Public Adjusters: Actual Cash Value and Complete Expert Reports are Essential

Recent speeches by me to public adjusting associations have focused on public adjusters providing compelling work to verify the amount of loss and the theory of coverage. A recent New Jersey case highlights what can happen when neither is provided. ¹

The case was litigated in federal court. The federal court sent the matter to a pre-trial arbitration. The arbitrator found the following:

My ruling against plaintiff is based on two reasons. First, the defense expert report is more convincing than the plaintiff’s expert report. The defense report was detailed regarding the storm track not directly impacting the home, and evidence that the winds were less damaging than claimed by plaintiff. The plaintiff’s report hardly addressed these issues. It is common knowledge that tornadoes are unpredictable, and that a tornado can completely destroy one home, while leaving other homes in the immediate vicinity, even next door, relatively unscathed. In this case, there were two rows of homes and a stand of trees situated between plaintiff’s home and the tornado track, 700 feet away. The fact that the exterior of plaintiff’s home suffered relatively moderate damage, which was paid by defendant, while other exterior fixtures, such as security cameras, light fixtures and a satellite dish remained unharmed, indicates that the tornado winds were not as destructive as opined by plaintiff’s expert. The fact that plaintiff did not report the interior damage for several months, and that plaintiff’s own public adjuster failed to note interior damage, saying he didn’t see any, also indicates that the interior damage was either non-existent, or not caused by the tornado.

The second reason for this ruling is based on the fact that plaintiff submitted his damages claim for Replacement Cost Value (‘RCV’), but no repairs have been made. Under the defendant’s policy, RCV damages can only be claimed if the repairs have been made. Otherwise, a plaintiff is limited to Actual Cost Value (‘ACV’). However, plaintiff did not submit an expert report on ACV, and as Judge Williams recently ruled in a similar case, Johnson v. Hanover, 1:23-cv-1294, (U.S. District Court for New Jersey), a plaintiff must produce evidence of ACV if repairs have not been made.

Insurance company adjusters are looking for claims that are verifiable. The current best practice is to always provide estimates of actual cash value if the policy pays for actual cash value before repairs or replacements are made. This is fundamental. Yet, we continue to see estimates based only on replacement cost value being made.

The theory of coverage must make common sense. Experts can be extraordinarily helpful if they are provided sufficient information to formulate an opinion. It is most helpful if the engineer explains why the theory of loss is correct and discusses why alternative theories are not correct. In this case, the policyholder’s retained engineer would not even show up for a deposition, and the report was only a few pages.

Hiring a competent and willing engineer is important for verification. We often invite engineers we retain to speak with the insurance company adjuster. While we cannot force the adjusters to speak with them, such transparency and willingness to share support for an opinion is compelling versus doing the opposite.

Thought For The Day  

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”
—Steve Jobs

¹ Berman v. State Farm Fire & Cas. Co., No. 24-17 (D. N.J. Aug. 27, 2025).