Alabama is poised to license public insurance adjusters, and the Legislature can’t act too quickly. Extreme weather has been plaguing many parts of the country, and home and business owners are often left feeling helpless and alone in the aftermath of severe storms, or even after any type of property damage.
Public insurance adjusters are licensed in almost every state as advocates for home or business owners who have sustained property damage. They are on the ground every day fighting for policyholders, and have seen the heartbreaking damage that storms can cause as well as the problems people face after such an event. Unfortunately, the claims process can be long and difficult, and the homeowner must navigate many obstacles to recovery. Public insurance adjusters help policy holders, commercial and residential, through the complex process.
Why are public insurance adjusters needed by homeowners? And how can the homeowners be made whole if they have to pay a public insurance adjuster a portion of the recovery? The answers to those often-asked questions are simple.
After a loss, most people do not have the time and/or expertise to properly evaluate their insurance coverage or to estimate the actual damage and effectively negotiate with the insurance company adjuster who does have such expertise. A policyholder must rely on the insurance company to evaluate the extent of the loss, determine coverage, and provide a prompt and fair financial settlement. The interests of the insurance company in this process are directly opposed to the policyholder, yet the policyholder must rely on the insurance company to perform such services. Most insurance company adjusters act with professionalism and treat the policyholder fairly, yet, the homeowner is still at a great disadvantage. The insurance company adjuster is not an advocate for the homeowner, but is a paid employee of the insurance company, or a third party who has been hired for the purpose of adjusting the claim on behalf of and for the benefit of the insurance company, and will put the interests of the insurance company ahead of the consumer. That inequality leads to the undervaluing of claims.
Historically, in Alabama, attorneys have stepped in to help negotiate for those who have suffered property damage, but attorneys aren’t always a cost-effective solution for a homeowner. According to the 2015 Insurance Information Fact Book published by the Insurance Information Institute, the average-size homeowners’ claim nationally from 2008-2012 was $8,384. As a result, the victim of the “average” claim is not often able to hire an attorney for representation, because of the prohibitive cost of paying the attorney on an hourly basis, or finding an attorney to charge a contingent fee on a small claim. Licensed public insurance adjusters provide the necessary, yet cost-effective expertise help these people need to fairly adjust such property damage claims.
A few years ago Florida conducted a study and found that homeowners who used public insurance adjusters on non-catastrophic claims received, on average, a 574 percent higher settlement amount than homeowners who did not use a public insurance adjuster (OPPAGA Report No. 10-06, p.8). Those results indicate that the homeowner receives greater value even when having to pay the public adjuster’s fee from the recovery. Therefore, instead of asking how the homeowner can be made whole when using the services of a public insurance adjuster, the question should be whether the homeowner can be made whole without the services of a public insurance adjuster. Empirical evidence suggests that the answer is usually “no”.
By enacting legislation to allow for the licensing of public insurance adjusters, Alabama will be doing a great service to its property owners, residential and commercial. For more information of the value of a public insurance adjuster, visit www.aapia.org and click on the video below to view an interview with Gene Veno, president of the American Association of Public Insurance Adjusters.
Holly K. Soffer Esq. is the general counsel, American Association of Public Insurance Adjustors