How To Deal With A Claims Adjuster When You Disagree On Price or Scope
by Erik Folgate
Filed under Insurance
A reader sent this question to us about a water damage claim she is dealing with that occurred in her home. I was a claims adjuster for three years, and I definitely know that adjusters and insurance companies love to pay the least amount possible for a claim, and they try to get away with as much as possible, hoping that the homeowner won’t push back or question their decisions. It’s the job of the insurance company and the claims adjuster to “indemnify” you, which means they have the responsibility to put you and your home back to its original condition. Here is the question from the reader:
My water heater busted and flooded my kitchen, living room, and den. I had a restoration company come out and remove the water and dry the area. The water only got 1 to 2 inches in the kitchen, but my cabinet warped a little due to the water. The insurance company only wants to repair the side of one cabinet and paint the bottom cabinet. They only want to replace carpet in the den and living room. I cannot match up my carpet with the correct carpet. The adjuster told me to get estimates, so I got several estimates. Later I contacted him and he stated that they were not the correct estimates and he could not understand them. Then he told me to call this Service Master and they gave me an estimate for $3,500. They stated that the cabinets did not need to be replaced however, I have had several contractors tell me that they do need to be replaced. My adjuster sent me a check for $2,500 and I got an estimate for $9,700. I was thinking about hiring an attorney or a public adjuster. Please help me. This is my first home, and I am a single 25 year old female. I think my adjuster is trying to take advantage of me.
This is a common situation, but it can easily be settled without the use of an attorney or a public adjuster. If you hire an attorney or a public adjuster, they will take anywhere from 20 to 40% of the claim settlement. Of course, they’ll guarantee that they get you so much money that it’ll pay for their commission, but they cannot really guarantee that, and it’s not ethical in the first place.
The insurance company sent you money, which is a great thing. This means that they agree with you that the claim is covered under the policy. So, the only difference you have is on price and scope. You disagree on how much the claim is worth, and you disagree with how and what should be replaced and repaired (scope of the loss). Scope and price can be negotiated with the claims adjuster, but you must put time and effort into it, and you must be persistent while maintaining a professional demeanor. As long as the claims adjuster didn’t get you to sign a release of liability form, then the check you received means nothing. All it means is that $3,500 is the “undisputed amount”, meaning that you and the adjuster both agree that the claim is worth AT LEAST $3,500. You can deposit that check without it being an admission of liability. But never sign anything saying that you agree that the $3,500 is the final settlement.
As far as the cabinets, you’ll probably need to concede thiis point. Cabinets can easily be repaired without requiring them to be fully replaced. Any good cabinet repairman can put your cabinets back to their original condition. Regarding the carpet, this is the area where you can negotiate with them. If the carpet runs continuous from the living room and den to other parts of the house without a break in the carpet, then the insurance company owes to replace all of the continuous areas. They cannot expect you to accept a “patch job” on carpet. Tell them that this isn’t indemnifying you. That word will get their attention that you know what you’re talking about.
The point is that you can negotiate the claim yoursef and continue to get competing bids. If they continue to be stubborn, then threaten to file a complaint with the state financial department. They will then give you the option of going to an “appraisal” which is a dispute of price and scope with a neutral mediator. This mediator often sides with the policy holder as long as you have legitimate reasons for your dispute.
I hope that answers your question! Anyone else want to weigh in on this?
Wow, good to know for future reference, if I ever have a problem.
My brother just had his basement flood.. and the claims adjusters actually didn’t put up a fight this time.
They did the last time, and he did something similar to what you are outlining above.
Thanks for your thoughts. I’m just waiting for my own water heater to bust and flood my basement. That’s the downside to buying a historical house.
Sounds like the best thing to do is have an open dialogue and just negotiate calmly.
Yes, stay calm and negotiate calmly with the adjuster. You can avoid getting a third party involved, you just need to be stern, know your policy, and make rational demands.
Erik your post is on perfect timing!
My Brooklyn, New York home just experienced a (4-5 inche high) water flooding from a pipe burst (boilder) in my basement (800sq). The adjuster is extremely rude, inpatient & totally far from customer freindly. But i have maintained my professinalism and cool through out the process. Of course items that have been in my (fairly used) basement have no receipts or old checks i can prove purchase price. But the way he is sticking me for repair cost make me really think twice on how much he has appraised things. Even my wedding dress (23 yrs old) was in the basement and all he gave me for the repair of the water damaged dress was $120!
Your experience and expertise is exactly what i need right now. PLEASE!
Also, reading my policy and knowing what i should be entitled to has been more than what a 62yr old workingc (nurse), widowed woman can handle.
please help i truly feel i am being taken for granted in my situation.
I am really sorry that you have to go through this, and that your adjuster is not being professional. You have done everything right up to this point. Regarding your personal items, you should not need to provide receipts or proof of purchase for items that he can PHOTOGRAPH and document himself to research replacement cost value. Now, every state is different, and every standard homeowner’s insurance policy is different. In Florida, most standard forms include Replacement Cost Coverage which means that your personal items should be replaced at today’s current replacement value of something of like-kind and quality.
Also, do you have children that could help you with the claims process? If you have a child that you trust will be more forceful and be able to negotiate with the adjuster better, you can type up a letter and sign it stating that you would like someone else to represent you for the claim. You MUST be proactive with the claim or they will try to get away with the bare minimum that they feel they owe. Don’t ever sign a release of liabiity form. As long as you never sign a form like that, you always have the right and ability to dispute the price and scope of a loss.
Reputable public adjusters
like Adjusters International only charge about 10$ of the claim settlement.
Sorry about that. I meant 10% not 10$.