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From Barnett Bank Newsletter –
Volume 2, No. 1, Winter 1996
Insurance:
Why Hire a Public Adjuster?
Author: Jill Andresky Fraser
Sooner
or later, every CEO confronts an insurance
nightmare. Gerald Erlich, whose
real-estate-brokerage firm, Hanover/Erlich
Ltd., is based in Denver, faced such a
nightmare last year, after a tenant in his
condominium-loft project fell asleep while
smoking. "The mattress caught on fire,
but the real damage came from the sprinkler
system that started automatically,"
Erlich recalls. His original estimate of the
damage was between $5,000 and $10,000.
But
Erlich didn't attempt to file the insurance
claim by himself. "Years earlier I had
had a loss experience that taught me how
difficult it is for consumers to deal with
insurers," he says. In the course of
his earlier claim, Erlich hired a public
insurance adjuster to represent his
interests. After last year's fire, he
decided to do the same.
Public
adjusters are "insurance adjustment
experts who work exclusively for the insured
in cases where a fire or other insured peril
occurs," explains R. Scott DeLuise, of
Matrix Business Services, the Denver firm
that handled Erlich's claim. What's the
advantage? "When you file a large
claim, you enter a minefield," DeLuise
says bluntly. "A consumer needs to
understand -- before even filing a claim --
that the goal of insurance companies is to
pay out as little as possible."
According
to DeLuise, most consumers make the mistake
of assuming that quantifying losses from,
say, a theft or a fire is simply a matter of
accuracy and precision: "This is an
art. It's not in the policyholder's interest
to assume that whatever loss estimate the
insurance company comes up with is
accurate."
There
is a good reason for the discrepancy.
Following a loss, public adjusters scan
policies to identify all possible sources of
insurer reimbursements. "With the
Hanover/Erlich fire, we tracked down
extensions of coverage and endorsements that
wound up covering much more than what
appeared on the face of the insurance
policy," recalls DeLuise. "We
ultimately were able to recover the cost of
extra management fees that were incurred
because of the fire; lost rent from
apartments that suffered water damage; and
the cost of hauling away debris."
In
fact, insurer reimbursements far surpassed
Erlich's original estimate. "We
received more than $60,000, which I could
never have achieved on my own," he
says. "I'm convinced that filing a
claim without a public adjuster would be as
impossible as performing brain surgery on
yourself." Typical fees are $150 to
$300 per hour, or 10% of collected losses.
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