Insurance Adjusters: Who They Are, What They Do, When To Hire One, And Why

The loss suffered by a policyholder will be reported to the insurance company through which the policy was purchased. Adjusters (also known as insurance adjusters or claims adjusters) are the individuals that investigate insurance claims on behalf of their respective insurance companies.

When it comes to paying out claims, insurers must exercise caution and exercise needful investigation. As a result, they may be forced to pay claims that are either outside the scope of the policy’s coverage or that are fraudulent in character. In the long run, this would deplete all of the funds available to the insurance company for real claims, causing the company to go out of business. No one would be covered by insurance in that case.

Fortunately, insurance firms employ adjusters to evaluate claims and assist them in reaching settlements that are equitable to both the insurer and their covered clients. The adjuster is the person who talks with the insured on behalf of the insurance company throughout the claims procedure.

There is a separate insurance regulator for each province and territory. Insurance adjusters are required to be licensed by these regulating organizations. They must be in possession of the appropriate license for the province where they are employed.

What is an insurance adjuster?

In the event of a claim, the amount of money that your insurance company should pay you is determined by an insurance adjuster, often known as a claims adjuster.

Depending on your insurer (or you! ), insurance claim adjusters can be either in-house representatives or independent contractors employed by your insurer. They look into matters such as bodily harm, medical bills, and property damage, among others.

Insurance adjusters assist in determining a fair settlement by doing the following tasks:

Having a conversation with you
Assessing the damages
Having conversations with eyewitnesses
Reading reports written by government authorities – and more!

What does an insurance adjuster do?

The job of a claims adjuster is quite demanding. Whenever a policyholder makes a claim with their insurance carrier, the claim is assigned to an adjuster who will investigate the claim. The adjuster will next begin the process of filing a claim and gathering all of the relevant information. A report to the insurance company is required, in which they must explain everything about the claim and how much the insurer should pay to resolve it. In addition, the adjuster will review the insurance policy to determine which aspects of the claim are covered and which aspects are not.

Example: Peter works as a claims adjuster for a large insurance business in the United States. After some time has passed, he receives a claim from a customer who had their home broken into and some of their valuable jewelry stolen. The first thing he does is contact the insured in order to hear their side of the story and learn more about the situation. He discovers that the insured was away on vacation at the time of the incident, so they don’t know much about the incident other than what is missing and what is damaged. Despite this, they did submit a police report. When Peter has gathered the necessary information, he gets in his car and drives across town to meet the customer and check out the location of the crime.

In order to produce an accurate and fair evaluation of the settlement amount, the adjuster must collect a large quantity of information from the parties. During their investigation, they will visit the location of the damage, interview claimants and witnesses, study police reports, speak with appropriate specialists, and do anything else they deem necessary to obtain a complete picture of the situation. For claimants, the more information you can supply to the adjuster, the better; you’ll save them time by not having to seek out information, and they’ll be able to settle your claim more quickly as a result of your cooperation.

While assisting the insured, the adjuster will frequently be able to assist the insured in completing important tasks such as obtaining repair quotes and hiring expert contractors.

The insurance company will be notified once they have completed their investigation, determined the cause of the loss, and determined the degree of the damage. They will then submit a report to the insurance company with a recommended settlement figure. The adjuster’s goal is to calculate the amount that will fully compensate the insured for the loss, nothing more and nothing less.

Example: Peter has determined that the customer’s policy will cover this claim after speaking with the customer, photographing the damaged door, and reviewing the police report. The jewelry had clearly been stolen, the customer had chosen to add sufficient jewelry coverage to their policy, and the customer had receipts to prove the value of the jewelry, among other factors. Peter estimates that the cost of replacing the stolen jewelry will be $7,000 and that the cost of repairing the damage caused by the burglary will be $800, based on his calculations. After reviewing the customer’s claim and making recommendations to the insurance company, he suggests that they pay $7,800 in order to resolve the claim, less the $1,000 customer’s deductible.

Of course, things don’t always go according to plan; it can be difficult to determine the exact cause of a loss. The insured may not always agree with the amount of compensation offered by the adjuster in a settlement. The adjuster also serves as a negotiator in the case of a dispute. Despite the fact that they are working on behalf of the insurer, they aim to ensure that both parties are satisfied with the settlement. It’s a delicate balancing act to strike.

