How HOA boards approve a public adjuster engagement

When a storm, fire, or water loss damages a community’s buildings, the board suddenly carries a heavy responsibility. A large, complex claim may deserve professional help, but hiring someone to act on the association’s behalf is a decision owners will examine closely. A board that works from a clear process and keeps good records is far better placed to explain its choices. This guide outlines how boards generally evaluate and approve a public adjuster, and what to document along the way.

Start with the board’s authority

Before comparing candidates, confirm what the board is allowed to do. The association’s governing documents, which usually include the declaration, bylaws, and rules, describe the board’s powers over insurance, claims, and contracts. State law may add requirements for notice, meetings, or owner approval, particularly for contracts above a certain size or length. These rules differ among associations and states.

Ask the association’s attorney, not a vendor, to confirm the limits. The questions to resolve include whether the board may sign a claim representation contract on its own, whether the contract needs an owner vote, how the decision must be recorded, and how the fee will be treated in the budget. Settling authority early prevents a later challenge that the board exceeded its power, which could cloud the contract and distract from the claim itself.

Decide whether the claim warrants a public adjuster

Not every association loss requires outside help. A small, clearly covered claim may be straightforward for the manager and the insurer. Larger or contested losses, especially those with unclear causation, disputed scope, or many affected units, often benefit from specialized claim help. The board can weigh the size of the loss, the complexity of the building, the volume of documentation, and the volunteers’ and manager’s capacity.

It helps to define the problem before hiring. Is the insurer’s estimate far below the contractors’ bids? Is the scope disputed? Does the claim involve more than one policy, such as the master policy and owners’ policies? Writing down the need clarifies what to ask each candidate and later gives the board something to measure results against. A public adjuster works for the policyholder, which here is the association, so the board should be able to explain why that help serves the community.

Budget is part of the decision, too. A public adjuster is usually paid from the claim proceeds, but the way the fee is structured affects how much the association ultimately has available for repairs. The board should understand the arrangement, ask how it applies to supplemental payments and any amounts that were already offered before the adjuster was hired, and consider how it fits with reserves and special assessment planning. A choice made with the full financial picture is easier to defend to owners.

Run a fair and documented selection process

A defensible process is consistent and written. Identify several licensed candidates through independent sources, such as the state department of insurance, referrals from the association’s attorney or insurance broker, or other associations, rather than relying on a single solicitation. Give each candidate the same information and ask the same questions, including experience with associations, the proposed approach, staffing, communication practices, and references.

Request each proposal in writing and compare them side by side. Verify each candidate’s license directly with the state department of insurance rather than trusting a certificate they provide. Be cautious of anyone who promises a specific result, pressures the board to sign quickly, or discourages review by counsel. Record the process in the minutes, including who was considered and why the board chose its candidate, so owners can see a reasoned decision.

Review the contract with counsel

The agreement determines what the adjuster will do, how they are paid, and how either side can end the arrangement. Have the association’s attorney review it before the board votes. Pay attention to the scope of services, the fee basis and what it applies to, how advances or supplemental payments are treated, and whether the contract covers all parts of the claim or only some.

Fee rules and contract requirements for public adjusters vary by state, and some states set specific requirements for how agreements must be written. Confirm the rules with your state’s department of insurance and have counsel verify the contract complies. Also look at cancellation terms, communication commitments, how conflicts will be handled, and who owns the claim file. Clear written terms give the board something solid to rely on if questions arise later.

References deserve real follow-up. Call the associations or owners a candidate has worked with, and ask about communication, responsiveness, and how the engagement concluded. Ask whether the candidate has handled claims for buildings comparable to yours in size, age, and construction. You can also ask your state’s department of insurance how to check whether a license is in good standing and whether complaints are on record. This homework takes time, but it is far less costly than discovering problems after a contract has been signed.

Conflicts of interest and transparency

Owners will rightly ask whether anyone benefits from the board’s choice beyond the association. Disclose any relationship between a board member, the property manager, or a contractor and a candidate, and follow the association’s conflict of interest policy. Referral fees or arrangements between the adjuster and a restoration or roofing company deserve particular attention, because they can influence recommendations.

Transparency is also a matter of communication. Tell owners that the board is considering professional claim help, explain why, and share what the process will be. Where the governing documents allow, make the decision and its rationale available in the meeting record. A board that is open about how it chose will usually receive more cooperation from owners, which matters when the claim requires access to units and documents.

Communicating with owners and lenders

Owners are stakeholders in the claim, and their cooperation affects the outcome. Explain how the process will work, what access to units will be needed, and how updates will be shared. Keep the tone factual and avoid predictions about payments, since the amount and the timing depend on the insurer and the scope of the loss. A regular communication schedule, such as updates at board meetings and in written notices, helps prevent rumors and complaints.

If the association has a mortgage, a line of credit, or other financing, review whether the lender has requirements about insurance proceeds or about the contractors who may be used. Notify the lender as the documents require, and ask counsel how claim payments will be handled, including who may endorse checks and where funds will be held. These details are easy to overlook in the first weeks and can slow repairs later if they are not addressed.

Record the decision properly

Documentation is the board’s protection. Hold the vote at a properly noticed meeting, follow the association’s procedures, and record the motion, the discussion, the vote, and any recusals in the minutes. Attach or reference the proposals, the license verifications, and counsel’s review. If an owner vote is required, keep the notice, ballots, and results.

Keep a central file for the engagement: the signed contract, communications with the adjuster, and the claim filings. Designate who will serve as the board’s point of contact so instructions are consistent, and set a rhythm for updates to the board. Good records support the association if its choices are questioned by owners, lenders, or insurers, and they make a handoff easier when the board membership changes during a long claim.

How the adjuster works with the association day to day

Once hired, a licensed public adjuster generally helps the association document the loss, prepare and submit the claim, communicate with the insurer, and respond to the insurer’s requests. They can coordinate with the manager, contractors, engineers, and the association’s counsel, and they may help sort out which items belong to the master policy and which to owners.

No adjuster can guarantee an outcome, and the board remains responsible for oversight. Ask for regular written updates, keep decisions that affect the budget with the board, and involve counsel for matters that raise legal questions. If anything about the arrangement seems wrong, the state department of insurance is the place to ask questions or file a complaint. A well-run engagement helps the board focus on the community while the claim moves forward.

Plan for the end of the engagement as well as the start. Ask how the file will be handed over when the claim concludes, how final accountings will be provided, and how the contract treats any later supplemental claims. A clean close protects the association and gives a future board a complete record to rely on.