Premier Claim Consultants In 2008

Premier Claim Consultants is an advanced property claim consulting company specializing in residential and commercial property claim adjustments, coverage evaluations, appraisals, litigation support, and expert witness services. I founded Premier in 2006 in order to provide these and other services to an industry (property insurance claims) that in my view has not been very well represented by public advocates in several states, in particular in the State of California. I want to change that representation. I want to raise its social perception to a level deserving of a licensed profession, a profession that is supposed to represent those in need. I intend to do this in part by bringing together those people, companies, agencies, and resources that are committed to helping members of the public prepare and settle their property claims fairly, in a timely manner, and with integrity.

Premier is at the cutting edge of property claim adjustment theory and practice, providing services and educational materials that can assist all parties to a claim adjustment, insurance appraisal, or during litigation. To that end, and in addition to the resources and materials currently made available on our web site, you can expect the following from Premier Claim Consultants in 2008:

LIVECLAIM^TM: You've read about it for several months now and since November of 2007 we've been letting everyone know about the coming of LIVECLAIM^TM. Well, it's still coming! If you click on the LIVECLAIM^TM link on our main menu you'll be taken to the LIVECLAIM^TM page, which as of today is still undergoing some revision as it is being programmed and made ready for the complete presentation of LIVECLAIM^TM. Here all viewers will be able to see the progression of California insurance claims "live." LIVECLAIM^TM will monitor each insurance company's compliance with the minimum standards of the California Fair Claims Settlement Practices Regulations, and where appropriate documents and a Property Adjustment Report completed by Premier will be appended to each claim. Now members of the public will see firsthand just how seriously insurance companies take compliance with existing Regulations and with applicable insurance laws.

Property Claims Quarterly (PCQ): It was my intent to have this journal online and ready at the start of 2008, but that was too optimistic of a date as it turns out. It is more likely that PCQ will be ready later this year, possibly by mid-summer. PCQ will focus exclusively on three aspects of the property claims industry, namely, the adjusting, legal, and construction aspects. Almost every property claim will involve a claim adjustment and construction or restoration of some kind. Many moderate to severe property losses could also involve one or more legal issues. Premier Claim Consultants will use PCQ to publish opinions and information relative to property insurance claims from the perspective of those licensed in each of these fields. It is still our desire to have the first issue of this journal online in 2008, and published thereafter each quarter of each year.

Property Claims Adjusting, A Complete Guidebook for Businesses, California Commercial Edition: This is the companion volume to my Property Claims Adjusting, A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007). With these two books California consumers and businesses will have available to them important resources for use when they are faced with a loss to their dwelling, commercial building, a loss of business income, or a loss to their personal or business property. Both books discuss claim adjustment theory, the different types and respective roles of adjusters, and each volume contains a helpful glossary of key terms, informative appendixes, and a subject index.

Property Claims Review (Premier's Blog): In 2008 I plan on being more regular with this Blog. I try to publish something on it at least once a month, but I will try to put something up once a week starting in April. So keep reading! If there's something you would like for me to review or write about, email me at gregstafford@premier-claim-consultants.com and let me know about it.

As we go forward into 2008, be assurred of Premier's commitment to working with the best professionals in the property claims industry in order to give consumers the best claims, legal, and construction service and assistance possible, which is what the public needs most when misfortune strikes their property and other personal assets.

For more information about Premier Claim Consultants, visit my website at http://www.premier-claim-consultants.com/.

LIVECLAIM is Coming!

You may have noticed that on the main menu of the front page of the Premier Claim Consultants web site there is a new option: LIVECLAIM^TM. LIVECLAIM^TM is where Premier Claim Consultants adjusts claims "live" so that consumers and others can have the benefit of seeing firsthand how the claim settlement process takes place. It will also provide a window into the business life and activities of public insurance adjusters. Finally, it will give insurance companies an opportunity to show their quality.

