When is a Public Adjuster Not a Public Adjuster?By Jason Wolf

Nearly every single person involved in an insurance claim has some form of professional license. Whether a Bar license, a roofing license or an adjusting license, it makes sense that our government establishes criteria for people to deal with insurance claims. Some people have decided that they don’t want to bother following the laws that apply to the rest of us. In most states, attorneys can adjust homeowner insurance claims without an adjuster license. With few excep-

tions, these attorneys rarely climb onto roofs and crawl under houses to prepare their estimates. Instead, they hire someone to take measurements and scope properties. They often hire someone else to input that data into an estimating program and spit out a professional looking estimate. It’s not just attorneys who often hire someone else to take measurements and prepare estimates. Often licensed public adjusters also hire someone to do the dirty and mundane work of

walking on roofs, measuring rooms, drawing diagrams, creeping into drip-ping cabinets and all the other neces-sary work that goes into preparing a valid estimate. There is nothing wrong with an adjuster or attorney paying someone a flat fee, hourly fee or using any other financial arrangement to pay someone to help prepare the estimate. Lately, how-ever, an entirely different breed of esti-mator or unlicensed adjuster has been emerging with increasing frequency.

©2017 Claims Journal | Originally Published in the Windstorm Insurance Conference Show Guide | Redistributed with Permission

To wit: What happens when the estimator sets out on his own? He has his own company. He prepares esti-mates. He takes a percentage of the recovery. He requires the insured to sign a contract memorializing his right to keep a contingent payment of the insurance proceeds. Does this sound like a public adjuster? It certainly looks that way. Yet this person is unli-censed. The reasons for his failure to obtain a license are unclear. He may not have bothered to put in the work necessary to obtain a license. He may have failed the test. He may just be skirting the law. It should go without saying that if a profession requires a license, it is ille-gal to engage in the profession without obtaining the license. By statutory definition, a public adjuster is a person who “for money, commission, or any other thing of value acts on behalf of an insured or aids an insured” either in “negotiating” for a claim or “effect-ing the settlement of a claim.” (Editor’s Note: This is the Florida definition from Fla. Stat. 626.854(1); most states have similar definitions). The person who acts like a public adjuster, does everything a public adjuster does, except for specifically negotiating with the insurance com-pany. But holding himself out to be a public adjuster would be to do so ille-gally.

Unlicensed Adjusters As a defense attorney, I often see the unlicensed estimator attempt to flout the law by stating that he or she does not participate in negotiations with an insurance company. I have found that these unlicensed adjusters are careful. They really do not negotiate with the carrier because they know that doing so would be illegal. The adjuster typi-

cally works in conjunction with a pol-icyholder attorney, who properly han-dles the negotiations with the insurer. But these people are not as careful as they think they are because negoti-ating with the insurance company is only one part of the definition. It says that if someone “acts on behalf of” a policyholder toward “effecting a set-tlement of a claim” then that person is serving as a public adjuster. It’s unnec-essary to delve into the nuance of the wording of the statute. If you take a percentage to help someone settle a claim, you are adjusting.

It should go without saying that if a profession requires a license, it is illegal to engage in the profession without obtaining the license.

In most circumstances that I have witnessed, these unlicensed adjusters operate on the fringes of homeowner insurance claims. They have cozy rela-tionships with plumbers and handy-men, who recommend their services and pay referral fees. I will stop short of calling this an outright kickback or bribe because there is nothing inherently wrong with a plumber giving the name of an adjuster to an insured who has a potential insurance claim. That’s business. But what I see is that these unlicensed adjusters take advantage of unsophisticated homeowners who later tell me under oath in depositions that they were under the impression that the adjuster would handle every-thing for them.

Fighting Back People on both sides of the fence — policyholder side and company side — should be sufficiently moti-

vated to take swift action to combat this new breed of unlicensed public adjusting. Plainly and simply, adjust-ing without a license while giving off the impression that you have a license is a third-degree felony. Whether our hard-working and typically under-staffed regulators pursue these types of fraudsters all the way through prosecution is a function of allocating government resources. Policyholder attorneys should imme-diately stop using these unlicensed adjusters. Using someone who earns a flat or hourly fee for preparing an estimate or measuring a house is fine. Using someone who has a contract which appears nearly identical to a public adjuster contract, with a few tweaks, is standing by quietly while someone commits a third-degree felony. The attorney is probably suffi-ciently detached from the process so that he or she is not actually helping someone commit a crime, but he is not helping clean up our industry. Insurance company adjusters should get their special investigation units involved when they come across these scurrilous characters. Licensing data is usually easy to find, either online or with a quick call to insurance depart-ments. Insurers should also refuse to name the unlicensed adjuster on the check when a claim is paid. Ultimately, it is up to everyone to combat this fraud.

Jason Wolf is lead partner, Property Insurance Defense Practice, at Koch Parafinczuk & Wolf, P.A., in Fort Lauderdale, Florida. His practice area focuses on first party property insurance defense.

©2017 Claims Journal | Originally Published in the Windstorm Insurance Conference Show Guide | Redistributed with Permission