The Key Differences: Public Adjuster vs. Insurance Company Adjuster

The key differences between a public adjuster and an insurance company adjuster are their roles and allegiances. A public adjuster works on behalf of the policyholder, advocating for their best interests in the insurance claim process. On the other hand, an insurance adjuster is employed by the insurance company and works to represent the company’s interests.

Introduction

In general, there are two main types of insurance adjusters:

• Insurance company adjusters, who are employed by the insurance company.
• Public adjusters, who are hired on a contract basis and work for the betterment of the policyholder.

Public adjusters are independent adjusters and do not have any ties to the insurance company. It allows them to focus solely on maximizing the settlement for the policyholder. However, insurance company adjusters’ goal is to minimize the financial impact on the insurance company.

Both types of adjusters are trained to analyze the facts of a claim, review relevant policies, and negotiate with the insurance company in order to reach a fair settlement.

In this blog, you will get detailed information about what a public adjuster and insurance adjuster do in the insurance industry, their primary duties and responsibilities, evaluation of claims, and more.

Let’s read the fundamental differences between both in the insurance industry!

What is a public adjuster?

The role of a public adjuster is crucial in handling property damage claims and determining the amount of compensation that should be awarded to policyholders. In our previous blog, we mentioned in detail that a public adjuster is an individual who investigates insurance claims to determine the extent of the insurance company’s liability. Moreover, the public adjuster also assesses the property damage, gathers relevant information, and negotiates settlements with the claimants. In addition to that, public adjusters play a pivotal role in the insurance process by ensuring that the claims are properly evaluated.

Primary Duties and Responsibilities

1. Evaluate and assess insurance claims, documenting property damage comprehensively.
2. Interpret insurance policies to optimize compensation for policyholders.
3. Compile detailed documentation, including reports and photographs, to support claims.
4. Advocate for clients in negotiations with insurance companies to secure fair settlements.
5. Maintain clear communication with clients, keeping them informed and guiding them through the claims process.

What is an insurance company adjuster?

An insurance company adjuster, often referred to as an insurance adjuster, plays an important role in the insurance industry. The primary responsibility of an insurance company adjuster is to assess and evaluate insurance claims to determine the extent of the loss and the amount that the insurance company should pay to the policyholder.

Additionally, they can work for insurance companies directly or maybe independent contractors hired by insurance companies on a case-by-case basis.

Here’s an overview of their role, along with their primary duties and responsibilities:

Primary Duties and Responsibilities

1. Investigate insurance claims to determine the extent of losses covered by policies, including property damage or other covered events.
2. Review insurance policies to understand coverage, assess whether claimed losses align with policy terms, and establish the scope of coverage.
3. Communicate effectively with policyholders, witnesses, and relevant parties to gather information and understand the circumstances surrounding the insurance claim.
4. Conduct physical inspections of damaged property, accident scenes, or injury sites to accurately assess the extent of the loss.
5. Document findings, prepare reports, and maintain detailed records of investigations and assessments.
6. Negotiate with policyholders or third parties to achieve fair settlements, resolving claims efficiently while adhering to policy terms.
7. Make decisions on the validity of claims and determine the compensation amount based on assessments and policy terms.
8. Ensure legal compliance throughout the claims process, adhering to regulatory requirements and standards.

Primary Allegiances

Public Adjuster

A public adjuster works on behalf of the policyholder, not the insurance company. However, their primary allegiance is to the insured individual or business that has experienced a loss or damage covered by an insurance policy. Public adjusters are independent professionals hired by the policyholder to assist in the claims process.

Here are some key points regarding their role:

• Public adjusters advocate for the rights and interests of policyholders. They work to maximize the insurance settlement on behalf of the policyholder.
• Public adjusters are not employees of the insurance company. Instead, they are independent contractors hired by the policyholder.
• Public adjusters help policyholders navigate the complex claims process. Additionally, they assess the property damages, prepare and document the claim, and negotiate with the insurance company to secure a fair settlement.
• Public adjusters typically have expertise in insurance policies, claims processes, and property assessment. They use their knowledge to ensure that the policyholder receives the maximum compensation to which they are entitled.

Fee Structure

Public adjusters are compensated based on a percentage of the final insurance settlement.
Moreover, their fee is usually a mutually agreed-upon percentage of the total claim amount, and it is paid by the policyholder.