Once LIVECLAIM^TM is ready for use you will be able to access it through Premier's main menu which will then take you to a listing of claim files organized by the date of most recent occurrence. The claims listed will also be labeled as to the type of loss (fire, water, vandalism, etc.), the insurance company involved, and the state and county in which the claim occurred. After selecting one of the claims on LIVECLAIM^TM, you will be taken to a listing of select documents sent between Premier and the insurance company during the course of the claim in chronological order. The documents chosen will be those that can be modified with respect to personal information but still capture and present the adjustment process from both the public adjuster's and the insurance company's perspective, allowing you to evaluate the claim and become more familiar with each insurance company's and with Premier's claim settlement practices.

Also listed next to each listing of claim documents will be a Claims Handling Barometer^TM that will show from the perspective of Premier Claim Consultants whether or not the insurance company is compliant during the course of the claim with the "minimum standards" (section 2695.1[a][1]) of the California Fair Claims Settlement Practices Regulations (hereafter, "CA Regulations"). These standards are in place to "promote the good faith, prompt, efficient and equitable settlement of claims on a cost effective basis" (CA Regulations, section 2695.1[a][2]). Therefore, LIVECLAIM^TM is not only a place where consumers can learn more about the process of property claim adjustments and the benefits of hiring a public insurance adjuster, but through it consumers can get a better appreciation for how different insurers meet, exceed, or fall below the standards in place in California for the settlement of claims.

LIVECLAIM^TM will have active and archived claims available for viewing after January 1, 2008. More information about the features and use of LIVECLAIM^TM will be given here on Property Claims Review, the official Blog of Premier Claim Consultants.

For more information about the California Fair Claims Settlement Practices Regulations, public insurance adjusters, property claims adjusting, appraisals, expert witness services, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

California Regulations and 'Unfair Claims Settlement Practices'

The California Fair Claims Settlement Practices Regulations state the following when it comes to their purpose:

Section 2695.1. Preamble

(a) (1) To delineate certain minimum standards for the settlement of claims which, when violated knowingly on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h);

I have underlined "knowingly on a single occasion" because this shows that, while any insurance company licensed to handle claim in the State of California who violates these "minimum standards" of the California Regulations may be guilty of "an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h)," it only takes "a single" violation of the Regulatons committed "knowingly" for there to be a determination by the Insurance Commissioner that the insurance company has performed an "unfair claims settlement practice." How, though, can such violations be committed "knowingly"?

These same Regulations require California insurers licensed to handle claims to do the following when it comes to their claims agents (which includes their claims adjusters):

Section 2695.6 Training and Certification

(b) All licensees shall provide thorough and adequate training regarding these regulations to all their claims agents. Licensees shall certify that their claims agents have been trained regarding these regulations and any revisions thereto. However, licensees need not provide such training or certification to duly licensed attorneys.

A licensee shall demonstrate compliance with this
subsection by the following methods:

…
(B) that clear written instructions regarding the procedures to be followed to effect proper compliance with this subchapter were provided to all its claims agents;

(3) where the licensee retains insurance adjusters as defined in California Insurance Code Section 14021, the licensee must provide training to the insurance adjusters regarding these regulations and annually certify, in a declaration executed under penalty of perjury, that such training is provided. Alternately, the insurance adjuster may
annually certify in writing, under penalty of perjury, that he or she has read and understands these regulations and all amendments thereto or has successfully completed a training seminar which explains these regulations;);

The underlined sections from the above quoted California Regulatons show that there must be annual certification or training with respect to these Regulations, such that the adjuster or claims agent "understands these regulations and all amendments thereto or has successfully completed a training seminar which explains these regulations." Therefore, there should be no excuse for any California insurer's claims agents or adjusters when it comes to whether or not they 'know' the regulations. The California insurer is required by the State to make sure that their claims agents and their adjusters know them.

But having worked for several of the nation's largest property insurers I can tell you that while there is some emphasis on select Regulations, and while some companies do provide a rather brief annual discussion of the Regulations, there is rarely an ongoing implementation of all of the Regulations that may be applicable to property insurance claims in California. I can also attest to this from my having been a licensed California public insurance adjuster for over three years. So what can be done about this lack of ongoing training and/or implementation of all applicable Regulations?

