A public adjuster is a person who acts to represent the interests of the policy holder (insured) in an insurance claim. In contrast an independent adjuster or a company adjuster represents the interests of the insurance company (carrier) in an insurance claim.
An independent adjuster is hired by the insurance company to review the loss and typically to report to the insurance company the scope (or cost) of the loss to the insurance company according to the insurance companies claim policy. The independent adjuster is not an independent actor as their name may imply but are hired and paid to represent the interests of the insurance company.
A claim adjuster or company adjuster is an employee of the insurance company who investigates the scope of the loss and represents the interests of the insurance company.
According to Wikipedia: An indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor (A) may or may not be responsible for the loss suffered by the indemnitee (B). Forms of indemnity include cash payments, repairs, replacement, and reinstatement. As the principle of indemnity allies to your insurance policy it is tied to an old law first passed in New York regarding fire loss known as the 165 line Standard Policy. This 165 line or Standard Policy for insurance is the basis upon which contemporary homeowners insurance products are typically based. This policy ensures that the policyholder is restored to "pre-loss condition" after suffering a loss due to a covered peril. The policy holder cannot benefit from the indemnity meaning the policy holder can "turn a profit" as a result of the loss but must be restored to pre-loss condition.
When a person owns a home but has purchased a home through a mortgage loan the entity issuing the loan uses the home (asset) itself as collateral on the loan and therefore has an interest on the asset. The mortgage agreement typically requires that the asset be insured. The insurance contract recognizes the interest of the mortgage agreement and recognizes the mortgaging entity as a beneficiary who is indemnified as well as the policy holder. A mortgage company is required to release the indemnity when repairs have been made regardless of payment status of the mortgage.
Public adjusters are typically engaged in larger losses. They are to the benefit of the policy holder for many reasons. First, they will review the actual policy (agreement for indemnification) between he policy holder and the insurance company to verify what benefits are due to the policy holder for the incurred loss. They will also assist in the creation of the information required to be provided to the insurance company in the terms of the insurance policy. Finally, a public adjuster will negotiate the scope of the loss with the insurance company's representatives on your behalf to ensure that you receive the full benefits of your policy. Public adjusters often recover up to 30% more from the insurance company than the amounts previously offered to policy holders without the benefit of representation.
An insurance company is not allowed to punish you for having a public adjuster assist you with your homeowners claim. From a cynical point of view they may not like having to pay out the full and fair claim which is much more likely when a policy holder hires a public adjuster but they are not allowed to punish you for having done so.
The policy holder is typically required to do certain things when a loss occurs.
DEFINITION: The amount equal to the replacement cost minus depreciation of the damaged property at the time of the loss. It is the actual value for which the property could be sold, which is less than what it would cost to replace it.
The cost to replace the assets of a company or a property of the same or equal value. The replacement cost asset of a company could be a building, stocks, accounts receivable or liens. This cost can change depending on changes in market value.
Also referred to as the price that will have to be paid to replace an existing asset with a similar asset.
FOR EXAMPLE: My home is only worth $120,000. Why does my insurance company want me to insure it for $275,000?
One of the biggest questions consumers have regarding homeowner's insurance revolves around the amount of insurance to place on their dwelling (home). When purchasing a house, the mortgage company requires the homeowner to obtain insurance prior to closing. Most consumers assume the amount of dwelling coverage will be equal to the amount they paid for their house. This is incorrect in some cases.
There are different methods to determine the value of a house. Market value is the price paid for your house. Replacement cost is the price or cost it will take to rebuild your house in the same spot, same size and same quality of construction, at today's costs. Insurance companies use the replacement cost valuation. These can be two completely different numbers.
For example, a home purchased in a depressed city neighborhood, may have a market value of $120,000. The exact house, located in a nice suburb, may have a market price of $285,000; however, the cost to rebuild the house after a loss would be the same in either location. The insurance company is looking to insure the home for the full replacement value, not the current market value. Remember, they are going to pay to build you a new home, not buy one for you down the street.
|Home in Thriving Suburb||Home in Depressed Neighborhood|
|Square Footage of Home||2,500||2,500|
|Cost to Replace/Rebuild Home||$275,000||$275,000|
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