Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 24, 2021

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“Insurance claims adjusters,” frequently referred to as “claims adjusters,” are either your best friend…or your worst enemy; depending on whether or not you agree with their valuation of your property or liability claim. Generally, they follow valuation guidelines set by the insurer. Drivers have the right to talk to the adjuster and present information such as reliable valuations of their car’s value to affect payouts.

Your insurance policy limits are predetermined for things like bodily injury and property damage liability. You also decide how much personal injury protection you want when you choose your policy. Your collision and comprehensive coverages are designed to cover the replacement cost of your vehicle in the event of a total loss or pay for repairs up to a preassigned percentage of your car’s value.  If your insurer’s initial valuation of your car’s value was wrong, they would still have to pay enough to repair or replace your car in the event of an accident with a like model.

If you’re reading this article, you’re probably currently involved in an insurance claim.

What do insurance adjusters do?

An insurance adjuster is the individual who basically determines how much money an insurance company will pay for a liability or property damage claim. Your adjuster will investigate the claim from every angle necessary to settle the claim. They have to be licensed by the state and then hired by an insurance carrier generally speaking. They’re trained to use different tools based on the carrier to evaluate damage or replacement costs. They are typically not mechanics. So they make an initial valuation on damages. But if mechanics come back with more costs, the payout amount set by a claims adjuster can be changed.

Investigation may include interviewing witnesses, reading police reports, reviewing medical records, and/or evaluating damaged property. It can be argued that insurance adjusters have the hardest insurance-related job.

First, they are often dealing with people who have suffered a loss of some sort and may already not be in the best mood.

Secondly, many people expect to get huge sums of money as the result of an insurance claim (and don’t). So you’ve got a position that deals with a lot of conflict.

That said, there is a high turnover rate when it comes to insurance claims. Many people simply cannot deal with the stress of the job and the treatment they receive by the people whose claims they are adjusting.

In fact, insurance claims sometimes take so long that you might have one insurance adjuster quit and another take your case. This can be frustrating, as the whole process tends to repeat itself.

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What types of insurance adjusters are in the market?

1. Insurance Company Staff Adjusters: These individuals work for the insurance company who will be paying the claim. Large insurance companies operating in multiple states typically have this type of insurance adjuster on staff. Staffers may or may not leave the building they work in to settle claims, depending on the circumstances or severity of a claim. They are similar in some ways to captive insurance agents.

2. Independent Insurance Adjusters: Independent insurance adjusters typically work for a company that offers insurance adjuster services to insurance companies. They hire their adjusters out on a contract basis to evaluate claims.

3. Claims Service Reps (also known as CSR’s): These insurance adjusters may work for an insurance company or an independent adjuster. They may handle smaller claims, such as a broken windshield, which does not require intensive investigation to settle.

4. Public Adjusters: These are insurance adjusters who work for the policyholder or claimant. You would be looking to a public adjuster if you cannot reach an agreement with the insurance company’s adjuster over the settlement offered for your claim. The public adjuster’s findings may be used as evidence in a court case if your claim goes that far. Public adjusters are the other side of the coin with independent adjusters. Public adjusters serve the claimant on a contract basis. Public adjusters serve individual insureds on a contract basis.

5. Insurance Agents: Although relatively uncommon, some insurance agents have authority to settle minor claims for a company they represent. Again, we are looking at cracked windshields, and in some cases, weather related claims; a hail claim for example.

How do adjusters settle first party claims?

These are your property damage claims, as in most cases you cannot file a liability claim against yourself.

Note: you may also file a liability claim against your own insurance company under the uninsured motorist coverage of your own personal auto policy.

A dollar value must be determined when a piece of property, a home or a car for example, is damaged, either by the owner or a third party (depending on the type of coverage you purchased) and a claim is filed.

The adjuster is also the person who determines if your car is totaled or not. They also give a preliminary estimate on damage, though that is subject to change based on what mechanics and other repair professionals find.

There are too many variables concerning coverage for the scope of this article, but at the end of the day, the adjuster has the final word…that is unless you or the third party involved doesn’t agree with the evaluation, which may result in mediation or a lawsuit to settle a claim.

For example, if you purchased an actual cash value loss settlement policy, you are at the mercy of the insurance adjuster’s view of the depreciated value of the property in question.

The process is a slightly more streamlined when a replacement cost policy has been purchased, as your property is typically replaced with new property of “like kind and quality.”

How do adjusters settle third party claims?

These types of claims are often more complicated, as there is always a third party involved in the process. The third party is the individual or entity that is not part of the insurance contract between you and your insurer. They could file a property damage or bodily injury claim. Generally, your insurance company will settle claims up to your limits based on their valuations if you’re at fault.

For example, if working on a bodily injury claim, the insurance adjuster will need to determine a fair amount of money to indemnify the injured person.

A property damage claim can be a liability claim, as you may be held liable for damage you cause to property as a result of your negligence. The easiest example of property damage liability would be when you are found to be at fault for an auto accident in which you hit someone’s car.

Your best bet is to cooperate with an insurance adjuster and let them do their job. In many cases, insurance companies rely on things like police reports and eyewitness statements to determine fault. Then insurance companies would know whose liability coverage would be used.

If you don’t agree with their findings you may seek to work with a public adjuster and/or hire an attorney to get your claim settled more in your favor. Often, even when it comes to something like determining fault, it isn’t as cut and dry as you might think. Your adjuster and other parties with your insurance company have a fair amount of discretion.

Read more: What to do when your insurance company won’t pay your car insurance claim.

(photo: Marco Verch)