Consumers can become better educated about the California Regulations when they have a property insurance claim. One way to do this is by reviewing the Regulations themselves, a link to which has been provided at the beginning of this post. Another way is by reading publications such as my Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), or reviewing the Blog articles and other materials on my web site.

But it would sure be nice if more California insurers dedicated themselves to making sure that they not only provided annual training concerning the Regulations, but in fact made the ongoing understanding and implementation of the Regulations the focus of the claims settlement practices. By proactively looking out for the rights of California consumers and not trying to put in the place of the Regulations company standards and procedures that do not meet the "minimum standards" of what is required of California insurers, there would be less instances of 'knowingly violating them on a single occasion or performed with such frequency as to indicate a general business practice shall constitute an unfair claims settlement practice within the meaning of Insurance Code Section 790.03(h),' and thus fewer claims of bad faith on the part of consumers against insurance companies.

For more information about the California Fair Claims Settlement Practices Regulations, public insurance adjusters, property claims adjusting, appraisals, expert witness services, and litigation support, visit my website at http://www.premier-claim-consultants.com/

Two Legitimate Answers To Two Legitimate Questions Based On One Condition

In property claim settlements involving damage to a dwelling or to a commercial building, someone or some entity is likely going to be contracted for all or part of the needed repairs. In most cases the owner of the property will hire a General Building Contractor. In this article I will refer to such contractors and their sub-contractors together by means of “repair individual or entity,” since this is the description used in section 2695.9(d)(3) of the California Fair Claims Settlement Practices Regulations (hereafter, “CA Regulations”). Similar wording is also used in section 2695.9(b)(c)(1)(2) of the CA Regulations, which sections read:

Section 2695.9. Additional Standards Applicable to First Party Residential and Commercial Property Insurance Policies

(b) No insurer shall require that the insured have the property repaired by a specific individual or entity.

(c) No insurer shall suggest or recommend that the insured have the property repaired by a specific individual or entity unless:

(1) the referral is expressly requested by the claimant; or

(2) the claimant has been informed in writing of the right to select a repair individual or entity and the insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and repaired in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by these regulations.

There are two critical facts here: 1) the insurance company cannot require an insured to use a particular repair individual or entity; and 2) the insurance company cannot even "suggest or recommend" a "specific individual or entity" unless the referral is "expressly requested" by the insured or unless the insurance company first informs the insured in writing of his or her right to choose the repair individual or entity.

Obviously, though, insurance companies are not obligated by the above CA Regulations to pay any estimate from any repair individual or entity chosen by an insured. At the same time, they cannot refuse to "reasonably adjust" (CA Regulations, section 2695.9[d][3]) the estimate obtained by the insured from the repair individual or entity of their choosing. Insurance companies cannot price-fix the insured out of making his or her own choice by adjusting only their own estimate or that of some other repair individual or entity not chosen by the insured. The focus must be on the estimate obtained by the insured from the repair individual or entity chosen, since that is the estimate that needs to be negotiated in order to maintain the insured's rights, in this case, his or her right to choose a repair contractor.

But since insurance companies often obtain or write their own repair estimate for a comparative evaluation of the estimate obtained from the insured's chosen contractor, two legitimate questions naturally arise from the perspective of both the insurance company and from the insured:

Insurance Company: Is the estimate from the insured's chosen contractor grossly inflated or out of line with costs in the construction market local to the affected structure?

Consumer/Insured: Is the estimate written or obtained by the insurance company a "low- ball" bid that is only suitable for an insurance company's "preferred vendor" but too low for a quality public construction company in the area where the loss occurred?

There are two legitimate answers to these two legitimate questions and both of them depend on one condition: What kind of contractor did the insured choose?

