July 2, 2012

Following this past weekend’s storms, Maryland Insurance Commissioner Therese Goldsmith is advising homeowners to take steps to protect themselves financially.

And while many consumers can resolve their property claims by dealing with their insurers and the assigned adjuster on their own, sometimes consumers or businesses will decide they would prefer that someone else handle the insurance claim on their behalf.

Commissioner Goldsmith said consumers can hire a public adjuster to act on the insureds’ behalf to process and negotiate the claim with the insurance company.

Public adjusters are licensed by the Maryland Insurance Administration to work for consumers. They are different than claims adjusters who work for insurance companies, the commissioner explained.

Public adjusters appraise damage, prepare an estimate of the cost to repair, prepare an inventory, and process claim documentation. They are paid by the insured, not the insurance company.

The amount of the public adjuster’s fee is negotiable and is not set by law. Under Maryland law, consumers who hire a public adjuster have the right to cancel a contract with the adjuster within three business days without penalty.

It’s important to keep in mind, however, that if an insured hires a public adjuster, the insurance company may or may not agree with that person’s estimate of the damage.

The insurer is not obligated to accept the damages that are claimed by a public adjuster, though the insurer may negotiate. The insurance company is obligated to settle the claim in accordance with the terms and conditions of the policy it issued to the insured.

The commissioner also offered the following suggestions for homeowners when deciding whether to repair or rebuild:

• If the home was destroyed and the insured decides to rebuild on another lot, or to purchase another home instead of rebuilding, check the insurance policy and discuss plans with the insurance carrier. There may be limitations on what the insurer will pay if the insured do not rebuild at the same location.

• The insurance policy provides coverage for the repair or replacement of the property with like kind and quality that the insured had prior to the storm. It does not provide for costly improvements or upgrades such as putting in granite countertops if, prior to the loss, the countertops were Formica.

• If the home was not built to current building code standards, the insured may be required to rebuild the damaged sections according to current codes. In some cases, this may cost more. Generally, a standard homeowners insurance policy does not cover such additional expenses unless the policyholder had purchased a special endorsement to the policy. Homeowners should check to see if they have this coverage.

Additionally, Commissioner Goldsmith cautioned that home repair fraud tends to increase after widespread damage. Consumers should follow the steps below when choosing whether to hire contractors and insurance claims adjusters:

• Get more than one bid from contractors.

• Request at least three references for the contractors the insured is considering to hire.

• Ask for proof of necessary licenses, building permits, insurance and bonding.

• Ask to see the worker’s Home Improvement Commission license and check its expiration date. Contractors must display their license number on all of their home improvement contracts, trucks and advertisements.

• Be wary of contractors who demand up-front payment for repairs.

Source: Maryland Insurance Administration