As a policyholder navigating the complex world of insurance claims, it’s important to understand the various fees associated with hiring a public insurance adjuster. Two common fee structures you might encounter are the “New Money” claim fee and the standard public adjuster fee. Let’s delve into what these terms mean and provide examples to illustrate their differences.
1. New Money Claim Fee:
A “New Money” claim fee is a fee structure employed by some public insurance adjusters to ensure that their clients only pay for the additional money they secure above the insurance company’s initial settlement offer. In other words, this fee is contingent upon the public adjuster’s ability to secure additional funds, referred to as “new money,” beyond what the insurance company initially proposed as a settlement. This approach is often seen as a more client-friendly option, as it aligns the adjuster’s compensation with the actual financial benefit they bring to the policyholder but is often only engaged into much later in the claim process.
EXAMPLE: Imagine you have a property insurance claim for damages to your home due to a severe storm. The insurance company’s initial assessment estimates the repair costs at $50,000. If you hire a public adjuster operating on a “New Money” claim fee basis and they successfully negotiate a higher settlement of $80,000, you would pay the adjuster a percentage (e.g., 30%) of the additional $30,000 (“new money”) they secured for you. In this scenario, the public adjuster’s fee would amount to $9,000 (30% of $30,000). Please be aware that public adjusters on many occasions can increase the insurance carrier’s claim settlement offer by double and even quadruple with their expertise and knowledge.
• This only applies in states without a mandated fee cap. If there is a mandated fee cap an insured should never pay more than the cap amount on the total claim from the first dollar offered. (e.g.10%=$8,000.00 fee not $9,000.00) If you are located in a state that does not have a fee cap it is best to ask for a “not to exceed percentage of the total claim”
2. Standard Public Adjuster Fee:
The standard public adjuster fee structure involves a predetermined percentage of the total claim settlement. This fee structure is more traditional fee structure and is typically implemented during the initial adjustment of an insurance claim when the amount of claim is still unknown. Most Public Adjusters prefer to work on this structure as they are able to get into the claim process early and negotiate a more favorable claim settlement as facts and evidence are being developed versus having to get a carrier employee to ask their superior to change their initial scope. No one likes to go to their boss and tell them that they missed something.
EXAMPLE: Continuing with the previous example, if you hire a public adjuster with a fee of 10% and they negotiate the claim to a settlement of $80,000, you would pay them $8,000 (10% of $80,000), regardless of whether the insurance company’s initial offer was $50,000 or higher.
Choosing the Right Fee Structure:
Deciding between a “New Money” claim fee and a standard public adjuster fee depends on your priorities and the specific circumstances of your claim. If you’re primarily concerned with paying only for the additional funds secured by the adjuster, the “New Money” fee structure might be more appealing. On the other hand, if you value the expertise and negotiation skills of a public adjuster and are willing to invest in their services, the standard fee structure could work for you. Experience leads public adjusters to recommend hiring their services early on in the claims processes as they do more than negotiate dollar amounts, they are also crucial in negotiating coverage(s) and how they are applied to the property claim.
In conclusion, understanding the nuances between a “New Money” claim fee and a standard public adjuster fee empowers policyholders to make informed decisions when seeking professional assistance for their insurance claims. Whether you opt for a fee tied to newly secured funds or a percentage of the total settlement, the ultimate goal is to ensure that you receive the rightful compensation to which you’re entitled.
Written by:
Justin R. Skipton, AIC, SPPA
For Skipton and Associates, Inc.
www.SkiptonInc.com