Public Adjusting – Your Right to Representation

Recently, in a public adjusting conference, I listened to a man who was an insurance adjuster for a large carrier. He spoke about how he was encouraged to discourage people from using public adjusters. He stated that California law provides for a 3 day right of rescission in which a contract with a service provider (including a public adjuster) may be cancelled in some cases. He reported that he often would use the argument that people could just wait until after the insurance company had come out with their offer to decide whether or not to use a public adjuster. While on its face this may actually seem to be a reasonable plan, it definitely works to the advantage of the insurance company. Like any negotiation, and make no mistake, the insurance claim settlement process is a negotiation, a policyholder may definitely benefit from the services of their own insurance expert to assist them. When dealing with what is likely your largest asset (your home), you would always engage a realtor when buying or selling a home? Why would you not engage a professional when negotiating for the repair of this asset? Likewise, when it comes to legal matters they say “a man who represents himself has a fool for a client”. Most people know the difference between right and wrong, but still there are many intricacies in an insurance policy that most people are not familiar with. Again it makes sense that a policy holder would benefit from the experience of a public adjuster who has experience with the policy and the claims handling process. Not only does it make sense to have an expert working on your behalf, but the law ensures and protects a policyholder’s right to professional representation.

Right to Representation:
In your state there is most likely a law which states that if you have an insurance claim you can have a professional represent you in settling that claim with your insurance company. In the Arizona Revised Statues that law is ARS 20-321 which states that an adjuster is “any person who for compensation, fee or commission adjusts, investigates or negotiates settlement of claims arising under insurance contracts on behalf of either the insurer or the insured.”

The adjuster must be licensed in the particular state in which representation is offered. This is also required by state law and in Arizona is in section 20-321.01. Licensing of adjusters; qualifications; exemption
A. A person shall not act as or claim to be an adjuster unless the person is licensed under this article.
In short, a contractor or other person is directed by law not to negotiate an insurance settlement or even present themselves to do so without being properly licensed by the state. The policy holder may engage representation to assist in the settlement of an insurance claim provided that the individual who is engaged for that representation is licensed to do so.

Right to negotiate with the insurer:
Also included in many insurance policies the insurer has the duty to negotiate the claim with the policy holder or their designated representative. One example for a policy is the following under the section for LOSS PAYMENT:

SECTION 1- CONDITIONS
I. Loss Payment
“We will adjust all loses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment.”

Simply stated, the insurance company does not have the right to come in and simply tell the policy holder what it will and won’t pay. The policy stated that all losses will be adjusted with the policyholder (or its legal representation). The online Miriam Webster’s Dictionary defines the word “adjust” as determining the amount to be paid under an insurance policy in settlement of a loss. A policy holder should remember that their damage claim is an actual claim on the assets of the insurance company and that the amount for which the insurance company needs to pay in order to indemnify the policy holder under the contract of insurance is to be worked out together with the policy holder and not unilaterally handed down from the insurance company without negotiation form the policy holder.

What is Representation by a public adjuster?
Representation by a public adjuster is legal representation, but only within the narrow confines of negotiating the settlement of an insurance claim. Public adjusters do not give legal advice. You must consult an attorney for legal advice. A public adjuster will however, get between and your insurance company and negotiate a settlement for your damages. This means that your public adjuster will speak to your insurance company and that you should direct all inquiries from you insurance company to the public adjuster. The insurance company may exercise its contractual right to schedule a recorded statement from the policy holder, but your public adjuster, in most cases, is allowed to be there with you.

Who Represents the Insurance Company?
Insurance companies employ adjusters whose job is to reach settlement in the case of damage under a policy. Many times an insurance company will also hire an independent adjuster who will work with a public adjuster or even a home owner in the field to adjust the claim, but this is only an investigative exercise on the part of the carrier. Independent adjusters frequently state this when they inform the claimant that they “have no authority to settle the claim” and that their recommendations will be passed on to the carrier. As evidence that the carrier makes the final decision as to what their offer will be to the policy holder, often the carrier (insurer) may alter the recommendations of the independent adjuster or instruct the independent adjuster to do so. This occurs even when the carrier’s in house adjuster has never even been to the location where the claim is located to gain firsthand knowledge or spoken with the policy holder or their public adjuster. When this occurs, the carrier is not negotiating in good faith as they are not adjusting the claim with the policy holder or their representatives, but are making isolated decisions for settlement on their own without direct input from the other interested party. A public adjuster should make every effort to make contact with the carrier in such cases, to argue for a fair settlement.