Public Adjuster

A public adjuster is a claims adjuster who represents the policyholder rather than the insurance company. The National Association of Insurance Commissioners defines the role as an "independent claims adjuster representing policyholders instead of insurance companies." Florida's statutory definition is broader than most people expect: section 626.854(1) of the Florida Statutes covers "any person, except a duly licensed attorney at law as exempted under s. 626.860, who, for money, commission, or any other thing of value, directly or indirectly prepares, completes, or files an insurance claim for an insured or third-party claimant, regardless of how that person describes or presents his or her services", and extends to anyone who negotiates or aids in effecting a settlement, or who advertises for such work.

The words "regardless of how that person describes or presents his or her services" are doing something specific. They mean the label on a business card does not decide whether the licensing rules apply. Florida makes the point again in the same section by prohibiting a licensed contractor or subcontractor from advertising, soliciting, offering to handle or performing public adjuster services unless licensed as one, while leaving the contractor free to recommend that a consumer contact their insurer, and to discuss or explain a repair bid with the owner or the insurer for the usual fee for the work.

What the policyholder is buying is documentation and negotiation, not a second opinion for its own sake. The public adjuster reviews the policy, inspects and measures the damage, prepares an itemized estimate, assembles the proof the policy requires and negotiates with the insurer's adjuster. That is most valuable where the loss is large, the scope is genuinely contested, or the policyholder cannot do the documentation themselves, which is often precisely the situation after a fire or a widespread disaster. Florida requires a written estimate to be provided to the insured within 60 days of the contract, and specifies its content: "an itemized, per-unit estimate of the repairs, including itemized information on equipment, materials, labor, and supplies, in accordance with accepted industry standards", retained for at least five years and available to the insured, the insurer and the department on request. That document is the product.

The compensation rules are where state law is most detailed, and Florida's shape is worth understanding even outside Florida because it shows what the caps are designed to stop. Section 626.854(11)(b) sets four ceilings on what a public adjuster may accept from any source:

• 10 percent of claim payments or settlements, exclusive of attorney fees and costs, for claims based on events that are the subject of a declaration of a state of emergency by the Governor, applying to claims made during the year after the declaration.
• 20 percent for claims not based on such events. - 1 percent where the insurer pays, or commits in writing to pay, the policy limit for a coverage part within 14 days after the date of loss or within 10 days after the adjusting contract is executed, whichever is later.
• Zero percent where that payment or written commitment occurred before the contract was executed.

The last two exist to stop a fee being charged on money the insurer was always going to pay. The statute adds two more limits in the same direction: compensation may not be based on the deductible portion of a claim, and it may not be based on additional living expenses unless a separate agreement with a prescribed disclosure is signed. On a reopened or supplemental claim, the fee may not exceed 20 percent and must be based only on payments obtained after the contract was signed, not on anything already paid for the same cause of loss.

The contract can be canceled, and the windows are specific. Florida allows cancellation without penalty within 10 days of signing, or, where the contract was entered into after a gubernatorial state of emergency, within 30 days of the date of loss or 10 days after signing, whichever is longer. There is a further right to cancel if the written estimate does not arrive within 60 days, unless the delay is outside the adjuster's control. The statute prescribes the cancellation language in 18-point bold type immediately above the signature line, and requires notice of cancellation to be sent in writing by a method that provides proof of delivery.

Solicitation after a catastrophe is regulated because that is when it happens. Florida restricts a public adjuster from soliciting an insured except Monday through Saturday between 8 a.m. and 8 p.m.; treats four specific advertising claims as deceptive, including inviting a policyholder to submit a claim when they have no covered damage, offering a monetary inducement to file, saying there is "no risk" in filing, and using a logo or shield that could be taken for a government agency; requires a prescribed disclaimer on written advertisements; bars loans or advances to clients; and caps promotional gifts at $25. A separate provision, aimed squarely at roof claims, prohibits offering a residential property owner a rebate, gift, gift card, cash, coupon, a waiver of any insurance deductible or anything else of value in exchange for allowing a roof inspection or for making a roof damage claim.

The other side of hiring one is that the insurer's people now have to go through the representation. Florida requires a company adjuster, independent adjuster, attorney or investigator acting for the insurer to give at least 48 hours' notice before scheduling a meeting with the claimant or an onsite inspection, and lets the insured deny access if that notice was not given, while separately forbidding the public adjuster from obstructing the insurer's timely inspection. The Texas Department of Insurance frames the boundaries of the role for consumers in three lines: public adjusters "work for you, not the insurance company", they "can't give legal advice or take part in repairing your property", and they must hold a state license, which the department will confirm on request.

What none of this settles is whether the estimate is right. A public adjuster's estimate is one side's valuation in the same sense that the insurer's adjuster's estimate is the other side's. Where the two cannot be reconciled, most property policies contain an appraisal clause, and that mechanism, along with what it costs to run, is covered on the claims adjuster page.

The policyholder signs a written contract with a licensed public adjuster setting out the fee and the cancellation rights. The adjuster notifies the insurer, provides a copy of the contract, and takes over the documentation: inspecting, measuring, pricing and preparing the itemized estimate and the proof the policy requires. The insurer's adjuster inspects, subject to any notice requirements the state imposes. The two sides negotiate. When the insurer pays, the adjuster's fee is taken as a percentage of the payments obtained, within whatever ceiling the state sets, and the remainder goes to the policyholder.

A hypothetical, using Florida's 20 percent non-emergency cap and a claim where no payment had been made before the contract was signed. The insurer's initial position on Priya's fire claim is $42,000. She engages a public adjuster, and the claim eventually settles for $61,000.

The fee is 20 percent of $61,000 = $12,200. Priya receives $61,000 − $12,200 = $48,800, which is $6,800 better than the insurer's original offer.

Now the version nobody quotes. Suppose the adjuster had only moved the settlement to $50,000. The fee is $10,000, Priya receives $40,000, and she is $2,000 worse off than if she had accepted the first offer.

The break-even is worth knowing before signing: at a 20 percent fee, the settlement has to exceed the original offer divided by 0.80, which is $42,000 ÷ 0.80 = $52,500, before the policyholder is any better off. Anything below that is a loss even though the claim went up. Figures are invented, the fee caps are Florida's, and the comparison assumes the insurer's first position would not have improved on its own, which is the assumption most worth testing.

Pros

• The only adjuster on the file whose economic interest runs with the policyholder's.
• Produces the itemized documentation a large or contested claim needs, which is work most policyholders cannot do to the same standard.
• Most valuable exactly where claims go wrong: large losses, disputed scope, and the period after a disaster when the household is displaced and the insurer's file is being handled by surge staff.
• The fee is contingent on the claim being paid, so the adjuster is not paid for an unsuccessful file.
• The occupation is licensed and the license is verifiable with the state insurance department before signing.
• Several states cap the fee, prescribe the contract language, and give a cancellation window measured in days.

Cons

• The fee comes out of the claim, so a settlement improvement smaller than the percentage leaves the policyholder behind where they started.
• The comparison that decides the value is against what the insurer would have paid anyway, which is unknowable at the time the contract is signed.
• Caps and contract protections are state law and differ, so the Florida structure described here is not a national one.
• Solicitation after a catastrophe is heavily regulated because it is a known problem, which is a reason to be cautious about anyone who arrives uninvited.
• A public adjuster cannot give legal advice, and in some states cannot take part in repairing the property, so they are not a substitute for a lawyer or a contractor.
• Adding a representative adds a layer to the claim, and where the parties still cannot agree the remaining route is the policy's appraisal clause or litigation.