Claims Guidelines and Fact Patterns – Case Study #2 Fee Schedules $1:

I regularly present to groups with other industry peers on appraisal. One of the items we highlight as an area of focus are fee schedules that are considered “Industry norm.” One of the key problems in appraisal can be related to optics. When an adjuster doesn’t find damage, that can definitively be tied to the loss, he or she creates a potential problem by writing an estimate for a minimum roof repair. Some are shocked to find out that many fee schedules have a tier that jumps up for any amount of damage found over $1.00. This incentivizes independent adjusters in the field to write an estimate for something.

The typical adjuster doesn’t see an issue writing an estimate that falls below the deductible. The thought process that goes into creating a fee schedule is that there is more work for the adjuster when an estimate is required. I’m of the opinion that both are wrong. 

The adjuster, by providing an estimate, can create a future conflict and optics issue. When I receive a call from the desk adjuster or examiner, they advise that they “gave the benefit of doubt.” My response is typically, “no benefit of doubt has been given if you added lines items to where they fall just under the deductible.” Writing an estimate is not necessarily giving the benefit of doubt.

For the groups that create fee schedules, there isn’t lees work in a claim Closed Without Payment (CWOP). Often the adjuster has more work dealing with claims where no damage is found. Having this dialog with various carrier clients has had them change their fee schedules to have the first tier that reflects CWOP removed. Now the CWOP claims fall into the same tier as claims with minimal damage. The result is that once an appraisal makes it to the field, the carrier appraiser is no longer dealing with the potential dilemma of an estimate that reflects damages potentially unrelated to the claim.