I-Team: Insurance Adjusters Steer Fire Victims to Preferred Contractor

Nearly a dozen homeowners in the Bronx and Westchester County say they unwittingly signed bad contracts after they hired an independent adjuster to negotiate their insurance settlement.

“We hired a public adjuster which, in my family’s opinion, was the worst mistake ever,” said Chancy Marsh.

Two years ago, a fire inside a neighbor’s home spread to Marsh’s three-story house in the Bronx. His roof burned and the water damage throughout was extensive.

To get the best possible settlement from his insurance company, Marsh hired a company called Adjustrite to represent him in negotiations with the insurer. After the settlement was negotiated, Marsh says the adjuster recommended a particular contractor, Joseph Armato.

What Marsh did not know was that Armato is also one of the founders of Adjustrite. He sold the company in 2007, but still worked in the company’s office and was still listed on the company’s website.

Independent public adjusters are supposed to represent the interests of homeowners, but one state lawmaker says too often they strike partnerships with contractors and steer disaster victims to those preferred builders.

“When they in good faith hired this public adjuster to advocate on their behalf, he was advocating for his own pocketbook," said State Sen. Jeffrey Klein, D-Bronx.

On Thursday evening, Klein met with nearly a dozen homeowners who told stories similar to that of Chancy Marsh.

All claim they were approached by a public adjuster within a day or two after suffering a fire. They hired a public adjuster who promised to the get the best settlement possible, then recommended Armato for the rebuilding.

Several homeowners, including Marsh, told the I-Team that Armato’s work was shoddy, prolonged and often incomplete.

Klein believes there is a conflict of interest when a public adjuster is partnered with the contractor working on a homeowner’s project. He’s proposing a bill that would ban such partnerships.

"There presently isn't any firewall that would prevent them from benefiting financially from working with a contractor that they would steer clients toward," said Klein.

The latest guidance from New York financial regulators allows the same entity to own a contractor and public adjuster business so long as there is “full disclosure of the relationship to prevent a potential conflict of interest and to make sure the insured is properly informed.”

Armato told the I-Team that he had completed more renovation on Marsh’s home than he had been paid to do, and he believes it’s good business for public adjusters to have relationships with the contractors they trust.

The I-Team has learned Armato has been the subject of seven complaints to the New York Department of Consumer Affairs since 2001 and at least four complaints to Westchester County’s Department of Consumer Protection.

Armato told the I-Team that he does 40 to 50 jobs every year and with that much work, a few complaints are inevitable.

He argued that state regulators don’t fully understand his business model.

The New York State Insurance Department fined Armato and Adjustrite $50,000 in 2009 for approaching fire victims and “improperly soliciting business,” overnight. Adjustrite, at the time, was also operating without a license.

Contact Us