What you need to know about nonlicensed adjusters and your wildfire insurance claim
If you’ve experienced damage from the recent Palisades or Eaton fires, you may be facing the daunting task of filing an insurance claim. And while you might already be expecting the process to be less than straightforward, new policies by the California Department of Insurance could make things even more complicated.
Here’s what you need to know.
What does an insurance adjuster do?
An insurance adjuster is responsible for evaluating property damage and determining the compensation owed under an insurance policy. Adjusters who work for insurance companies represent the insurer and aim to assess claims while protecting the company’s financial interests.
A public adjuster, on the other hand, works exclusively for you and works to protect your interests. Their role as an advocate for the policyholder is to ensure all damages are thoroughly documented and that the policyholder receives a fair settlement.
In California, adjusters are required to be licensed, which involves specific training and adherence to state regulations. This licensing ensures they understand California’s complex insurance laws, such as the Unfair Practices Act and Fair Claims Settlement Practices Regulations, which are critical for proper and lawful claim handling.
Nonlicensed adjusters
In response to the overwhelming volume of claims caused by Southern California wildfires, Insurance Commissioner Ricardo Lara issued an emergency declaration allowing insurance companies to use nonlicensed adjusters. These adjusters, often brought in from out of state, can assist insurance companies with claims under the supervision of a California-licensed adjuster, manager, or insurer.
The goal of this policy is to speed up the claims process, which is undoubtedly beneficial for policyholders eager to start rebuilding their lives. However, while the intention to streamline claims processing is commendable, this approach introduces several challenges.
- Nonlicensed adjusters may lack the necessary experience and knowledge of California’s complex insurance regulations.
- Their unfamiliarity with local laws and practices can lead to errors, delays, and even disputes in claim handling.
- Moreover, the supervision requirement places additional burdens on experienced, licensed adjusters, potentially slowing down the process rather than expediting it. This oversight can divert time and resources away from directly addressing claims, reducing the overall effectiveness of the system.
In the end, the quality and fairness of the claims process may be compromised, leaving policyholders to shoulder the consequences.
Challenges of wildfire insurance claims
Total loss fire claims are among the most complex insurance claims to handle. They involve multiple coverages, extensive damage assessments, coordination of services, and reconstruction efforts. These challenges can overwhelm even experienced adjusters, let alone nonlicensed ones.
Homeowners, most of whom have paid their policy year after year, deserve adjusters who have the expertise needed to navigate these complexities thoroughly and effectively.
Potential risks for homeowners
Nonlicensed adjusters bring significant risks for homeowners:
- Inexperienced handling: Nonlicensed adjusters may not be fully trained in California’s complex insurance laws, which are critical to fair and lawful claim handling.
- Missed damage assessments: Without sufficient experience, nonlicensed adjusters might overlook important details, such as hidden fire or smoke damage, which could lead to reduced settlements.
- Long-term claim management: Wildfire claims often have “long tails,” requiring consistent attention over months or even years. There is concern about whether these nonlicensed adjusters will follow through to completion, as many may leave the state or return to other jurisdictions after their temporary work is completed.
- Settlement pressure: Homeowners may feel pressured to settle quickly, often for less than the replacement value of their property. This is particularly problematic when inexperienced adjusters are involved.
- Systemic talent gap: The reliance on unlicensed adjusters highlights a larger issue within the insurance industry — a shortage of skilled, experienced professionals willing to take on disaster claims for fair compensation.
Why public adjusters are essential
As we said earlier, unlike adjusters working for insurance companies, public adjusters work exclusively for policyholders. They are trained to thoroughly assess losses, document damages, and negotiate with insurers to secure fair settlements.
Public adjusters are particularly valuable in complex situations like wildfire claims, where the stakes are high, and the need for expertise is critical.
If you’re filing a wildfire insurance claim, understanding the process and knowing your rights are critical. Seek professional guidance to ensure your claim is handled properly and fairly.
Comments
Here’s what a few people had to say about this issue on social media. What do you say?
“Putting oversight responsibility on staff managers or licensed adjusters overseeing unlicensed personnel defeats the purpose of having extra adjusters. Unless the unlicensed adjusters are experienced professionals from other jurisdictions, their involvement may do little to improve claim handling.”
“Seems more effective to allow unlicensed/inexperienced adjusters to handle non-wildfire claims that are less complex, allowing staff and insurance adjusters to focus on wildfire.”
“Carriers will pay intro level money to people with zero experience who just want to get their foot in the door, at the expense of the policyholder.”
“Seems to me like this will just increase confusion. It also seems to me like it will end up with the illusion of work getting done, but people who start the project will probably not be able to finish it.”
