6 ADJUSTINGTODAY.COM “Pays up to 10 percent of the adjusted loss for the services of a public adjuster.” (Normally the insured is expected to pay the public adjuster, but this coverage recognizes that the public adjuster performs many of the services the policy requires of the insured.) Comment: This form is very unusual with respect to its explanation of the coverage. It points out the inherent advantage of the coverage, which is extended specifically to cover public adjuster fees up to 10 percent of the amount of the loss, and to cover costs of any appraisal process which are not covered under conventional property insurance.1 In contrast to the depth and clarity of the previous examples, the following “Loss Adjustment Expense” endorsement included in a policy issued through a national insurance broker may not serve business clients who require the services of a public adjuster very well. 9. “This policy is extended to include expenses incurred by the insured, or by the insured’s representatives, for preparing and certifying details of a claim resulting from a loss which would be payable under this policy. However, this company shall not be liable under this clause for expenses incurred by the insured in utilizing the services of a public adjuster.” Comment: While this clause has no limits, it is not clear whether these costs are subject to or apply in excess of the policy’s limits. The intentional exclusion of coverage for public adjuster’s fees prevents the insured from recovering a claim cost which may be required in a complex loss situation. Some policies or packages include loss preparation costs in the basic coverage, usually under a clause referred to as, “professional fees.” Following are some examples. 10. “Auditors Fees. We will pay reasonable fees you are obligated to pay your accountants or auditors, subject to the insurance stated below, for: A. Producing and certifying particulars or details of your business expenses, profits, or losses when B. required by us to determine the business loss you sustain; following C. a covered cause of loss of property at the premium stated below, causing such a business income loss, but D. only when we have stated a limit of insurance in the declarations for business income insurance.” Comment: This clause is intended for use with time element coverages. It limits coverage to the amounts which would be shown as limits of insurance for each location listed in the schedule, and to fees paid to “accountants or auditors.” It is unclear whether the insured can be reimbursed for anyone performing accounting functions such as a public adjuster who prepares the business interruption claim. 11. “This policy covers the necessary and reasonable fees incurred by: A. The insured’s customary auditors, accountants; B. architects or engineers with mutual agreement during loss settlement between the insured and this company’s loss adjuster, except the insured’s own employees, for producing, preparing and certifying details of a claim resulting from a loss payable under the time element endorsement coverage provided by the policy. This coverage is not subject to the reporting or adjusting clauses of this policy. Limits of liability for such professional fees shall not exceed $________ or ________ percent of the adjusted claim, whichever is smaller.” Comment: This clause, also used with time element coverages, seems to limit payment to the four professionals cited, and specifically excludes the insured’s own employees. Coverage is limited to the dollar amount listed or a percentage of the loss, whichever is smaller. 12. “Professional Fees Coverage. Amount of insurance under the Employee Dishonesty Coverage includes an amount payable to auditors/ accountants, except the insured’s employees, for producing and certifying particulars or details of the insured’s business, as required by the insurer, in order to arrive at an amount payable in the event of a loss.” Comment: This clause, which only applies to fidelity claims, is quite open-ended—with no limitation on the amount of coverage available or the type of outside professionals that are used. It specifically excludes the cost of using the insured’s own employees.
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