If you are wanting to become an adjuster, you need to know the difference between the different types of adjusters and how they are paid. Overall, there are three different types of adjusters: Independent adjusters, staff adjusters, and public adjusters. Each adjuster title has a the same job, but different way in which they are paid.
In this article, we will break down the different ways independent adjusters are paid. An independent adjuster has three options of payments: fee schedule, day-rate or hourly-rate. No matter which way you are paid, you will make money. You should try each different way to be paid to find which way you prefer.
A fee schedule is the first, and most common, way independent adjusters are paid.
According to Alan Olson, “A fee schedule is a ladder scale, basically, of dollar amounts that they charge a base—stipulates a base service fees by bracket, based on an amount of loss on a claim.”
This means that as the damage on the claim rises, the amount an adjuster will be paid will rise with it. However, each new rung in the latter, so to speak, is a set dollar amount range for the damage.
“For example, “ Olson said, “the claim will pay x-amount of dollars from 0 to 5,000 dollars in damages on your claim. Then the next bracket will be from 5,000 to 9,999 would be x-amount of dollars in base fee. And then just a ladder scale going up. So the higher the dollar amount is on the claim, the higher your base fee gets within these brackets—usually in 5 to 10 thousand dollar brackets.”
Once you have written your estimate and found the damage amount, you can look at the ladder brackets your carrier has set and that’s how much you will be paid at a base fee.
This base fee does not include additional fees. If your carrier pays mileage, your mileage will be added to this base fee. In addition, if your carrier does two-story steep, rope and harness or any other additional fees, these will be added on top of the base fee schedule.
You have to complete the claim in order to be paid.
Most adjusters like this form of payment because they know what they are going to be paid before they go do it, typically. However, the stress to complete the claims is higher.
The second most common and used form of payment for Independent Adjusters is day-rate.
Olson said, “Day-rate is a negotiate—or they [the carrier] tell you what they’re willing to pay you per day to go to a location. That day rate is what they pay you, before taxes, and you are still responsible to cover all your own expenses—do everything you need to do on that site.”
“You’re going to have a set amount of claims,” Olson continued, “that you are required to do on that day-rate—most of the time its two to three claims, they want to see two to three claims a day completed…If they put you on day-rate, they may say they ‘we want you to do two to three claims a day if we have the volume.’ Either way, they’re setting you there, they’re paying you there per day.”
Most of the time, this form of payment is from the daily zones, “I’m going to sit in one spot and work for the next six weeks” and are paid seven days a week, unless stipulated otherwise by the carrier.
The third, and only other way, to be paid for a claim is hourly-rate. Depending on your qualifications and level of adjusting will depend on how much you are paid an hour.
Olson said, “That typically only falls with commercial division claims. Commercial doesn’t necessarily mean skyscrapers and shopping malls, it could mean anywhere from farm property to a subway to somebody that just lives outside the general area of the normal populace and their property is outside the fire coded areas—so they have to put them on a commercial policy in order to get the coverage that they need.”
“What they [the adjusters] do,” Olson continued, “is work off an hourly rate, which says: if you’re an adjuster, you get this much per hour to handle that claim; if you’re a GA—a general adjuster—you get this much per hour; based on rank and qualifications you can get paid more for taking those claims. They pay you drive-time—they wont pay for hotels—but they will pay you mileage, drive-time and all the time it takes to do that claim.”
While doing the claim, keep a log book and fill out a timesheet. By keeping records of the hours you have invested into the claim, you will be able to justly charge the carrier for you time.
“The reason they do that [pay an hourly rate],” Olson said, “is because commercial claims are usually very time consuming, the file requirements are a lot more, the expected knowledge is a lot more because you are dealing with components that not ever residential home has. It takes a long time—there’s a lot of requirements that are untypical to residential that you would have to do in the commercial division claims that take time to do, so they do it on an hourly basis versus a set amount of money.”
While the stress to complete commercial claims isn’t as high as fee schedule claims because of the slower pace, you can make just as much either way you do it.
No matter which way you are paid, you are going to make money as an independent adjuster. Tryout every form of payment. See which ways you prefer and work better with—find your niche. But just know, if a carrier asks you to work, take the job! You’re going to make money!