May 27, 2011

State regulators: Joplin consumers, beware of offers to negotiate your insurance claim

Residents with tornado damage may be approached by public adjusters

Gov. Jay Nixon has signed an executive order setting strict limitations on the activities of public adjusters working with insurance policyholders in Joplin. A public adjuster is a state-licensed individual who represents homeowners in claims negotiations with their insurance companies.

Public adjusters may offer to help consumers get more money for their insurance claims. Their fee is usually a percentage of the claims payment. This service can be valuable at times, but in many cases, consumers will be just as successful working directly with their insurance company, and they won't have to pay a fee.

The Missouri Department of Insurance is enforcing Gov. Nixon's executive order, which says public adjusters working in Jasper and Newton counties must:

  • Show proof of state license to prospective customers;
  • Not sign new contracts with consumers during the two weeks following May 26. This gives homeowners time to work with their insurance companies to get claims processed;
  • Not require payment in advance for representation;
  • Not charge a fee of more than 5 percent of the insurance claim payment; and
  • Offer consumers 14 days to cancel a contract.

"Consumers should first work with their insurance companies themselves to settle insurance claims," said John M. Huff, director of the Department of Insurance. "Gov. Nixon's order gives consumers some time to allow that process to work, before they're solicited by a public adjuster."

Huff says if consumers reach an impasse with their insurance company on resolving a claim, hiring a public adjuster may be an option, but it comes at a cost. In any case, he says your first course of action should be to work with the insurance company yourself.

Huff urges consumers to exercise extreme caution before signing a contract with a public adjuster. He suggests checking with the Department of Insurance to verify the public adjuster is licensed. Consumers with questions or complaints can call the Insurance Consumer Hotline at 800-726-7390 or visit insurance.mo.gov.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department's seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

###