The Howarth Group’s V.P. Denis Rowe Explains Why Hiring A Public Adjuster Early On Could Hurt You.

Hi. My name is Denis Rowe. I am Vice President and a partner with The Howarth Group here in downtown Franklin, TN. We have been helping property owners for almost 35 years now with their insurance claims. If you are viewing this video, you may be considering looking at hiring a public adjuster to help you with your claim.

Maybe the question that ought to be considered at this point would be: “When should you engage and hire a public adjuster, a professional who would look after your interests in a claim?” There are two options for you to consider here. If you hire a public adjuster shortly after a loss or even right before the carrier is expected to deliver their estimate, you are going to end up paying them a percentage of whatever the insurance company ultimately offers. Sometimes for having put forth very little work or effort up to that point in time.

All I mean to say by that is: The insurance company isn’t going to just let you or your general contractor or you and a public adjuster put together an estimate and take that as their valid claim, the one that they have to pay out on. They are going to give you an estimate that is based on their inspection, their training, what they believe is fair and reasonable to indemnify you, to make you whole, to put you back like you were before the loss. That is going to happen. You are going to get an estimate.

You need to consider if you hire one (a public adjuster) now, you are going to be paying them a percentage of whatever the carrier is going to put on the table. Many times, a public adjuster’s compensation is going to be 8%, 10% or 12% of the entire claim. Let’s say it was 10%, and it turns out that the carrier’s estimate is $1,000,000. Ten percent of that, right away, is going to be paid out to the public adjuster. A question to consider is: Why would you want to pay anyone a percentage of what you’re going to get anyhow? It’s worth some thought. It’s worth some discussion with your board or the other property owners that may be involved in making this decision.

The second thing to consider is: What is their incentive, if they are getting this kind of compensation, to add additional money to your claim? I’m not saying it can’t be added, but I do question, I do wonder how much more would be added to your claim. Because have you not, have they not, in the compensation arrangement taken away their incentive to add additional money when the bulk of their compensation, for the most part, has already been achieved. With little, I’m not saying any effort, but with little effort, some effort on their part to make their own case. Again, it’s worth knowing and understanding.

The third thing to consider is the risk. What if it turns out that the offer by the carrier is good, reasonable and fair, and it’s $1,000,000? Then you have paid and given away 10% of those monies to a public adjuster and instead of having $1,000,000 to rebuild that property, you now have $900,000. Who bore that risk? It wasn’t the public adjuster. It is you, the property owner, that is at risk when hiring someone before the carrier has put their offer on the table. So, what is option two? Consider compensating someone based only on any new money that they add to your claim. I would think a prudent and wise course of action is to pay for performance, something that is measurable, something that you can see. When we know that the carrier has offered $1,000,000, before we ever make any sort of offer to get involved in a claim, someone like us will take the time to read your policy, review the estimate, see if it encompasses the full scope of the damage, and to make sure that it lines up with accepted industry standards and practices for restoring the specific type of damaged property.

These are the things we are looking at and looking for, but if it turns out that you have received a good estimate, you won’t need our help. I will tell you that in our review of estimates, reading of policies, and understand of damages, that 30% of the time those estimates are good and you won’t need us. Granted, a majority of the time, you would. It doesn’t make any sense to me to pay someone a percentage of what you’re going to get anyhow when that should be the starting point if you stand a 30% chance of it being a good estimate. So the compensation I think is important for you to understand.

Obviously, if we are only getting paid a percentage of any new money that we add to your claim, then we are going to assess the claim honestly and we are going to be motivated to perform in a way that benefits you and us.  The last thing to consider is the risk. If we fail miserably, if I told you that you were due another $500,000, or $250,000 or another $1,000,000, and it turned out that I was wrong and we didn’t advance it one dollar more past the $1,000,000, then the question again is who bears that risk? That risk, instead of being born by you, the policyholder and property owner, is born by us. We are the ones at loss for investing our time, talents and assets to advance your claim. You owe us nothing. That doesn’t happen very often because we do have a chance to evaluate the estimates and read the policy.

Just some important things for you to consider, as you are looking at whether to engage a public adjuster and when you might do so. If you have any questions, feel free to call the number at the bottom of the screen. We would love to talk to you. Thanks!