Insurance Company Adjuster

Insurance adjuster, on the other hand, works for the insurance company. Their primary allegiance is to the company that employs them.

Here’s an overview of their representation:

• Insurance company adjusters are staff members of the insurance company. They are hired and paid by the insurance company to handle claims on its behalf.
• The insurance adjuster’s loyalty lies with the insurance company. They work to ensure that claims are assessed in accordance with the terms and conditions of the insurance policy.
• Insurance company adjusters aim to protect the financial interests of the insurance company by accurately assessing and managing the risks associated with each claim.
• Insurance adjusters must adhere to the company’s guidelines and policies when evaluating claims. They work to find a fair resolution within the boundaries set by the insurance policy.

Salary-Based Compensation:

Unlike public adjusters, insurance company adjusters receive a salary from the insurance company. Moreover, their compensation is not directly tied to the amount of the insurance settlement.

Evaluation of Claims

Public adjusters and insurance company adjusters employ distinct approaches to claim evaluations.

Insurance Company Adjuster Approach to Claims Evaluation

Insurance adjuster approach claims evaluation with the goal of protecting the interests of the insurance company while adhering to the terms and conditions outlined in the insurance policy. Meanwhile, their assessment is typically guided by internal company policies and industry standards.

Processes and Methodologies

Adjusters employ systematic processes and methodologies to evaluate claims.

1. Policy Review

Insurance adjusters begin by thoroughly reviewing the insurance policy to understand the coverage, exclusions, and limitations. Insurance adjuster ensure that the claimed loss falls within the scope of the policy.

2. Investigation

The next step insurance adjuster take is to conduct a comprehensive investigation. However, this step may involve site visits, interviews with the parties involved, and gathering relevant documentation. The insurance company adjuster seeks to establish the cause and extent of the loss.

3. Documentation

Insurance company adjusters then thoroughly document their findings, including photographs, witness statements, and any other evidence. Additionally, they also create a detailed report that serves as the basis for claim evaluation.

4. Estimation

Using industry-standard tools and guidelines, insurance company adjusters estimate the cost of repairs or replacements for property damage. That estimation is a key factor in determining the final settlement amount.

5. Negotiation

Insurance adjuster may engage in negotiations with the policyholder or their representatives to reach a fair and reasonable settlement. The negotiation process considers the insurance company’s position and the policy terms.

6. Claims Processing

Once a settlement is agreed upon, the insurance company adjuster oversees the processing of the claim and ensures that the policyholder receives the agreed-upon compensation.

Public Adjuster Approach to Claims Evaluation

Public adjusters approach claim evaluation with the primary goal of securing the maximum possible settlement for the policyholder. They work independently on behalf of the insured party and strive to ensure that the policyholder’s rights and interests are protected.

Processes and Methodologies

In the case of public adjusters, negotiation techniques and methodologies are used to ensure fair and accurate assessments aligned with policy terms.

1. Policy Analysis

Public adjusters carefully review the insurance policy to understand the coverage, exclusions, and any limitations that may impact the claim. Meanwhile, they ensure that the policyholder’s rights are fully exercised.

2. Independent Investigation

Public insurance adjuster conducts his own independent investigation, often re-evaluating the findings of the insurance company adjuster. Additionally, he may bring in experts or specialists to provide additional insight into the extent of the loss.

3. Documentation and Presentation

Public insurance adjuster usually compiles a comprehensive, detailed, and compelling claim file. It usually includes proper documentation, evidence, and estimates. Moreover, they present this file to the insurance company, advocating for the policyholder’s position.

4. Negotiation and advocacy

The next step is to actively negotiate with the insurance company’s representatives on behalf of the policyholder. Their goal is to achieve the highest possible settlement, taking into account the policyholder’s needs and the true extent of the loss.

Compensation Structures for Public Adjusters

Public adjusters are typically compensated based on a percentage of the final settlement amount awarded to the policyholder.

Here’s an overview of how public adjusters are compensated:

Contingency Fee

• Public adjusters work on a contingency fee basis. This means that they only get paid if they successfully secure a settlement for the policyholder.
• The fee is a percentage of the final settlement amount, and it is agreed upon between the public adjuster and the policyholder before the commencement of their services.

