It took just one negligent smoker to thoroughly upend a 60-unit Westchester co-op. But the fire that started when the smoker dozed off in bed was just the beginning of this co-op’s woes.
“Almost always, with respect to a fire, there’s more damage done by the water that puts the fire out than by the fire itself,” says Jason Schiciano, co-president of the brokerage Levitt-Fuirst Insurance. “That’s because it’s poured on the top of the building, and it runs all the way down to the bottom – into every single crack, into every piece of drywall or plaster, and in between the floors.” All the residents of the Westchester co-op were displaced for well over a year.
The co-op board initially asked its lawyer and managing agent to compile an assessment to submit to the insurance carriers. But they were soon overwhelmed. “After several weeks of sort of floundering and not moving forward on an appropriate timeline,” Schiciano says, “we suggested to them that it was time to reconsider getting a public adjuster involved.”
Public adjusters are professional claims handlers hired by policyholders, such as a co-op or condo board, to help prepare, negotiate, and manage Proof of Loss insurance claims after a building catastrophe. For a fee, they act as the policyholder’s advocate in seeking a fair and favorable settlement, and they help expedite the recovery phase.
“A good public adjuster is going to be worth his or her weight in gold, literally,” says Michael P. Feldman, a co-founder and CEO of Choice New York Management, who recently worked with a public adjuster when an ice-making machine went haywire in a high-end Tribeca building that his company managed. Over a holiday weekend, while owners were away, it leaked enough water to do serious damage to all six of the building’s units – to the tune of $1.5 million. “There was a big variance between what the carrier felt was fair and what our client, the insured, felt was fair,” Feldman says. But by employing a public adjuster, “we got a much better result,’’ he says. “A good public adjuster is very good at going to bat for you.”
Not for Everyone
Not all property damage claims merit the services of a public adjuster. In the case of a straightforward, seemingly manageable loss of, say, tens of thousands of dollars, the board can probably count on its insurance broker, property manager, and a reliable contractor to help determine the necessary repairs – and if the insurance carrier’s cost estimate is adequate.
Fees are another consideration. Public adjusters take a percentage of the total recovery they negotiate. The smaller the loss, usually the higher the percentage. Brian Evans, president and CEO of Eastern Public, says his company’s fees tend to range from 7 to 10 percent of the claim. New York State law caps public adjuster fees at 12.5 percent.
But when the repair costs are going to soar into hundreds of thousands or millions of dollars, “I can almost guarantee you that the insurance company’s estimate is going to be lower than the actual cost of repairs,” says Ken Jacobs, a partner at the law firm Spolzino Smith Buss & Jacobs. When a fire ravaged 56 units in a New York co-op Jacobs represents, the insurance carrier’s adjusters made an initial offer of $4 million. The co-op called in a public adjuster to do an appraisal. After everybody finished thrashing it out, says Jacobs, “we finally settled that claim at $10 million.”
A Forensic Analysis of the Damage
A public adjuster’s work can begin the very day disaster strikes. If it was a fire, for instance, the adjuster might mobilize preferred vendors to go to the scene and mitigate the damage. “They board up the windows,” says Evans. “They go in and bring drying equipment to soak up any water from the fire suppression.” The adjuster’s insurance experts, meanwhile, are working on the back side, poring over the co-op or condo’s policies to ascertain exactly what the policyholder is entitled to and where one coverage leaves off and another picks up.
“There’s a common misunderstanding of who’s responsible for what or who pays for what,” says Evans, describing a situation in which, say, a toilet overflowed and the condo or co-op board tries to hold the owner of that unit responsible. “But the reality is that the governing documents of the co-op or condo are going to work in concert with the insurance policy. In almost all situations, unless there is some kind of negligence on the part of the shareholder or unit-owner that resulted in the property damage, they are not going to be responsible for it, and they are not going to be responsible for the repair.”
To ensure that all necessary repairs are tallied, a reliable and effective public adjuster does an almost forensic analysis of the damage. “If these were cookie-cutter situations, it might be easier for the managing agents and boards to handle,” says Evans, noting that an experienced adjuster will spot biohazards that a general contractor might overlook or not know how to remove properly.
“Everything in your home is made up of some combination of chemicals,” he says, including glues, epoxies, paints, and plastics. “All these different things, as they combust, become airborne and become part of that smoke and soot. And on anything they touch, they settle.”
Some people question the way public adjusters pass remedial or construction work on to their preferred contractors, engineers, or architects. An example of unscrupulous behavior, says Schiciano, “would be where a public adjuster recommends certain contractors to do repairs for the building or to provide quotes to do repairs – and then those contractors kick back money to the public adjuster sort of as a referral fee, if you will.” That said, he adds, “there are a number of good public adjusters who we feel confident in recommending and who we think do an outstanding job.”
To quash any concerns of that kind, Evans, who is a member of the National Association of Public Insurance Adjusters and the New York Public Adjusters Association, says his company has a strict nonreferral policy and uses vendors who specialize in disaster recovery.
He also takes pride in his company’s ability to draw up thorough, conclusive claims. For instance, when a condominium on the Bowery suffered buildingwide damage from a bulkhead leak, the condo board submitted a claim for approximately $700,000 in damages. The building’s insurance carrier countered with a low-ball offer in the $150,000 range. The condo board brought in Eastern Public.
Right off, the public adjuster convinced the carrier to allow him to withdraw the original claim and resubmit it. He then put together a 200-page report itemizing every bolt, floorboard and piece of drywall. The adjuster priced out delivery charges and double-checked the updated cost of the imported premium-grade kitchen cabinetry. “The upshot,” says Evans, “is we ended up closing that claim at $1.2 million – and fairly quickly.”
To find a suitable public adjuster, Schiciano recommends that boards interview at least two companies before making a decision. But he doesn’t think it’s necessary to find one in advance, to guard against some terrible event in the future, since property managers and insurance brokers will quite likely have a couple of names on their shortlist.
But Evans says Eastern Public does consultations every week with boards that want to know more about what the company could do for their co-op or condo if disaster should strike. Then, if the need arises, Evans says, “your first call is to 911 and the second one is to your public adjuster.”