New York's Cooperative and Condominium Community
Ann Farmer in Legal/Financial on November 11, 2019
This is the first of two articles on public adjusters.
It took just one negligent smoker to thoroughly upend a 60-unit Westchester County 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 they might want to consider 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 Feldman, a co-founder and the 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.”
However, all property damage claims con't 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. “Anything below $250,000, we won’t do for less than 10 percent,” he says. 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.”
Coming tomorrow: how public adjusters work.
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