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The following article was written by Ron Cercone in response to a letter that was submitted to the Visalia Times Delta. Ron's article was published in the Times Delta on January 25, 2001.

Public Adjusters are Advocates

The letter, "Insurance Claims: Work with a reputable firm" by Larry Benevento, owner of ServiceMaster, ("Your Views," Jan. 10) has made inaccurate generalizations about public adjusters, calling them fire engine chasers and fly-by-nights who listen to police scanners.

In fact, public adjusters are, by law, advocates for policy-holders in the process of settling their insurance claims for loss. They represent neither the insurance company nor those restoring the loss. An entire body of law regulates the activities of public adjusters and they are licensed by the government.

Insurance claims are adversarial by nature. Insurance companies want to pay the lowest and consumers want the most compensation. It is human nature for people to protect whoever signs their paychecks. As someone working for the interests of the insurance company, that is what Mr. Benevento is doing when he attacks public adjusters and contractors other than the few who get all the referrals.

A fire and water damage restoration company, such as ServiceMaster by Benevento, is literally given work by insurance company adjusters and insurance agents. Believe me, it doesn't take much to buy the "good will" of most adjusters and agents (an occasional lunch, a desk clock, and ink pen, etc.).

Mr. Benevento claims that he fights for policyholders' rights, but when he attempts to make a policyholder accept personal property that is still fire damaged, he is looking out for the insurer, not the policyholder.

Here's how it really works: A house burns. The homeowner calls his insurance agent. His agent or claims department calls his favorite restorator, such as ServiceMaster, to remove the contents to be cleaned and restored. The restorator pulls up with a moving van and presents the homeowner with a paper to sign. They say, "The insurance company sent us." Most homeowners sign, not wanting to "rock the boat."

What the restorator fails to tell the homeowner is that if they spend $20,000 attempting to clean and they fail, and if their policy limits are used up on other total loss contents, the homeowner, not the insurer, must pay the $20,000 out of their own pocket. In effect, the insurance company adjuster is gambling with the policyholder's money.

I advise my clients not to sign anything a restoration company presents them other than permission to be on the property. Let the insurance company's adjuster sign the authorization paper.

Mr. Benevento's figures don't add up. Look at his figures on what public adjusters charge and what they produce. If a public adjuster "expands the scope" of compensation for a loss of 25 percent and charges 10 percent, then that gives the homeowner an extra 15 percent after the public adjuster is paid. I myself have an average increase of 34 percent and an average fee of 10 percent. That amounts to an extra 25 percent for the homeowner-client. What's wrong with that?

The Central Valley has two good public adjusters who have been here for 20 to 40 years. We don't chase fire trucks or solicit after hours or during a fire. Most work is by referral, and most of our contracts are signed weeks after the fires, when policyholders are fed up with their own insurers. I personally do little face-to-face solicitation. Most of my solicitation consists of mailing brochures days, weeks, and months after the fire. If they call, then we meet.

As to Mr. Benevento's advice about hiring a public adjuster, references are biased, and the Chamber of Commerce doesn't even know what public adjusters are.

Now my advice on how to choose "the best" public adjuster: Meet him in person and get a feel for whether you can trust him. Meet the actual public adjuster who will be working on the claim, not some sales person telling you his brother is the president of the company.

If the adjuster won't come to meet you himself, don't hire him. Call the California Department of Insurance and check for complaints. Ask for a curriculum vitae of the actual public adjuster. Find out about their education and insurance companies they used to work for. Ask to see a list of books and publications in their library. A public adjuster who owns 500 books on adjusting, law and construction is more serious than one who owns none. While these guidelines will help you to choose "the best" public adjuster, almost any public adjuster is better than no public adjuster on your side, especially if their fee is a percentge of additional settlement dollars they get for you over and above what you already got on your own.

The following letter was published in the Visalia Times Delta, and was the letter that prompted Ron Cercone to write his response above.

Insurance: Work with a reputable firm

Your house is on fire. You are experiencing one of the highest stressful situations in your life. Your home is still smoldering as the fire department extinguishes the final hot spots. Out of the blue, a man approaches you and empathizes.

No, it is not a neighbor or a friend or even a longtime resident of your town. This guy is a fire engine chaser, usually a contractor or public adjuster, trying to land a job. He found out about your loss over a police scanner.

They approach you at a most vulnerable time and tell you they are there to help you "deal" with your insurance company. Trust me, they are there to receive 10 percent to 15 percent of your claim by helping you.

They start an adversarial relationship between you and your insurance company and its adjuster. They usually expand the scope of loss by 25 percent to put more money in their pockets.

Recently, a homeowner hired one of these companies. He won't be back in his house for months. If the insured would have used a reputable restoration company that has served this community for years, the family would have been back in their hone within weeks, not months.

Why fight with your insurance company when it is not necessary. True, some insurance companies have not treated their clients fairly and that is why we have public adjusters. P.A.'s have ulterior motives in their relationships with insured. Most respectable restoration companies want what is best and fair for the insured and will fight for their rights while working with them and their insurance company.

Before you sign up with any contractor, public adjuster or restoration company, talk to your insurance agent. They truly want what is best for you. Most importantly, never make a decision to sign a contract with someone you don't know. Get references; talk to your agent. Call the Chamber of Commerce. Then and only then, sign on the dotted line.

Larry Benevento
ServiceMaster by Benevento

The following article appeared in the October 1995 edition of Inc. magazine:

Why Hire a Public Adjuster?

Sooner or later, every CEO confronts an insurance nightmare. Gerald Erlich, whose real-estate-brokerage firm Hanorer-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" Erich recalls. His original estimate of the damage was between $5,000 to $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 fired, 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 asimpossible as performing brain surgery on yourself." Typical fees are $150 to $300 per hour, or 10% of collected losses.

For referrals, contact the National Association of Public Insurance Adjusters at 703-138-8254. The association's members have been in business for more than two years and adhere to ethical standards..

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