of the claim such as gathering the proof of loss, witness information (if any), underwriting concerns, and last but not least: printing of the claim payment check (indemnification).
Some companies employ the use of field staff adjusters to ascertain the extent of damages. Some field staff adjusters will also have the ability to indemnify the insured immediately by writing a check on the spot. Smaller to regional insurance carriers commonly sub-contract their investigations and general adjusting needs to independent adjusters. Iinsurance carriers may employ the use of field staff adjusters in regions where they have a high and steady number of claims (larger coverage) and employ independent adjusters in growing regions where there isn’t quite a need for a staff adjuster. I/A’s handle losses from beginning to end but not without several stops along the way to receive various permissions from the carrier.
Conversely, some smaller carriers might use a third party administrator to handle their losses from the perspective of an in-house staff adjuster. Commonly known as “third party admins”, these separate companies handle the loss from beginning to end often sub-contracting the actual survey or adjustment out to independent adjusters. This method isn’t always reserved for small carriers, rather, it is often the standard in dealing with other coverages; particularly inland marine floaters. The case with inland marine is that the carrier is often located overseas and the actual number of claims scales in comparison to residential or commercial structure property damages. The dollar amount of the claim expenses on an inland floater alone often dwarfs that of an entire residential or commercial policy.
Of course, as mentioned in our definition of independent insurance adjusters, not every person is an adjuster, at least not until there is a difference in price which would need adjusting. Independent adjusters really begin as surveyors of damage, damage appraisers and light investigators so that staff adjusters may form an opinion on the loss and decide how to move forward, if necessary. I/A’s can save an insurance carrier a substantial amount of money in costs of investigation early on.
The most important thing to know about independent adjusters is that although they receive work from insurance carriers, it is to their benefit to remain impartial to the parties involved in the matter. Independent Adjusters charge on an hourly or flat-rate stepping fee schedule, meaning that the more damages they locate and document, the more they are paid. This presets a good amount of evidence for the insurer to prove that they did not pay the adjuster to deny any part of the claim. If, for example, an independent adjuster leans to the side of an insured then his client (the insurer) might suspect he is intentionally cheating the schedule. If the I/A leans to the insurers side by failing to include damages, he exposes his client to a lawsuit for bad faith. For these reasons the I/A has every reason to remain impartial to both sides.
Public Adjusters really don’t help to settle claims. PA’s frequently lengthen the time and increase the cost that it takes to resolve a dispute. Public Adjusters have their place in claim resolution but they are not really necessary in today’s claim environment. Almost every policy employs an appraisal clause that provides a means for a low-cost dispute resolution which allows each side to appoint their independent appraiser to re-evaluate the cost of damages – not the damages of themselves. This was most commonly the place for public adjusters years ago but the appraisal clause is generally less than two short paragraphs in length and is commonly written in plain english to the insured’s benefit; thereby negating the need for a public adjuster or attorney. We could not find any statute law requiring that the public use a “public adjuster”. Public Adjusters often charge a percentage of the overall claim dollar – therefore, they are forced to advertise (and often do advertise) that they can increase the amount of the claim for the better of the insured, when in fact they are doing it only to make up the difference for the cost of their services.
All any insured need realize is that an independent adjuster would be shooting himself in the foot to cross the impartial line and become biased toward one side. Most insurer’s now prefer their independent adjusters give an insured the benefit of the doubt. We generally see unfair decisions from the claimant’s perspective in a liability claim but that’s a whole different topic for another post.
