An Advocate In Your Corner

Nation's Business, Nov 1, 1998 by Juan Hovey

Juan Hovey is a free-lance writer in Thousand Oaks, Calif.

An independent insurance adjuster can handle your property-loss claim so you can focus on your business.

Picture this: A fire strikes your business, melting your computers, trashing your production equipment, and destroying all of your work in progress. Also ruined are your office furnishings, your communication system, and many of your records.

What's the first thing you do?

If you're like Norman F. Liedtke, president of Meyer Associates, Inc., an Ardmore, Pa., firm that designs interior commercial space, you hire a public insurance adjuster to haggle with your insurer-so that you can concentrate on getting your business up and running again.

After fire gutted Liedtke's operations one cold night in January 1994, he wasted no time finding a public adjuster to negotiate his claim. He concentrated on marshaling his employees, reassuring his clients, and resuming business. As the term suggests, public insurance adjusters help people settle claims resulting from property losses. In essence, they do the same work as adjusters employed by insurance companies-but on behalf of the policyholder, not the insurer. And because they understand the fine print of any property-insurance policy, public adjusters level the playing field for the business owner.

A Question Of Necessity

Insurers typically don't welcome public insurance adjusters with open arms. "Hiring a public insurance adjuster should be a measure of last resort-and only in cases where the policyholder and the insurer are worlds apart in trying to settle a claim," says Robert Hartwig, a vice president of the Insurance Information Institute in New York City The institute is a nonprofit trade association sponsored by property/casualty insurers.

But Liedtke, whose claim exceeded $2 million, says that hiring a public adjuster is the smart course of action for any business owner with a big property loss. It takes work to settle big claims, he says, and if you don't know your insurance policies backward and forward, you stand a chance of winding up with less than you should from your insurer. Worse, the time you spend worrying about your claim is time you lose in the effort to put your business back on its feet.

Liedtke sensed this the moment he saw his office engulfed in flames that night nearly five years ago. An old radio had shorted the wiring in a wall, and bad weather delayed firefighters in getting to the site. Everything went up in smoke. On the following Monday he decided to "hire somebody to assist me with the claim," he says. "By Wednesday we were back in operation."

Liedtke's adjuster; Stephen Figlin, president of TAG--The Adjustors Group, Inc., m Philadelphia, inventoried the items destroyed in the fire, made sure that Liedtke complied with all requirements in his insurance policies-for example, taking steps to prevent further damage-and began an assessment of Liedtke's claim under his business-interruption coverage.

Figlin secured advances from Liedtke's insurer, prepared the paperwork supporting the claim, and handled all contact with the insurer's adjusters.

Fees And Procedures

At what point do you need a public adjuster? As a practical matter, it pays to hire one when your claim threatens to take more of your time than you can afford. Public adjusters earn contingency fees-usually 10 percent of whatever settlement they negotiate, with the percentage declining as the settlement rises above $100,000.

The contingency fee cuts into the settlement check, of course, and it should raise a red flag to any business owner who considers hiring a public adjuster, according to Hartwig of the Insurance Information Institute.

"Really, your first step is to notify your insurer of your loss," Hartwig says. "The insurer's own adjuster will have immediate access to your policy and can determine what it does and does not cover. The business owner should not jump to using a public adjuster because he or she may wind up with less money in hand when the settlement comes through."

If you do need a public adjuster, it pays to hunt for a good one. A crowd of free-lance public adjusters got to the scene of Liedtke's fire before he did in 1994. He ignored them, choosing instead to seek references from clients in the insurance-broker-age business. (Other good sources are lawyers, accountants, and other business owners who have dealt with disaster.)

"Because we had backup computer tapes, we could determine which jobs had already been sent out to bid and which papers were missing," Liedtke says. "In the end, the only material we lost was work we had in process that week.

"I probably spent several hundred hours with [Figlin] in the 19 months it took to get a final settlement. I maybe would have spent three times that trying to do the claim myself. I'd be hard-pressed to think when you couldn't get some value from a public insurance adjuster."