If, for example, the insured has chosen a repair entity or individual that works regularly for or with insurance companies or with their adjusters and because of this regular work association they are able to accept lower unit costs or eliminate certain common repair estimate items like the cost for a project manager, base service charges relating to the size of the job, or other conditions necessary in order for a particular repair individual or entity to receive referrals from insurance companies, then it may be that such a contractor, if chosen by the insured, can work with the costs and the scope limitations that insurance companies require of those vendors who work for or with them.

However, public contractors, whom I define in my book Property Claims Adjusting: A Complete Guidebook for the Consumer: California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), page 138, as "Licensed General Building Contractors who do not work for or with insurance companies," have no such relationship with an insurance company such that they must accept the same reductions in pricing and scope of work commonly expected by insurance companies for insurance company contractors, defined in my book, page 136, as repair entities "who work primarily or exclusively for or with insurance companies." These are two different types of contractors, and their typical costs and the scope of work they usually prepare for similar jobs will often differ in certain key respects.

That is why when a consumer gets a repair estimate from a public contractor, one who does not work for or with insurance companies, and then the adjuster for the insurance company gets an estimate from an insurance company contractor, they are almost always different with the public contractor usually higher than the insurance company contractor. But since the insured has the right to choose his or her own repair contractor, and since insurance companies are required to "reasonably adjust" the chosen contractor's estimate (not their own estimate or one obtained by a contractor friendly to the insurance company), then the focus should stay on the insured's contractor, not on any estimate prepared by any other individual or entity. But as any public insurance adjuster will tell you, in property claim settlements today the insurance company is focused almost exclusively on their adjuster's or on their preferred contractor's estimate, not on the estimate prepared by the repair individual or entity chosen by the insured. Thus, the exact opposite of what should be happening is what's happening more often than it should.

But it's a legitimate question to ask: "Is the estimate from the insured's chosen contractor grossly inflated?" It's also legitimate to ask: "Is the estimate from the insurance company adjuster or from the insurance company's preferred vendor a 'low-ball' bid?" The answer to each question will most likely depend on one condition: Which type of contractor did the insured choose: A public contractor or an insurance company contractor? You cannot look at one as if it is the other, and you cannot require one type of contractor to accept the pricing and scope limitations or parameters of the other, either. In any event, it is the estimate from the insured's chosen contractor that must be 'reasonably adjusted' (CA Regulations, section 2695.9[d][3]). Not anyone else's estimate.

For more information about how to successfully negotiate your property insurance claim, how to evaluate public insurance adjusters, choosing repair contractors, and understanding many of your rights and obligations in a property claim settlement, see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters in general, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

Beware of Unlicensed Public Adjusters and Contractors

It happens almost every time there's a natural disaster involving loss of personal or structural property: Someone tries to take advantage of those who have suffered already from the disaster itself. During the recent Lake Tahoe (California) fires several unscrupulous and unlicensed contractors were arrested by a sting operation conducted by the California Department of Insurance and El Dorado County investigators. A July 5, 2007, Press Release by the Department states in part:

On July 4, the California Department of Insurance's Enforcement Branch partnered with investigators from the El Dorado County District Attorney's Office and the California Contractors State License Board to identify unlicensed public adjusters as well as unlicensed and uninsured contractors. The operation resulted in five arrests. The El Dorado County District Attorney's Office is prosecuting the cases."Preying on fire survivors is unconscionable," said Commissioner Poizner. "My department will continue to do everything possible to ensure residents aren't burned twice by contractors unwilling to protect their employees and customers from unnecessary liability."

Though to date no unscrupulous public adjusters have been found soliciting people who have suffered loss by fire in the Lake Tahoe area, the Department is concerned with reason, since it has happened in the recent past. While the public insurance industry, especially in California, has earned a bad reputation, good public adjusters are doing their best to changes things. But there are still nefarious contractors and public adjusters out there. So, since you will likely need the services of one or both of these entities should you have a property insurance claim, how can you know whom to choose?

In my book, Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007), I offer simple checklists for evaluating and choosing both contractors and public adjusters. Here is what I suggest:

When it comes to choosing contractors, there are three critical steps:

• Check to make sure the contractor is licensed and bonded.