Depending on the insurance firm (or insurer) for whom they work, an adjuster may approach claims in a different way. Under explicit settlement methods, some adjusters, for example, may be authorized to payout small claims more swiftly than others.

Public institutions, such as state governments or major cities that receive a considerable number of claims are more likely to have their own claims adjustment departments. There is no difference between the negotiation process with government insurance adjusters and the negotiation process with private insurance adjusters. The only significant difference between bargaining with a private claims adjuster and negotiating with a government insurance adjuster is that if a claim eventually ends up in court, judges and juries are not as generous in awarding damages with public funds.

As a result, government entity adjusters tend to be more conservative with settlement funds than commercial insurance adjusters in general. Generally speaking, if you have a claim against a public entity, you may expect your settlement to be 10 percent to 25 percent cheaper than if your claim was against a private business. (Contact your state’s attorney general for information on filing a lawsuit against the government for personal injury.)

Even if you have not filed a personal injury lawsuit, it is possible that you will be contacted by an attorney (rather than a claims adjuster) to discuss the details of your claim. Self-insured corporations and some insurance firms that do not have a local claims office may employ either their own in-house counsel or a local attorney to serve as a claims adjuster in certain circumstances. Additionally, government institutions such as cities, counties, and states may employ assistant city, county, or state attorneys who deal directly with accident claims before they reach the courtroom.

In the event that an attorney is managing your claim rather than an insurance adjuster, don’t be alarmed. In the claims negotiating process, a lawyer cannot perform any functions that are distinct from those performed by a non-attorney insurance adjuster. A lawyer may be able to bluff a little more than an insurance adjuster when it comes to the law involving negligence and responsibility, but there are simple strategies for calling that type of bluff.

Your own insurance agent will not negotiate a settlement on your behalf if you submit a claim under your own automobile collision, uninsured, or underinsured motorist coverage. All an agent can do is refer your claim to the claims department, after which it is out of the agent’s control totally. You will then enter into a settlement negotiation with a claims adjuster, who will be representing the company rather than you in the process.

How does an insurance adjuster settle the claims?

Insurance adjusters’ success is measured not only by how little money they spend on settlements but also by how quickly they resolve claims. Most adjusters receive between 50 and 100 new claims every month. Each month, they must settle that many claims—a process known as “clearing” or “closing” a claim file. Also, their performance is evaluated based on the number of claims they can resolve on their own without involving supervisors or insurance company attorneys. Once an adjuster determines that you understand the range of value for your claim, the adjuster is unlikely to stall your claim.

Throughout the bargaining process, you will discover that you are far more knowledgeable about your claim than the adjuster is. Insurance claims adjusters, with the exception of those assigned to the most complex situations, lack special legal or medical qualifications. And the majority lack the time or resources necessary to thoroughly analyze or study your claim.

As a result, while an adjuster may know more about the claims business in general than you do, he or she will likely be unfamiliar with your specific claim. You were present at the time of the accident. You are aware of the nature of your injuries, how much and where they hurt, and how long they took to heal. You have taken the time to determine how the accident occurred and to document your damages through photographs, medical records, and other papers. On the other hand, the insurance adjuster has only a few minutes per week to review your paperwork. You have the negotiation advantage as long as you are organized and understand the procedure.

The adjuster has the authority to negotiate the ultimate settlement amount with you over the phone. Once you and the adjuster agree on a settlement price, the adjuster will simply email you the papers necessary to finish the transaction. However, adjusters’ capacity to resolve claims independently is limited to specified dollar amounts. The restrictions are determined by the adjuster’s level of experience. The limit may be between $5,000 and $15,000. For less experienced adjusters, the limit may be between $5,000 and $15,000. The cap may be between $15,000 and $30,000. For more experienced adjusters, the cap may be between $15,000 and $30,000.

An adjuster will not disclose his or her authority limits unless you receive an offer that exceeds that authority. If this is the case, the adjuster must seek approval from a superior—typically referred to as a claims supervisor or claims manager. This is not uncommon or difficult. However, if the adjuster requires confirmation from a supervisor regarding your settlement offer, obtain a date by which you will hear back from either one and then send a letter to the adjuster confirming that date.

How to become an insurance adjuster?

While becoming a claims adjuster is not a common career option, it is one that is in high demand. Insurance claims adjusters are often required to have a high school diploma, while an associate’s or bachelor’s degree is desirable. Individuals will then need to study for and pass a licensing exam.

