February 27, 2015


This week you are in for a special treat! My good friend, Jim Sylvester, has put together a post that is sure to boost your productivity as an adjuster. Jim has spent nearly his entire career in the insurance industry and not only has a CPCU designation to show for it, but also endorsements from many of the industry’s top talent. Jim currently freelances as an adjusting firm quality control consultant from his home in Texas.

Jim has been kind enough to compile his three-step approach to working with Contractors and Public Adjusters from his experience and observation of adjusters that get this right (and wrong). Here’s Jim:

Insureds and claimants often ask us adjusters to work together with contractors and public adjusters. And how we work with them – either as collaborators or adversaries – will govern how the insured feels about us and how quickly and successfully the claim can be settled.

In my own career and in training new adjusters, I have found that a three-step process works well to manage what can often appear to be competing interests between adjusters, contractors, and public adjusters.

First: Come to an agreed scope of damage.

It’s too early yet to talk about what’s covered and what’s not covered. And in this first stage of the process, if you get the cart before of the horse and start immediately barking out pronouncements – “That’s Not Covered!” – you will accomplish nothing but picking a fight; a fight you are guaranteed to lose as you will be pitted against the holy trinity: the contractor, PA, and the insured. What you should be doing in the first stage of the process is collaborating and building consensus. Let me explain.

The first step of the process is to identify all of the claimed damage. Don’t worry thinking about what’s covered and not covered at this stage. Instead, be sure to inventory and meticulously photograph all damage being claimed by the contractor and public adjuster.

In this step, the contractor and public adjuster can be true allies since you are letting them lead the discussion. Be friendly! Be cheerful! Be appreciative of their help! Doing so not only helps flesh out the claim in its entirety, but also leverages a truth in human relations: letting the other guy talk while you listen leads him to believe you’re a great guy and a true professional!

Second: Arrive at the scope of covered damage.

In Step One, you took a full inventory of and photographed the claimed damage. In Step Two, you separate the items into two categories: items that are covered damage and items that are not covered damage. Don’t perform this step at the inspection. Do it at your desk with your eyes glued to the policy to determine what’s covered. Do it with your best understanding of what your carrier defines as damage.

Depending on your scope of authority, the decision maker in this step is either you - or in all cases with independent adjusters - the carrier.

Regardless, one thing is for certain: Neither the contractor nor the public adjuster has a vote in Step Two. You don’t have to rub their nose in it; in fact, you don’t even need to bring it up unless they mention it. If they are experienced professionals, they already know it.

So after the claimed damage is separated into the two categories of covered damage and non-covered damage, it’s time to move on to the third and final step.

Third: Come to an Agreed Cost of Covered Repairs

Begin Step Three by writing a full and fair estimate representing the cost of covered repairs. I encourage you to write your estimate with Xacimate or an equivalent. If you do, you will be creating an estimate with line-item specificity and pulling from a database that represents the industry’s settled cost for material and labor.

Once your estimate is complete, it’s time to present it to the contractor and/or PA. Preface it saying something like:

I have taken the list of damaged property that we agreed on, consulted with my carrier for their decision on coverage, and written this estimate as my good faith assessment of what it will take to repair the covered damage.

Of all they could possibly say, it will boil down to really only two reactions: they will either agree or disagree. If they agree, great! You’re done! If they disagree, invite them to write an estimate for the same covered property with one understanding: that their comparable estimate will contain the same level of specificity as yours; a number scrawled with a crayon on the back of a cocktail napkin is not an estimate.

Let me back up for a moment to emphasize the importance of giving the contractor your estimate first. By doing so:

  1. You are demonstrating your professionalism and good faith claims handling in the universally recognized “best practice” of writing an estimate independently of the contractor and by writing yours first.

  2. You are putting the ball in their court and have punched the clock for their move (sorry about the mixed metaphor).

  3. You have taken a proactive leadership position. You are leading if they are responding to your estimate. You are following if you are responding to theirs.

Once you receive the contractor’s or PA’s comparable estimate, for the intent of this paper, you are pretty much around the bases to home.

A wise person once said, there are three sides to every story – yours, mine, and the truth. And no one is lying.

Right, you’re thinking. That’s it? What if I get back something outrageous? No worries. You work through the PA’s comparable estimate the same way you eat an elephant: one bite at a time. There really are only three ways his estimate can be outrageous: He can include damage that’s already been determined as not covered, use inflated prices for material or labor, or write an estimate that is not a “best practices” repair technique. And my recommendation for handling those three is to write your report to your carrier with exactly those three captions:

  1. Items in the estimate for non-covered damage

  2. Items in the estimate with material / labor costs that are above market rate

  3. Repair techniques in the estimate that are not reasonable and necessary

There, you stud or studette, you. You settled the claim.

There you have it! I hope everyone is as appreciative of this article as I am. I am sure you will be able to put these tips to the test on your next encounter with a contractor or PA. Just be sure that you operate within your client’s guidelines when it comes to sharing estimates and reaching agreements. Every carrier is different in how they want you to handle these situations.

Thanks again to my great friend, Jim Sylvester, for sharing a bit of his vast knowledge. So what has helped you in dealing with contractors or public adjusters? Share in the comments!

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