What You Should Know About Property Insurance Claims
CATASTROPHIC WEATHER EVENTS ARE CHANGING THE SCOPE OF THE INSURANCE INDUSTRY
Due to worldwide catastrophic weather related losses, insurance companies are looking for ways to reduce payouts and coverages by any means. Raising premiums, applying substantial storm related deductibles and adding new policy conditions and exclusions is just the beginning of what is to come in this industry. Many carriers have distanced themselves from insurance regulators by hiring independently licensed agents to represent their interests. These agents interpret your statements to work to their advantage, which can affect the outcome of your claim settlement.
Incorrectly reporting a claim, or answering ambiguous questions can void part or all of your insurance benefits, so that, consulting with a certified public insurance adjuster will leave you with the options of;
- Reporting your claim on your own
- Entrusting the matter to your insurance agent / broker
- Retaining a professional claims adjusting service (public adjuster) to report your losses
At the very least your free consultation and or, an on location visit will leave you with a much better understanding of what you may expect to face in the current and ever changing climate of the property claims industry.
THIRD PARTY REPORTING AND THE ABILITY TO IDENTIFY RED FLAG INSURANCE (AMBIGUOUS) QUESTIONS
To be clear, although there are many intelligent and well versed insurance sales agents and brokers who know how to report claims, there are many who aren’t. Insurance agents and brokers devote the bulk of their time to selling insurance policies in order to make a living. The larger they grow the more they depend on office staff to report client claims. If their office staff;
- Are not well trained in the newest carrier claim reporting strategies
- Fail to recognize ambiguous questions
- Speculate on the cause of your loss
…your claim may suffer. On the other hand, a public adjuster only makes a living from representing and settling policyholder claims and can identify and challenge improper (red flag) questions posed by claim center operators and insurance company adjusters.
WHAT YOU SHOULD KNOW ABOUT INSURANCE BROKERS WHO RECOMMEND THEIR PREFERRED PUBLIC ADJUSTER
By law your insurance broker can profit by sharing the settlement fees with the public adjuster they recommend to settle your losses, however, in accordance with an NYSDFS-OCG opinion regarding prevailing N.Y. Ins. Law § 2110 (McKinney 2006), there are the following restrictions;
- Your broker must still be licensed at the time of your loss,
- They must either be the broker of record who placed the insurance involved in the adjustment of your loss, or if you changed brokers they must have been designated to act for you in writing before your loss occurred, and
- They must have disclosed to you in writing that they will share in the adjusting fee the public adjuster is charging you.
Failure to inform in you could be perceived as divided or conflicted loyalty to you, which itself may be regarded as untrustworthy conduct within the meaning of the NYS insurance law. Although we never share our fees with a broker, we do evaluate their request to represent their large loss clients.
THE COSTS OF ADJUSTING LARGE LOSSES VS. LOWER ADJUSTER COMPENSATION WHEN SHARING FEES WITH A BROKER
The question is whether or not the broker’s adjuster can afford to properly document and settle your claims while sharing fees. To offset their adjustment expenses some brokers recommend their public adjusters service your loss at the NYS legal maximum of 12 1/2%. Example, if a public adjusting firm normally charges their clients 10%, but in your case has to split their fee (typically 50%) with your broker, your adjuster is now working for a 5% fee. If your broker suggests you contract for the 12 1/2% fee your broker’s’ public adjuster is now making 6 1/4%, as well, the adjuster’s business expenses must come at a lower cost in order to obtain a profit margin close or equal to the industry standard of 10%. Since large losses are very expensive to adjust and there is no shortcut for documenting damages, using underpaid third party labor to sift through and account for your belongings could present a host of risks. There are many scenarios and business arrangements that may work in fee splitting, such as your broker referring a stream of clients to his preferred public adjuster. Ultimately, its a call you have to feel comfortable with.
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