Hurricane Florence made landfall today, and the storm is expected to linger close to shore through most of the weekend. Given its current size, strength and speed, millions are in its path, and billions of dollars of insured property are at risk.

But property owners aren’t the only ones preparing. The insurance industry is, too. Catastrophe loss teams are mobilizing and heading to affected areas as long as travel is safe—and public adjusters are also preparing to descend on distressed areas.

There are generally three types of adjusters:

• Staff adjuster: a loss adjuster employed directly by the insurance carrier
• Independent adjuster: an adjuster contracted by and representing the insurance carrier, who may work for an independent adjusting firm or as an independent contracted by the carrier
• Public adjuster: an adjuster hired by the insured to assist in settling the claim, who provides expertise in preparing, filing and adjusting the claim, and works closely with the insured to provide the most equitable and prompt settlement possible

While staff and independent adjusters represent the insurance company, a public adjuster represents the insured against the insurance carrier, fighting on behalf of the insured.

Some insureds find public adjusters beneficial following a property loss because the adjusters are experienced in the process. Most insureds have never suffered a loss, so they don’t understand all the requirements or nuances of adjusting one. Some agents don’t even know all the ins and outs. A good, ethical public adjuster can be a valuable advocate for an insured during a difficult time.

With the massive amount of damage anticipated from Florence, at least some of your insureds are likely to be contacted by a public adjuster—and a few of them will contract with one. Don’t be hostile in the presence of public adjusters. Instead, seize the opportunity to serve your clients.

Agents are still the primary contact following a loss. You can prepare by having key information on hand, including advice on how to choose the right public adjuster. While the decision to hire a public adjuster is ultimately the insured’s choice, don’t let them contract blindly.

When an insured first reports the loss to your agency, advise them to notify the agency if they are contacted by a public adjuster. This gives you the opportunity to advise the insured on whether they need to hire a public adjuster and how to properly choose one if they decide it’s necessary.

Here are several key questions to ask your clients if they plan on hiring a public adjuster:

Does the adjuster have a state-issued public adjuster license? Public adjusters are generally required to be licensed in the state in which the property is located. Make sure your insured gets or sees a copy of the license.

Where is the adjuster based? Even if the public adjuster has a license issued by the state in which the property is located, are they domiciled in the state? Due to state-by-state variations in coverage, if the adjuster doesn’t commonly work in the state in which the property is located, they may not be as well-versed in that state’s laws and requirements.

Is the adjuster a member of the National Association of Public Insurance Adjusters? Although being a member doesn’t guarantee the intentions of every public adjuster, members of the association are required to follow a strict code of ethics.

Did the adjuster provide references and qualifications? As the insured’s agent, you may want to check references on the insured’s behalf. This may be the best course of action because the same public adjusting firm may contact multiple clients. If you check the firm’s references, every insured contacted by that firm must only call the agency for information. Again, make this about the services the agency provides.

Did the adjuster attempt to pressure the insured into signing the contract? Statements like “Just sign this and we will take care of the whole thing for you” may sound innocuous, but they’re actually a type of hard sell. Remind your clients to be wary of these tactics— even though a public adjuster is involved, the insured must still participate in developing the proof of loss.

Did the adjuster fully explain the contract to the insured? Remember, public adjusters charge a fee for their services, often 10-15% of total claim payment. If the adjuster failed to fully explain this and other provisions of the contract, it’s a red flag.

Did the adjuster ask for money up front? This is not proper in any way. If the public adjuster does this, your insured should not contract with them.

Did the adjuster make any guarantees about the sum the insured will receive? There is no way a public adjuster can promise anything. Warn insureds against contracting with any public adjuster who guarantees a specific outcome.

Is the same person who solicited the service the same person who will adjust the loss? This is not an ethical consideration, but if the salesperson is also going to adjust the loss, the insured needs to be sure they’re qualified.

Does the contract address monies received prior to the hiring of the public adjuster? If the insurance carrier pays the insured emergency money or some other payment before the insured hires the public adjuster, that amount should not be part of the calculation for payment to the adjuster. 

Does the public adjuster seem honest? This is very hard to judge, but some public adjusters may give themselves away by telling the insured things they can do to make sure the insured gets a certain amount of money. An ethical public adjuster just wants to ensure the insured gets everything they are owed—no more.

Once an insured hires a public adjuster, you should still provide guidance to the insured—not necessarily through the claims process, as that becomes the public adjuster’s role, but through your own relationship with the public adjuster. Get to know the adjuster, and keep track of what they do.

An ethical public adjuster will welcome the relationship and happily converse with you as time allows. An unethical one will avoid agent involvement or conversation with another insurance professional working with the insured.

If the public adjuster appears to be harming the insured, inflating the loss or otherwise acting in an unethical or illegal manner, contact your state’s department of insurance. Your job is to protect the client, even when the client has hired a third party.

Chris Boggs is executive director of the Big “I” Virtual University.