By Lawrence Berman, SPAA, Berman Adjusters

What is the best way for investment property owners to prepare for a property damage loss?

Most people buy insurance to protect their business property. Trying to collect the full amount on a claim may be a difficult exercise. Many insurance agents do an excellent job of providing insurance to protect your property. However, priorities can change when it comes time to collect on a large claim. This occurs because there may be conflict of interest. An insurance agent is your friend when you purchase insurance. When a loss occurs, you then realize that the agent represents the insurance company that is seeking to minimize its payment to you. Some people mistakenly feel that insurance companies will provide a fair estimate and offer of your damages. Others understand that this scenario may be similar to allowing the I.R.S. to prepare your tax return for you.

As investment property owners, you should consider purchasing All Risk insurance, which provides coverage for damages occurring from fire, water, windstorm and vandalism. You should also purchase coverage which includes "demolition and increase cost of construction" which will cover you so that you may bring a building up to code after a loss occurs. Other important coverages may be Blanket Insurance, Agreed Amount Insurance, Loss of Income Including Extra Expense Coverage, Backup of Sewers and Drains, and possibly Flood and Earthquake Insurance.

As claims increase in size, the procedure often becomes more complex. Most policyholders don't have the time or expertise to submit a complicated insurance claim. They usually encounter problems in properly documenting and valuing the damaged property. If you're not an expert in property damage valuation and/or you do not have the time to reconstruct destroyed records, you may be in the uncomfortable position of having to accept the insurer's offer even though you know your damage may be greater than their assessment.

Most people are not aware of public insurance adjusters and/or loss consultants who may be hired on a fee basis to represent the policyholder. These adjusters represent the consumer and are knowledgeable in property damage evaluation and insurance claim negotiations. As a profession, it is increasing in acceptance as more apartment and commercial building owners hire public adjusters so that they may avoid hassling with their insurance company, or solely relying on the insurance company's adjuster. In many cases, the insurance companies may be hostile, adversarial, and may attempt to deny liability for your damage claim.

Public adjusters perform many functions, including review of your policy coverage, a coordinating emergency repairs and post-loss cleanup, suggesting strategies for reducing damage and recommending appropriate courses of action to return your building to pre-loss conditions.

Property insurance policies normally contain many clauses and exceptions which could have an important effect on your ability to collect an appropriate adjustment from the insurance company. Very few policyholders ever read their policies, nor do they have their insurance agents explain the nuances to them at the time they purchase the coverage. For this reason, the insurance company has a big advantage over the policyholder when the loss occurs. Knowledgeable, experienced public insurance adjusters are experts in interpreting and understanding policy provisions. They also provide an outstanding service in valuing your property so that you get a fair settlement from your insurer.

In most states, public adjusters are licensed and regulated by the state's insurance department. Many states require public adjusters to pass licensing examinations and to be bonded. Most of the more knowledgeable public adjusters are members of and have obtained an accreditation from the National Association of Public Insurance Adjusters.

Lawrence Berman is president of Berman Adjusters. He is vice president and founding shareholder of TAG/The Adjusters Group. He is also past president of the National Association of Public Insurance Adjusters. He is currently secretary of the Massachusetts Association of Public Insurance Adjusters. He is also a member of the Massachusetts Board of Fire Protection Regulations.