• Make sure the contractor has workers compensation and liability insurance.

• Check the contractor's references.

The first two steps can be accomplished by visiting the California Contractors State License Board and inputting the license number provided to you by the contractor. You can obtain a list of references from the contractor and call them to see if their project was similar in scope to yours, and then ask them if they were satisfied with the service they received, or perhaps even asking if you can stop by and take a look at the work the contractor completed.

Once you decide which contractor you want to use, then there are several important steps you need to take to make sure the contract you sign protects you:

• Be sure the financial terms of the contract are clear. The contract should include the total price, when payments will be made, and whether or not there is a cancellation penalty.

• The contract should specify all materials to be used, such as the quality, quantity, weight, color, size, or brand name as it may apply.

• Your contract should specify an approximate starting date and completion date for your project. However, external factors such as the weather or the availability of supplies might cause delays.

The above points are taken from the publication, What You Should Know Before You Hire A Contractor (California: Contractors State License Board, 2004), pages 14-16.

When it comes to choosing a public insurance adjuster to represent you in settling your property claim, I recommend you consider the following:

• Is the public adjuster licensed?

• Does the public adjuster have references you can check?

• Do the references supplied provide credible, positive feedback on their experience with the public adjuster?

• Does the public adjuster appear professional and does he or she seem genuinely concerned with your interests or are they eager only to “sign you up”?

• Has the public adjuster patiently answered any relevant, claim or coverage questions you have asked?

• Does the public adjuster take the time to provide a general summary of what you can expect?

You can check a public aduster's license by visting the web site of the California Department of Insurance and inputting the license number provided to you by the public adjuster, or by calling the California Department of Insurance License Bureau at (800) 967-9331 or (916) 322-3555.

After a loss to your home or personal property, the last thing you need is for someone to take advantage of your situation when what you need most is honest, reliable, and productive service. Likely, you will need the assistance of a contractor and a public insurance adjuster. But while you may need them, you only really need the ones who are legitimate and who will make your situation better, not worse. You can protect yourself by following the above suggestions when it comes to choosing repair contractors or public adjusters.

For more information about how to successfully negotiate your property insurance claim, how to evaluate public insurance adjusters, choosing repair contractors, and understanding many of your rights and obligations in a property claim settlement, see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters in general, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

Sales Tax Omissions in Property Claim Settlements: Can They Do That?

Consider the typical homeowners settlement procedures followed by an insurance company adjuster for damages to your structure or dwelling:

• The insurance company sends out a company or an "independent" adjuster who works for it, and the adjuster then prepares an estimate for repairing or replacing the damages, or who obtains an estimate for the same from an insurance company contractor with whom the company adjuster or the insurance company works on other claims.

• The adjuster applies depreciation to nearly all if not all of the line-items in their estimate for the work in question, often even for costs covering labor, though this is not permitted by new California Regulations or California State law. (See CA Insurance Code, section 2051[b][2]: "In case of a partial loss to the structure, a deduction for physical depreciation shall apply only to components of a structure that are normally subject to repair and replacement during the useful life ofthat structure." Labor does not have a "useful life" nor is it "normally subject to repair and replacement!)

• The adjuster includes the traditional though often insufficient (especially in California [see Merl Vandervort, CR. CGR, “The 10 and 10 Myth,” as published in The Bluebook of Cleaning, Reconstruction and Repair Costs [Lake Forest, CA: The Bluebook International, Inc., 2002], pages xx-xxi) general conractor's overhead and profit and materials sales tax appropiate for the county in which the materials will be purchased.

• The resulting total is then sent to you for use in beginning the restoration work to your dwelling or other structure by your contractor, with an amount usually withheld for the depreciated value (or Actual Cash Value in most cases) of the dwelling until your home has been completely rebuilt.

Again, the typical steps in this process from the carrier's perspective are:

1. The company adjuster writes or obtains a Replacement Cost estimate.

2. The company adjuster depreciates, at his or her sole discretion (unless you have a public adjuster assisting you!), amounts to be withheld, based on your home's age and condition, until the repair/replacement of the damages is completed.