Certain states require a certain number of hours of training to be completed in advance. Following that, insurance adjusters must earn continuing education credits to maintain their license. Independent insurance adjusters licensed in California are required to complete a minimum of 24 hours of continuing education per two-year licensing term.

For instance, insurance claims adjusters in Florida are required to pass specific exams and possess professional credentials. Residents may take and pass either the Florida Adjuster Examination or a state-approved adjuster designation course. Additionally, the state will need proof that they have completed 24 hours of continuing education every two years.

The following states do not need insurance adjusters to be licensed:

Colorado
Iowa Illinois
Kansas
Missouri
Maryland
Massachusetts
Nebraska
State of New Jersey
Dakota du Nord
Ohio
Pennsylvania
State of South Dakota
Tennessee
Virginia
Wisconsin

Qualifications of an insurance adjuster

The business’s owner, partner, officer, or employee management must meet the following requirements:

Age: 18 years of age is the minimum requirement.
Residency: California Insurance Code Section 14029(a) requires that each licensee’s business be operated actively under the direction, control, charge, or management of the licensee if qualified, or the person qualified to act as the licensee’s manager, if not qualified. Although the competent manager does not have to be a resident of California, they must adhere to the supervisory criteria outlined in section 14029. (a).
Entity type: The two categories of entities are individual and business entities.
Experience/Education Required Prior to Licensing: Two years of certified insurance adjusting experience is required. In the adjusting sector, one year of experience equates to 2,000 hours of compensated time.
Continuing Education: California Insurance Code Section 14090 was amended to require independent insurance adjusters in the state to complete 24 hours of CE per two-year licensing term, including three hours of ethics.

Working with an insurance adjuster

Claims adjusters are employed by the insurance company to resolve claims. A claims adjuster may be employed directly by an insurance company, or they may be a freelancer hired by an insurance company to handle a specific claim. Due to the fact that their job is the insurance company, they will not be acting in your best interests in either situation. You should seriously consider hiring your own independent claims adjuster, who will endeavor to safeguard your interests in the event of an insurance claim. Your own claims adjuster will do all in his or her power to keep your loss to a minimum. The fact that there is no conflict of interest between the adjuster and the insurer works in the claimant’s favor, as previously stated.

If you are involved in an accident, the best thing you can do is provide specific descriptions of all of the objects that have been lost. You should also produce a house inventory, which should include images and videos if possible. Make sure to obtain your own quotes for repairs and to carry out your own due diligence.

Types of insurance adjusters

Listed below are the three most common categories of insurance claims adjusters:

Company insurance adjusters

Business adjusters are individuals who work for an insurance company. Because corporate adjusters work for your insurance company, they are primarily concerned with meeting the interests of their employer. Despite the fact that they are aware of your worries, they are primarily concerned with settling claims swiftly and decreasing claim payouts for their respective companies.

Independent insurance adjusters

Independent adjusters are self-employed adjusters who are hired by insurers in specific circumstances. They are also known as independent claims adjusters. Independent insurance adjusters, with the exception of those who work on a freelance or consulting basis, work for insurance companies. Companies may use them in situations where they do not have a claims employee in a certain geographic area, are overburdened with claims, or do not have an adjuster with specific experience in a particular type of claim.

Public insurance adjusters

Public adjusters are identical to independent adjusters, with the exception that they operate on behalf of the insured rather than the insurance company. Because they are hired by insurance companies, public insurance adjusters are in a better position to provide objective advice on settlements, for which they receive a percentage of the settlement amount as compensation. Because greater settlements improve their income, the interests of a public adjuster are frequently aligned with yours.

When should you consider hiring a public insurance adjuster?

If your small company insurance claim is only a few hundred or a few thousand dollars in value, it is unlikely that it will be beneficial to hire a public insurance adjuster to handle the case.

You should defer decision-making on your claim settlement to your insurer’s adjuster if you have a substantial claim and are certain that your insurer will handle it properly and efficiently.

However, if you have experienced a significant loss that has the potential to be devastating to your business or personal finances, it may be prudent to retain the services of a public adjuster from the beginning.

How much does a public insurance adjuster cost?

Numerous public insurance adjusters charge no fee for visiting the scene of a loss and determining if they will deal with a policyholder on a case. They do, however, charge a fee for assisting a policyholder with filing a claim.

