Continuing the Christie Administration’s actions to protect consumers who suffered property losses in Hurricane Sandy, Department of Banking and Insurance Acting Commissioner Ken Kobylowski yesterday issued a bulletin to all public adjusters reminding them that the fees they charge consumers must be reasonably related to services performed and informing them the Department will closely monitor their fees, particularly any that seem excessive.
“We do not believe that public adjusters should need to increase their fees due to Superstorm Sandy,” Acting Commissioner Kobylowski said. “New Jersey residents have suffered severe damage to their homes and other property as a result of the storm and should not be victimized by any excessive or unreasonable fees from public adjusters.”
Public adjusters, who are licensed by the Department of Banking and Insurance, are professionals hired by insurance policyholders to appraise damages to their property and negotiate their insurance claims. They are paid from the proceeds of a policyholder’s claims settlement, typically a percentage of the total amount received and generally in the range of 10-15 percent.
In the immediate aftermath of Superstorm Sandy, the Department issued regulations allowing public adjusters licensed in the State to sponsor and employ temporary licensees, generally public adjusters licensed in other states, to handle the large numbers of claims resulting from the storm.
During the last seven weeks since Superstorm Sandy struck New Jersey, the Department has heard complaints about excessive public adjusters’ fees, some ranging up to 50 percent of the amount of the claim issued by the insurer.
“It is unconscionable that any public adjuster would attempt to levy that kind of fee on New Jersey residents who are struggling to restore their homes after this devastating storm,” said Acting Commissioner Kobylowski. “We at the Department will be using every tool at our disposal to protect consumers and ensure public adjusters’ fees are reasonable and related to the services they perform.”
State regulation, N.J.A.C. 11:1-37.13(b) 3ii, requires that public adjuster contracts specify a list of services to be rendered and the maximum fee to be charged, “which fees shall be reasonably related to services rendered.”
The bulletin says that documentation on the reasonableness of a public adjuster’s fee would include time records that detail the actions taken on each claim file, the hours during which the public adjuster engaged in each activity, and expense records, including receipts for items such as computer software and travel.
If the Department determines a public adjuster’s fee is unreasonable, it can rescind the adjuster’s license and/or fine the offender a maximum of $2,500 for the first offense and $5,000 for each subsequent offense.