Public Adjusters Replace Aspirin In Times Of Crisis
By Glenn Haussman | September 26, 2000
NEW YORK -- No matter the reason, whenever a hotel operator needs to submit an insurance claim, it usually means lots of headaches, red tape, and endless hours of negotiating to ensure the best return of money to replace or repair lost goods and income. However, many hotel operators simply don't have the experience or time necessary to appropriately follow a claim through all of its stages effectively to maximize their return.
One way hotel operators have side-stepped this problem is by seeking out third-party companies that rally behind the claimant in order to get the highest possible insurance settlement on behalf of the insured.
"If you have investments, you need people to look after them. When you have a problem where you need to make a claim, it is important to have someone in your corner," said David Goodman, Principal of the Allentown Ramada in Pennsylvania.
For that reason, Goodman and his partners hired the public adjusters Young Adjustment Company in case a crisis occurred that required a claim on the hotel's insurance policy.
For the uninitiated, public adjusters handle all aspects of the claim process, including a detailed analysis of the situation. Then they create detailed reports to best support the hotel's claim with the insurance carrier to maximize the value of the claim. For the hotel operator, the best part is that there is no up-front fee involved, because the adjusters take a percentage of the total claim.
According to David Horowitz, President of Young Adjustment Company, public adjusters are better equipped to raise the insurance company's payout, and his company's fee is generally less than the extra amount earned with use of the service. Also, the hotel operator is saved from many headaches, he said, since the adjuster assumes all aspects of the claim process. Also, Horowitz said the usual fee is a contingency fee of about 10%, with that number dropping to as low as 5% for the largest claims.
About five years ago, Goodman's property was damaged during a particularly heavy storm and part of the roof structure was ripped off the building. There was substantial damage due to the harsh elements where exposed hotel sections suffered heavy ice damage and water damage from the resultant thaw.
"We don't have the time as owners to be involved in the claim on a daily basis. Young Adjustment takes the claim, evaluates your particular policy and sits down with you to figure things out. Basically, they take over the responsibility of dealing with repair people, repair estimates, and clean up. They totally take control of the claim and look out for your interest and follow through to completion," said Goodman.
According to Horowitz, a public adjuster takes a percentage of the claim as payment and in return assumes all aspects of the claim process.
"One of the main reasons you want an adjuster that represents your interests in taking care of an insurance claim is that [the customer] is trying to get the operation back in business," said Horowitz.
Raju Ghandi, a Vice President at Herhsa Enterprises -- a hospitality company with more than 25 properties -- also sees the benefits of a public adjuster. "It is not a question of more or less money, but [these people] are able to explain things to the insurance company agent better and explain exactly what the loss is and have a way to figure out prices better," said Ghandi.
Young Adjustment's Horowitz also explained the reason they are able to extract higher claims from insurance companies is because they are attentive to details and nuances non-insurance professionals are not familiar with.
"A lot of it has to do with getting the right team of experts lined up and also putting together the claim properly to show why a property is due more," said Horowitz. "Generally, non-insurance industry professionals don't know the right questions to ask. Many of our adjusters have 25 or more years of experience dealing with these sorts of issues.
"They also help to expedite things," said Horowitz, who explained that being out of business even for a day can leave long-term depressions on the balance sheet, because even loyal hotel customers who are forced to stay at a competitor due to a property crisis are vulnerable to switching their brand alliance.
"You don't want to lose business," said Young's Director of Claims, Dick Burr. "If you lose your customers, you may not get them back. We get in there immediately and help to reduce downtime."