3. The company adjuster adds or approves in most cases only the traditional allowances for a contractor's general overhead and profit (10%/10%) as well as the appropriate materials sales tax.

4. The company adjuster then issues a payment for the amount calculated in the above three steps for use by you or your contractor in repairing the dwelling or other structures damaged by a covered peril, with an amount withheld for depreciation until all of the repairs are completed (some companies, such as AAA and State Farm issue the full Replacement Cost according to their estimate, with no dwelling depreciation holdback).

Now consider the typical homeowners settlement procedures followed by an insurance company adjuster for your total loss personal property (= your contents):

• The insurance company sends out a company or an "independent" adjuster who works for it to compile an inventory of all the destroyed personal property.

• The insurance company representative compiles a Replacement Cost Value for the non-salvageable personal propery.
• The insurance company applies depreciation to the Replacement Cost Value based on their assessment of the items' ages and condition, resulting in an Actual Cash Value.

• The insurance company issues you payment for the Actual Cash Value of the destroyed personal property, holding back the depreciation and the sales tax (Allstate and a couple of others are exceptions here) until you actually replace the items in question.

Let's restate this process again so that the steps likely involved in the insurance company's valuing and settlement of your total loss personal property claim are clear:

1. The insurance company prepares a contents inventory.

2. The insurance company applies a cost to replace to each item.

3. The insurance company decides how much to knock off the cost to replace in view of their assessement of how old or worn out (used) the item is.

4. The insurance company then pays you the used value, but will pay you the sales tax or the full cost to replace the items in question until you actually do replace them.

Okay, setting aside the fact that you or your public adjuster can establish your own Replacement Cost Value with supporting documentation and negotiate the amount to be withheld for the age and condition of each and every single item you claim, what's missing above from the contents settlement process that is included in the structure or dwelling process described previously? Don't worry, I will not make you go back and forth through the summaries to find it. The answer is: sales tax.

Insurance companies such as Century-National, State Farm, AAA, and others (again, Allstate and some other insurance companies are exceptions to this rule) routinely leave off of their Actual Cash Value settlements allowances for personal property sales tax though, again, they include it in their Replacement Cost Value repair estimates for dwelling or structure claims. Why the difference?

Based on my over thirteen years of claims adjusting experience, I believe it because they do not think you will replace much of your personal property, and what you do replace you will provide a receipt showing the total cost which they will then pay you if they believe the item is comparable to what you lost. They know you will likely rebuild your property, and that your contractor will be looking for that materials sales tax, so they include it. But they should include it both for dwelling and personal property Replacement Cost Value calculations, and subsequent Actual Cash Value payments, because sales tax is a part of the Replacement Cost Value.

You are entitled to an Actual Cash Value settlement for your lost property under most policies, and the Actual Cash Value amount is based on the Replacement Cost Value which should, again, include the slaes tax. But if you or our representative do not bring this fact to the insurance company's attention then they will likely not include sales tax in their personal property claim settlement calculations, leaving you with less money up front to use in replacing your property or to keep should you decide to cash out for the Actual Cash Value settlement. Can they do that? Insurance companies are not supposed to settle your claim for less than the Actual Cash Value of the full and proper Replacement Cost Value, inclusive of sales tax, but they will if you let them.

For more information about how to successfully negotiate your property insurance claim, how to evaluate public insurance adjusters, choosing repair contractors, and understanding many of your rights and obligations in a property claim settlement, see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters in general, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.

Should You Hire A Public Adjuster?

When professional athletes discuss multi-million dollar contracts with a sports team, they usually don't do it on their own. With rare exception, they use attorneys or sports agents who specialize in knowing contract law and the rules and regulations of the sports league in question, this so the athlete can enter into the best possible contract. In return for negotiating the best contract and representing the athlete in a variety of other ways, the athlete's sports agent or attorney is paid a fee based on the negotiated contract.