Typically, a public insurance adjuster will charge a percentage of the final settlement amount paid by a policyholder’s insurance company for a claim. For instance, suppose a policyholder pays a 10% fee to an adjuster, and the insurance company finally pays $100,000 for the claim. The policyholder would then owe $10,000 to the public adjuster.

The percentage of fees charged by adjusters varies and is typically capped by municipal or state law. In Florida, for example, fees cannot exceed 20% of the amount of a reopened or additional claim. Additionally, there is a 10% fee cap on claims arising from an event declared a state of emergency by Florida’s governor.

Additionally, public insurance adjusters have a cap on the amount of money they can charge for every claim. In general, less experienced public insurance adjusters may cap their rates at $5,000 per claim. Adjusters with experience may set their rates substantially higher, such as $10,000 or $15,000. For instance, a public insurance adjuster may charge $15,000 for a $350,000 claim, rather than the standard 20% fee of $70,000. Additionally, they may negotiate a reduced percentage charge for major claims, such as those involving property losses of $1 million or more.

How to choose a public insurance adjuster?

There are several steps a policyholder can take to ensure they hire an experienced public adjuster. They should begin by determining if the public adjuster is legally permitted to practice. Public insurance adjusters are required to be licensed in each state in which they practice. As with other professionals, they must be bonded and maintain their licensure through continuing education courses. If an individual, such as a contractor or an attorney, proposes to provide claim adjustment services but is not licensed to do so, avoid working with them. It is against the law to practice without a license, and the license serves as a significant indicator of knowledge and qualification.

Will your adjuster personally handle your claim?

Certain public adjustment businesses may assign one adjuster to provide an estimate and another to conduct follow-up and in-depth analysis of a claim. While you may prefer to work directly with a single adjuster as a policyholder, having a firm send more than one individual may not be a bad thing. Another adjuster may assume responsibility for a claim merely because they are better familiar with a particular sort of damage. For instance, one adjuster may be aware that their firm is interested in working on your fire claim, but another adjuster within the firm may have greater experience with fire damage and will take over from there.

Inquire about referrals or references

The ideal referral comes from an acquaintance who has already worked with an adjuster. However, if no one you know can give a recommendation, request contact information for some of the public adjuster’s former clients from the public adjuster under consideration. Ascertain that others have enjoyed working with them.

Additionally, we urge that you examine internet reviews of public adjusters. The National Association of Public Insurance Adjusters (NAPIA) maintains a membership database, albeit membership does not guarantee that an individual is a licensed or competent adjuster for your claim.

Is your public adjuster qualified?

Depending on the severity and complexity of a claim, a policyholder may wish to retain the services of a more seasoned public adjuster. Inquire about the types of cases they have handled and whether they have expertise working with your insurance. Inquire about the length of time public adjusters have been in practice and the types of claims they have handled. An adjuster’s website should include this information, and more experienced adjusters often charge a higher cost. Bear in mind that the number of years an adjuster has been in practice or the volume of claims they handle each year are not always indicative of their degree of experience. For instance, an extremely skilled adjuster may take on less than a dozen claims per year, but only because they prefer to deal on complex, intricate claims involving large monetary amounts.

What are the adjuster’s communication guidelines?

While a public adjuster is typically responsible for the entirety of a claim on behalf of their clients, certain policyholders may desire some amount of engagement. Before hiring a public adjuster, discuss this with them. You want to pick an adjuster with whom you feel at ease throughout the procedure.

Attorney vs. public insurance adjuster

Do not panic if your claim is being handled by an attorney rather than a claims adjuster. A lawyer cannot do anything differently than a non-attorney claims adjuster during the claims negotiating process. While a lawyer may bluff slightly more than a claims adjuster regarding the law of negligence and liability, there are simple strategies for calling that type of bluff.

You do not negotiate a settlement with your own insurance agent if you file a claim under your own automobile collision, uninsured, or underinsured motorist policy. All an agent can do is refer your claim to the claims department—at which point the agent’s involvement is utterly lost. After that, you will negotiate an injury compensation with a claims adjuster who will represent the company, not you. Discover how to negotiate with your own insurer following an accident.

Policyholders who make a claim and receive an unreasonable settlement proposal from their insurer may believe they need to employ an attorney to contest their claim. They typically do not in this case – they must engage a public adjuster.

Indeed, policyholders frequently use the services of public insurance adjusters at this stage of the claims procedure. A public adjuster can assist them in reopening their claim and filing a supplemental claim with their insurer for additional payments.