Percentage-Based Compensation

• The specific percentage can vary and is often negotiable. It is not uncommon for public adjusters to charge a fee ranging from 5% to 20% of the final settlement amount, depending on factors such as the complexity of the claim and the services provided. It’s just an estimate, as it may be subject to change.

No Upfront Costs

• Public adjusters typically do not charge upfront fees.
• The fee structure aligns the interests of the public adjuster with those of the policyholder, as both parties benefit from maximizing the settlement.

Payment After Settlement

• Once the insurance company disburses the settlement to the policyholder, the public adjuster’s fee is deducted from that amount.
• The policyholder receives the remaining balance after the public adjuster’s fee has been subtracted.

Compensation Structure for Insurance Company Adjusters

Insurance adjusters are salaried employees of the insurance company. Their compensation structure differs from that of public adjusters and is not directly tied to the amount of the settlement. Here’s an overview:

Salaried Position

• Insurance adjuster typically receive a fixed salary as employee of the insurance company.
• The salary is not contingent on the outcome of individual claims or the settlement amounts.

Employee Benefits

• Insurance adjuster may receive additional benefits such as health insurance, retirement plans, and other employment benefits provided by the insurance company.
• These benefits contribute to the overall compensation package but are not tied to specific claim settlements.

Performance bonuses (in some cases)

• Some insurance companies may offer performance bonuses to adjusters based on factors such as overall claims handling efficiency, customer satisfaction, or meeting specific performance targets. However, these bonuses are not directly linked to the settlement amounts of individual claims.

Pros

Public Adjusters	Insurance Company Adjusters
They have specialized knowledge and advocate for fair settlements.	They understand policies well and facilitate a smoother claims process.
Work to maximize settlements for policyholders.	Direct access to the adjuster handling their claim, enabling immediate communication.
Guide policyholders through the process and manage negotiations.	Working directly with an insurance company adjuster may lead to a more straightforward and predictable claims process.
Public adjusters work on a contingency fee basis, aligning their interests with those of policyholders.	Insurance company adjusters are well-versed in their company’s policies, leading to efficient claim handling.
Public adjusters handle details, reducing the burden on policyholders.

Cons

Public Adjusters	Insurance Company Adjusters
Charge a contingency fee, reducing the final settlement amount.	may be perceived as having potential bias in favor of the insurer’s interests.
For straightforward claims, policyholders may navigate the process without a public adjuster.	Insurance adjusters prioritize the company’s interests, potentially offering limited advocacy for policyholders.
Involving a third party in rare cases may introduce delays, especially in complex cases.	Insurance company adjusters receive a fixed salary, and their motivation to maximize settlements may be questioned.

Ethical Considerations

When it comes to the ethical standards for both types of adjusters, there are several important considerations to keep in mind.

• For independent adjusters, it is crucial to remain impartial and avoid any conflicts of interest when making decisions on behalf of an insurance company.
• Conversely, insurance company adjusters must adhere to the ethical standards and regulations set forth by their employer, ensuring that they operate in the best interest of the company and policyholders.
• Another point of debate is the ethical implications of certain cost-cutting measures, such as denying or delaying legitimate claims in order to save the company money. These controversies highlight the importance of ethical considerations in the insurance adjusting industry and the need for ongoing dialogue and evaluation of ethical standards.

Real-life Scenarios

Real-life scenarios, such as case studies or examples, can provide valuable insight into the differences in action among various types of adjusters. By examining these scenarios, one can gain a better understanding of the potential outcomes associated with each type of adjuster. This understanding can be beneficial in making informed decisions and formulating effective strategies for handling insurance claims and settlements.

Conclusion

In conclusion, it is important to carefully consider the main differences between insurance policies and their implications. One should take into account the coverage limits, deductibles, and exclusions when making an informed choice on insurance claims. It is crucial to read and understand the policy terms and conditions before making a claim and before hiring adjusters. However, by understanding the differences between public adjusters and insurance adjusters, a policyholder can make informed decisions. In addition, seeking guidance from adjusters can provide valuable insights. It aids in making the best choices when faced with property damage insurance claims. Therefore, taking the time to understand the main differences and seeking guidance when needed can greatly benefit individuals in making informed choices when dealing with insurance claims.

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