What Percentage Does a Public Adjuster Take?

Navigating property damage insurance claims can be challenging. Policyholders often face adjusters employed by the insurance company, who represent the insurer’s interests. A public adjuster provides a distinct advantage as a licensed professional who advocates solely on behalf of the policyholder. They assess damages, interpret policies, and negotiate with the insurance company to secure a fair settlement. Their expertise is valuable in situations involving significant damage or when a claim has been mishandled.

Public Adjuster Fee Structures

Public adjusters typically operate on a contingency fee basis. This fee structure aligns their interests with those of the policyholder, as they only get paid if a settlement is achieved. The fee is usually a percentage of the final settlement amount received from the insurance company. This arrangement ensures no upfront fees are required, and if no recovery is made, no fee is owed.

The percentage charged by public adjusters commonly ranges from 10% to 20% of the total settlement. For example, if a claim settles for $100,000 and the fee is 15%, compensation would be $15,000. This percentage generally applies to the entire settlement amount, not just any increase the public adjuster achieves over an initial offer. Some agreements may stipulate a fee only on “new money” recovered beyond an initial offer, though this can come with a higher percentage rate on that portion.

While contingency fees are prevalent, some public adjusters might offer alternative fee arrangements, such as hourly rates or flat fees, though these are less common for property damage claims. Hourly rates can range from approximately $250 to over $750 per hour, depending on location and the adjuster’s experience. Flat fees might be considered for straightforward claims where the outcome is predictable.

Factors Influencing Fee Percentages

The specific percentage a public adjuster charges can fluctuate based on several factors. State regulations frequently impose caps on public adjuster fees, influencing the maximum percentage they can charge. For example, some jurisdictions limit fees to 10% of the settlement, particularly for claims from declared emergencies, while others might allow up to 20% or more for standard claims. These limits protect policyholders from excessive charges.

The complexity and size of the insurance claim also play a significant role in determining the fee percentage. Claims involving catastrophic damage, such as those from large-scale natural disasters, or intricate valuation challenges, may command a different percentage than simpler, smaller claims. Public adjusters sometimes charge a higher percentage for smaller claims because overhead costs and effort may be similar to larger claims. Conversely, for very large claims, the percentage might be negotiated lower due to the substantial total fee generated.

The timing of when a public adjuster is engaged in the claim process can also affect their fee. If a public adjuster is brought in early, before the insurance company has made an offer, their fee might be a standard percentage of the total settlement. If engaged later, perhaps after an initial offer or a claim denial, their fee might be based on the difference between the final settlement and the amount previously offered, often at a higher percentage for the added value. Fees are often negotiable, especially for high-value claims, allowing for potential adjustments.

Payment and Collection of Public Adjuster Fees

The payment process for public adjuster fees typically occurs after the insurance claim has been successfully settled. Public adjusters generally do not receive payment until the policyholder receives their settlement funds. If the insurance company does not issue a settlement, the policyholder is usually not obligated to pay the public adjuster.

Once a settlement is reached, the insurance company often issues a check payable to both the policyholder and the public adjuster. This joint payee arrangement ensures the public adjuster’s fee can be disbursed directly from the settlement funds. Alternatively, settlement funds might be deposited into an escrow account, from which the agreed-upon fee is then released.

Regarding expenses, clarify whether these are included within the contingency fee or are separate. In most cases, the public adjuster’s percentage fee covers their professional services and standard operating costs. However, extraordinary expenses, such as fees for expert witnesses, engineers, or specialized appraisals, may be billed separately. The public adjuster contract should clearly outline how such additional expenses are handled and whether policyholder approval is required before incurring them.

Understanding the Public Adjuster Contract

Before engaging a public adjuster, policyholders should thoroughly review their contract. The contract serves as the formal agreement outlining the scope of services, responsibilities of both parties, and the terms related to fees. It should clearly state the exact contingency fee percentage applied to the final settlement amount. Some contracts may also specify a sliding scale, where the percentage decreases as the settlement amount increases, which can benefit larger claims.

The contract must also detail how any potential expenses beyond the contingency fee will be handled. This includes clarifying whether costs for third-party experts, such as structural engineers or forensic accountants, are covered by the percentage fee or will be billed as additional charges. Policyholders should ensure the contract specifies if their approval is necessary before these extra expenses are incurred.

The contract should contain clear provisions regarding cancellation policies and any associated fees. Many jurisdictions grant policyholders a right to cancel the contract within a specific timeframe, often three to five business days, without penalty. In instances of major disasters, this cancellation period might be extended. Some contracts may stipulate conditions under which a fee might still be owed if services have been rendered before cancellation. The contract should also outline procedures for resolving disputes over fees.