Your home has just been destroyed by fire.  Your life has been shattered.  Who do you trust?  The good news is that fire is always an insured peril, so there should be no coverage issues like there are after a flood or earthquake.  The major coverage question is the size of your deductible and the coverage limits. Many of the complaints about insurance coverage come from people who have not been insuring their home for the full replacement cost.  That is less common in California than in other states, because for a long time insurance agents were required to do replacement cost estimates when insuring a home.  Many companies provide extended replacement cost coverage and extended building ordinance coverage.  This is a time when those expanded coverages really matter.

 Insurance companies have already mobilized to pay claims.  Most of them have already dispatched adjusters to the scene and they are gearing up to handle the claims.  Some people think that insurance company adjusters are trained to pay as little as possible to save the company money.  My experience has been the opposite.  Most claim departments I know have a policy of “pay what you owe, owe what you pay.”  Many insurance companies actually pride themselves on paying claims promptly and fairly after a disaster.  There are exceptions, but they are rarer than you think.

Disasters bring out the best in most people and the worst in some people.  It is always heartbreaking to see things like looting of people who have already lost everything.  There are also reports of unscrupulous contractors who try to take advantage of desperate people.  There are other people, like public adjusters, asking you to hire them to handle your claim.  Is that a good idea?

We thought it would be good to explain the type of adjusters working after a disaster.  There are basically three kinds of adjusters.  Those who work directly for the insurance company, independent adjusters hired by the insurance company and public adjusters hired by the insured.  A public adjuster works for you, not the insurance company, and they also charge you, not the insurance company.  In some cases, their fee is a significant percentage of the insurance proceeds.  We neither recommend for or against anyone hiring a public adjuster.  However we do suggest some guidelines that may help you make the decision. 

We always suggest that people start by contacting their insurance company to see how they respond.  You may be pleasantly surprised.  In many cases the adjuster will quickly give you a check to help start your recovery and will work with you to restore your property and your life.  If the insurance adjuster is ready, willing and able to give you a fair settlement, why pay someone else to get involved?  On the other hand, if you feel the insurance company is not being fair, then a public adjuster or even an attorney is certainly an option.

If you do want to hire a public adjuster or any other professional, we suggest the following:  Make sure you take the time to read and understand all the costs and fees before signing anything.  I personally never sign a contract without taking 24 hours to think about it.  If you feel pressured to sign right now, that should be a warning signal.  Check to verify that the public adjuster or other professional is licensed in California.  Finally, always check references. 

Be selective with regard to the contractor you choose to repair or rebuild your home.  Most insurance companies have a list of contractors they approve.  These are usually contractors the carrier has worked with before, who know how the claim process works and who have a reputation for doing a good job.  Insurance companies do not always choose the lowest cost contractor, because they actually do want customers to be satisfied with the finished product.  The most expensive claim for an insurance company is the one they pay twice.  If you deal with a contractor approved by the insurance carrier they will know exactly what documentation the insurance carrier will require and they will provide that.  Many delays in claim payments are the result of documentation that is unacceptable to the insurance carrier.

If there is a dispute between a contractor and the insurance company, seriously consider letting the adjuster handle that.   It is the adjuster’s job to evaluate the work done by the contractor.  It is the contractor’s duty to document that the repairs are appropriate and that the amount charged is reasonable.  The adjuster has access to experts who can evaluate what is fair and reasonable.  Most homeowners do not have that expertise.  I have seen claims denied because the contractor was unable or unwilling to provide reasonable documentation the insurance adjuster required.  Insurance adjusters are required to have documentation to justify payment.  Properly documented claims are usually processed promptly and fairly.

The good news is that the insurance industry has already mobilized and is working hard to help people recover.   If you have homeowners’ insurance from a reputable carrier, help is already on the way.

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