However, if an adjuster negotiates with an insurance company and still believes the policyholder is entitled more than the insurer is prepared to pay, litigation may be necessary. If a policyholder determines that the cost of an attorney and filing a lawsuit against their insurance company is worth the desired compensation, a lawsuit may be filed.

Any insurance company may refuse to engage with a public adjuster or to pay the desired settlement to a policyholder. In that case, the only choice would be to retain an attorney and pursue the lawsuit. Fortunately for policyholders, this is a somewhat rare occurrence.

Advances in technology and insurance adjusters

In the insurance industry, claims are one of the more contentious topics. Despite the fact that insurance is intended to be a social good, it is still a business managed by real corporations with very real bottom-line objectives and consequences.

While the majority of insurance companies rely on claims adjusters to do the heavy lifting on all types of claims, some companies are leveraging technology and artificial intelligence to automate parts of the claims process, which is altering the insurance industry’s traditional business model.

Insurance adjuster salary

The annual salary of an insurance claims adjuster is a source of much intrigue and conjecture for people considering a career in claims.

Many people have heard through the grapevine – possibly through their girlfriend’s brother or the roofer – that insurance claims adjusting is a lucrative business. And the money tree blooms with Benjamins, waiting to be plucked by any newcomer with the inside scoop. Additionally, you do not need to work!

Then there are the tales on the other side of the money tree: that claims adjusters earn pennies on the dollar and that adjusting is a dead-end or low-level employment.

Both are misunderstandings that are far from the truth.

As is the case with many occupations, there is no one-size-fits-all solution. However, a closer examination of the data reveals a few hints. As of May 2019, the most recent data available from the United States Department of Labor provides the complete picture of wage/salary figures for claims adjusters, examiners, and investigators.

Average Salary of an Adjuster: $68,940
Average Hourly Wage for Adjusters: $33.15

However, this is where things become interesting…and a little perplexing.

The top 10% of claims adjusters earned more than $100,000 annually. And the bottom 10% of adjusters made just more than $40,000 per year. This appears to be a sizable disparity for a single occupational category. Therefore, what is the distinction? Who is at the top…and who is at the bottom?

In general, there are two sorts of adjusters: staff adjusters who work for an insurance company on a salaried basis and freelance claims adjusters who work for Adjusting Firms. This initial distinction has an effect on both compensation structures, and the types of claims handled – from worker’s compensation to multi-million dollar commercial properties.

Typically, staff adjusters make less than freelance adjusters, and in some circumstances, significantly less. A career staff insurance adjuster’s income should be between $38,000 and $70,000. Staff adjusters earn an average of around $40,000 as entry-level employees.

However, staff adjusters do have some advantages over freelance adjusters. They frequently receive typical work perks such as health insurance, vacation and sick time, and company-provided equipment. An independent adjuster is responsible for all of these.

On the other side, independent adjusters can earn far more than $100,000 in a good year, particularly when handling disaster claims. For instance, during the 2017 hurricane season’s peak, adjusters earned between $65,000 and $100,000 in a single month.

Additionally, independent adjusters work when and where they like. After all, they are self-employed. This complicates determining “salary” in the conventional sense. While some adjusters we know work a whole year, many “work while the sun shines” with the idea of taking a few months off. The next year, those same adjusters may choose to do the opposite, take additional time off, or split the difference. Salary is not an agreed-upon number that rarely varies for independents.

This is why establishing a regular yearly wage for independent adjusters can be challenging. However, the takeaway here is that individuals who select the independent adjuster route have a wonderful opportunity.

Staff adjusters may unquestionably earn a comfortable life. Independent adjusters may find the prospect a little more appealing as the industry, and their objectives fluctuate.

Final words

In the world of insurance, there is always a demand for qualified employees, and even during a recession, there will always be a need for adjusters to come in and assess the damage caused by natural catastrophes to individuals, businesses, and organizations. Furthermore, if you’re ready to put in the effort and pass the license exam, becoming a claims adjuster is a relatively straightforward process.

In addition, insurance adjusters have a great deal of latitude in their job duties. Although it is a mobile employment, claims adjusters are responsible for a wide range of tasks, including estimating hurricane damage, completing paperwork, consulting, inspecting, and more. It’s truly a job that you can design to allow you to focus on the aspects of it that you enjoy while outsourcing the aspects that you don’t. Particularly if you work as an independent claims adjuster, you have complete control over how you charge for the task and how you are compensated.