Consider, too, how you might go about purchasing or selling your house. In most cases it is common for home buyers or for sellers to use a real estate agent. Why? Because real estate agents are licensed to help people buy and sell houses. They have special knowledge of the value of properties on the market in a given area. They know the laws that have to do with buying and selling a house. They can tell you a good deal about the differences between neighborhoods and towns. And real estate agents can also help you find the right financing if you need it. In return for their services, real estate agents are paid a percentage of the money that you pay or receive for the property in question.

Now consider this hypothetical but very real possibility: Your home or your business has been severely damaged or even completely destroyed. You have insurance to cover your loss. But you are unfamiliar with the claims process and you do not have the time or the expertise to begin documenting, valuing, and settling your claim. Further, you do not know the full range of coverages, additional coverages, or extensions of coverage the may come with your policy package. Finally, your and your family's home life or business operations have been completely disrupted and it will be months, possible a year or more, before everything can be put back to the way it was before the loss occurred.

If an athlete needs a sports agent to help him or her negotiate and finalize the best contract, if a real estate agent is worth a percentage of the purchase cost of a house in exchange for helping you find or buy one, does it not make sense that you would need the best available, professionally licensed agent to assist you with the coverages, negotiations, and with the settlement of your and your family’s claim for damage to your house, your personal property, or to your commercial building and your business property and loss of income?

In California, like in many other states, consumers have available to them just such an agent. They are known as "public adjusters":

Any person acting as a public adjuster who has executed a contract as described in Section 15027 is the agent of the insured. [California Insurance Code, section 15027.5.]

Public adjusters can be hired by insureds to represent them in the preparation, preasentation, and settlement of their claim. In fact, they are the only type of insurance adjuster that can legally represent consumers in California. Public insurance adjusters are individually licensed and they must pass a State-administered exam. They are property claim settlement experts who know how to evaluate coverage, prepare and present your claim, and then negotiate a settlement for all of your covered loss and damages. As with other agents, they are usually paid in relation to the settlement they negotiate on your behalf and in return for performing a variety of difficult but necessary claim services.

But public adjusters are not the only type of adjuster who may be involved in your property insurance claim. There are actually three types of insurance adjusters defined in the California Insurance Code, namely:

1. Company Adjusters: "Company adjusters means the insurance adjusters who are mployees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California." [California Insurance Code, section 15027(v).]

2. Independent Adjusters: "Independent adjusters means the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee." [California Insurance Code, section 15027(v)(3).]

3. Public Adjusters: "Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only." [California Insurance Code, section 15027(v)(1).]

The above defintions make clear the fact that insurance companies have two kinds of adjusters that may represent their interests: 1) company adjusters who work as direct employees of the insurance company, and 2) independent adjusters who are hired on a contract basis, again, to work only for the insurance company. Thus, the "independent" in "independent adjuster" does not mean this type of adjuster is not influenced by the insurance company for whom they work. They are. "Independent" here means that the independent adjuster does not “work exclusively for one [insurance] company” (Black’s Dictionary of Law, 5th ed. [St. Paul, Minn.: West Publishing Co, 1979], page 693, under "Independent"). Again, both "company" and "independent adjusters" work exclusively for insurance companies in the settlement of claims. Further, "company adjusters" are not tested by the State. In fact, many independents are also not tested by the State are as all public adjusters, depending on whether or not the independent adjuster has his or her own license or whether he or she works under the license of another "independent adjuster" for insurance companies.

Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only." Their license empowers public adjusters to assist you with the "preparation, presentation, and settlement of your claim." They do not work for insurance companies when adjusting claims. They can only legally represent your claim interests, and they negotiate with insurance companies and with their adjusters on your behalf. But just how do public adjusters represent insureds in the preparation, presentation, and in the settlement of property claims? Here are some examples:

• Public adjusters provide a comprehensive analysis of all coverages that might in any way apply to your claim: This is the essential "first step" for any property claim adjustment. You must know all of the coverages, and exclusions, that apply to your claim before you begin incurring claim-related expenses. The last thing you want to find out is that you paid for something that is not covered, or that you paid too much for something that may have certain coverage limits or restrictions.

