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What Are Typical Fee Arrangements?
Standard payment arrangements a public adjuster may suggest include:
Hourly rates
Flat fees
Retainers
Contingent fees
All depending on the size of the loss, type of loss, and the complexity of the loss. Hourly rates are not the most common arrangement for public adjusters. Sometimes, the public adjuster gets paid an agreed-upon hourly rate for the hours he or she works on a client's claim until it's settled.
Hourly Rates
It depends on each public adjuster's experience, operating expenses, and the location of his or her practice and the type of claim being handled. Cheaper is not necessarily better when it comes to your claim protection. A more expensive public adjuster with a lot of experience may be able to handle a complex claim more quickly. Also, an experienced public adjuster will be able to better estimate how many hours a particular matter will take to settle.
Flat Fees
Where a very large claim is simple and well defined, public adjusters, in some cases, charge a flat fee. If a public adjuster suggests or has advertised a flat fee, be sure you understand exactly what that fee will and will not cover. The flat fee might not include expenses such as expert fees and other expenses.
Retainer Fee
A retainer fee is typically, but not always, an advance payment on the hourly rate for a specific case. The public adjuster puts the retainer in a special trust account and deducts from that account the cost of services as they accrue. Retainers are nonrefundable. If you decide to discharge a public adjuster that has worked on your claim before the retainer has been exhausted, you may forfeit the remainder if the public adjuster was discharged without cause.
Contingent Fees
This is the most common type of fee charged by public adjusters. In most types of claims, public adjusters work on a contingent fee basis. "Contingent" means that the public adjuster takes no fee from the client, but gets a percentage-typically 10% to 12.5% or more of the insurance claim settlement depending on the size of the claim.
Public adjusters and clients are free to negotiate contingency fees less than the standard 10% to 12.5% contingent fee arrangements on vary large claims.
How Much Can You Expect to Pay on an Hourly Rate?
Rates for public adjuster fees vary based on location, experience of the public adjuster, and the nature of the matter. Believe it or not, rates may vary anywhere from as little as $250 an hour to $750 an hour or more. When using the hourly rate try to negotiate the maximum fee plus standard expenses "Not to exceed {10% or 12%} of the overall settlement". For a small loss, $2,500 may be the minimum fee.
In rural areas and small towns, public adjusters tend to charge less, and fees in the range of $100 to $250 an hour for an experienced public adjuster are probably the norm. In major metropolitan areas, the norm is probably closer to $250 to $750 or more an hour. Again, when using the hourly rate try to negotiate the maximum fee plus standard expenses "Not to exceed {10% or 12%} of the overall settlement". For a small loss, $2,500 may be the minimum fee.
What About Expenses?
Little things add up. Carefully discuss with your public adjuster anticipated miscellaneous costs so that you can estimate those costs up front and avoid any unpleasant surprises. Be prepared to scrutinize miscellaneous costs.
How Can You Keep Track of Fees?
Get a fee agreement in writing. If a public adjuster is unwilling to put a fee agreement in writing, cross that public adjuster off your list. Some states require written fee agreements for most cases. Ask your public adjuster to include in the fee agreement a provision for periodic, itemized billing if on an hourly basis. An itemized bill should list and describe all charges so that you can review them and compare them to your fee agreement.
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