When making a claim on an insurance policy, many professionals do not question the amount they receive from the insurance company. They allow an insurance company’s adjuster to measure the loss, as opposed to taking advantage of their right to make their own claim.
Following are four things apartment management professionals should know about maximizing the amount they receive from the insurance company.
1. The insurance company adjuster represents the insurance company—not you. Some pros may not know they can hire a public adjuster to represent them in the claims process. It’s akin to hiring an accountant at tax time, says Michael Fusco, CEO of WorldClaim Global Claims Management, a public adjuster with experience in the multifamily housing market. “Public insurance adjusters represent solely the interests of the insured individual or company,” he says. “Adjusters may be able to elicit a much higher settlement than you could do on your own.”
Trey Stone, CEO of Houston-based Guardian Equity Management, which owns and operates 3,500 apartments, says he hires a public adjuster for every claim that he estimates to be $50,000 or more, but says smaller owners may want to hire one for claims as small as $10,000.
2. The scope of work is subjective. If there is a fire in an apartment bedroom and smoke travels throughout the apartment, do the sheetrock walls have to be replaced or cleaned? A contractor can clean the smoke off of the surface of the sheetrock, but a public adjuster will point out to the insurance company that the smoke odor will never come out of the insulation of the sheetrock, and therefore the sheetrock needs to be replaced.
3. You’re entitled to collect today’s market rate, not collect competitive bids. The insurance industry has accepted formulas for estimating the cost of damages. If the market rate for a square of roofing is $150, the insured should collect that full rate, even if he can use his volume discount to pay only $98.
4. All policies have exclusions. An insurance policy may not cover changes made after damages to bring a building up to code, for instance —those changes would fall under separate code and ordinance coverage. A public adjuster can determine the potential pitfalls and hurdles of the claim, and potentially make up for losses to exclusions with more accurate damage claims.
—NAA’s Jeffrey Lee