• Public adjusters assist you with locating and setting up temporary residence or business operations: This is one of the most urgent items after a severe claim event occurs: you need to restore stability to your normal personal life or to your business operations right away. This will allow you to carry on as usual, to the extent possible under the circumstances, while the claim is adjusted and the damaged or destoryed property is restored or replaced. Again, such a process can take months or longer. A public adjuster will know what your coverages are during this time and he or she can help make sure that you have the best possible residence or business location, and all the furniture or equipment you need for each, during the course of the claim.
• Public adjusters complete an inventory of all your damaged or destroyed business or personal property: This is actually a policy "duty" with which insureds must comply, and one that will help document a significant part of your loss in preparation for your settlement demand to the insurance company. But are you prepared to spend several days inside your smoke or fire damaged property to complete the inventory? Are you ready to dig through all of the debris and ash to make sure that your inventory is complete? Are you prepared to price each and every item (which now represents settlement money to you) and to provide supporting documentaiton for the values claimed? Further, do you know where best to turn for help with restoring any salvageable personal property, such as valuable papers, family heirlooms, and other items that may not be replaceable? Public adjusters are of invaluable assistance in all of these areas.

• Public adjusters compute any necessary reduction in value ("depreciation") for affected property: Your insuance company will in most cases withhold money for the age and condition of the items damaged in the claim event. But how much they withhold is often subjective and you can almost always challenge the insurance company's withholdings so that you receive more money up-front for any property that you may or may not choose to replace. Since in most property claims there are always items you will decide not to replace, then the amount of depreciation withheld will directly correspond the money you get to keep for the used value of these items. Therefore, you need someone representing you who knows property values and how depreciation is properly calculated for each item, in order to make sure you are getting the best property settlement possible. New California Regulations are in place that will definitely benefit the consumer in these areas, provided that you understand them or that you have someone representing you who understands how to apply these new Regulations.
• Public adjusters negotiate payment for any damaged structures: Public adjusters are also very familiar with what is justifiable for residential and commercial construction projects, and how to negotiate the best possible settlement for you to use in restoring the damaged or destroyed property. To do this, they will use repair estimates that are not written with the limitations often imposed by insurance companies on their adjusters or on their preferred contractors. The public adjuster will also likely have to have numerous discussions and on-site meetings with the company or independent adjuster and with their contractor, as well as review and submit regular correspondence to the insurance company concerning differences of opinion that may need to be resolved prior to concluding your claim settlement.

• Public adjusters can give you peace of mind: Public adjusters can provide all of the above and many other services should you suffer a loss to your personal or business property. These services usually result in a settlement for your entire covered loss and damages that is based on costs for goods that match your standard of living. Public adjusters also adjust claims so that you have enough money to choose your own repair contractor, which is a California consumer's right (see California Fair Claims Practices Settlement Regulations, section 2695.9[b][c][1][2]). In providing these services to insureds who have had the misfortune of experiencing a property loss, public adjusters can provide you with peace of mind during a time when a good deal of your life may be turned upside down due to an unforeseen occurrence.

Should you hire a public adjuster? Would you hire a sports agent if you were a professional athlete? Would you hire a real estate agent if you were looking to buy or to sell a house or commercial property? With all that is involved in making sure that your property claim settlement is complete, equitable, and that it leaves you with enough money to repair or replace all of your damaged or destroyed property with your own contractor, if the answer to the last two questions is "yes" then it is hard to imagine answering any differently to the first question.

For more information about how to evaluate and hire a public insurance adjuster, choosing repair contractors, and understanding many of your rights and obligations in a property insurance claim see Property Claims Adjusting: A Complete Guidebook for the Consumer, California Homeowners Edition (Murrieta, CA: Premier Claim Consultants, 2007).

For more information about public adjusters, expert witness services, property claims adjusting, appraisals, and litigation support, visit my website at http://www.premier-claim-consultants.com/.