Those who have suffered a property loss often describe the experience of dealing with their insurance company as traumatic and confusing. This is particularly true of the claims adjustment process, wherein the insurance company investigates the claim to determine how much money the insured is owed. Consequently, many insureds use a public adjuster to assist them through the process of getting their insurance claims resolved.

While a company adjuster is employed by the insurance company, and an independent adjuster is contracted by the insurance company, a public adjuster works directly for the insured or other claimants for the purpose of negotiating and reaching a positive settlement with an insurance company. In many instances, public adjusters are successful in their efforts.

According to a January 2010 report prepared by the Office of Program Policy Analysis & Government Accountability (OPPAGA), which is the Florida Legislature’s research arm, policyholders represented by public adjusters typically received higher settlements than those without public adjusters.

For example, the typical payment to a policyholder represented by a public adjuster for property damage caused during the 2004 Florida hurricane season was $22,266. In contrast, typical payments for policyholders who did not use a public adjuster were $18,659. For claims related to the 2005 hurricanes, the difference in payments was larger–claims processed with the assistance of a public adjuster resulted in payments that were 747% higher. However, as noted in the report, since policyholders pay public adjusters a percentage of their settlement, the net settlement is lower than these amounts.

Based on these statistics, many insureds and claimants believe public adjusters provide an invaluable service. Insurance companies, however, tend to see things a bit differently. Indeed, the OPPAGA report describes the conflicting viewpoints between insurance companies and public adjusters. According to the report, public adjusters believe they are the only advocates exclusively representing policyholders, whereas insurance companies believe public adjusters insulate policyholders and create distrust between the insurance company and the policyholder.

In the context of claims settlement practices, public adjusters believe that since insurance companies are loyal to their shareholders, they are not motivated to provide full compensation to their insureds. Insurance companies, on the other hand, believe that public adjusters make it difficult for insureds to complete all repairs to their property because a portion of the settlement amount must be paid to the public adjuster. These are but a few of the conflicting points of view between insurance companies and public adjusters.

During the 2011 Florida legislative session, the insurance industry lobbied for changes to the laws governing the manner in which public adjusters do business. As a result, several changes have been made to Florida’s Insurance Adjusters Law, including the following:

Compensation Limits (F.S. §626.854–Effective June 1, 2011)

If a public adjuster reopens a claim or files a supplemental claim seeking additional payment for a claim that was previously paid or settled, then the public adjuster’s compensation for any such reopened or supplemental claim may not exceed twenty percent (20%) of the reopened or supplemental claim payment.

If a claim is based on an event that causes the Governor to declare a state of emergency, then a public adjuster’s compensation cannot exceed ten percent (10%) of the amount of paid by the insurance company for such a claim. However, under the amended law, after one year, the ten percent limit on the public adjuster’s compensation is increased to twenty percent.

Advertising Limitations (F.S. §626.854(8)(a)–Effective January 1, 2012)

Florida’s Insurance Adjusters Law was amended to add various restrictions on the manner in which public adjusters, or anyone on their behalf, circulate or disseminate any advertisement, announcement, or statement. Section 626.854(8)(a) provides that the following statements, made in any public adjuster’s advertisement or solicitation, are considered deceptive or misleading:

  • A statement or representation that invites an insured policyholder to submit a claim when the policyholder does not have covered damage to insured property;
  • A statement or representation that invites an insured policyholder to submit a claim by offering monetary or other valuable inducements;
  • A statement or representation that invites an insured policyholder to submit a claim by stating that there is “no risk” to the policyholder by submitting such claim; and
  • A statement or representation, or use of a logo or shield, that implies or could mistakenly be construed to imply that the solicitation was issued or distributed by a governmental agency or is sanctioned or endorsed by a governmental agency.

Advertising Limitations (F.S. §626.854(8)(b)–Effective January 1, 2012)

The amended law provides that public adjusters must include a disclaimer on all “written advertisements,” which consists of only newspapers, magazines, flyers, and bulk mailers. The following disclaimer, which is not required to be printed on standard size business cards, must be added in bold print and capital letters in typeface no smaller than the typeface of the body of the text to all written advertisements by a public adjuster:

“THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT.”

Scheduling Limitations (F.S. §626.854(14)–Effective January 1, 2012)

Under the amended law, a representative of the insurance company, including a company adjuster, independent adjuster, attorney, or investigator, that needs access to an insured or claimant or to the insured property that is the subject of a claim must provide at least 48 hours’ notice to the insured or claimant, public adjuster, or legal representative before scheduling a meeting with the claimant or an onsite inspection of the insured property. The insured or claimant may deny access to the property if the notice has not been provided. The insured or claimant may also waive the 48-hour notice.

General Standards for Public Adjusters (F.S. §626.854(15)–Effective January 1, 2012)

The amended law includes various provisions requiring that public adjuster provide notice to the insurer. The law generally provides that a public adjuster must ensure that prompt notice of property loss is submitted to the insurer, that the public adjuster’s contract is provided to the insurer, that the property is available for inspection, and that the insurer is given an opportunity to interview the insured directly about the loss and claim. The law includes a catchall provision stating that the insurer must be allowed to obtain necessary information to investigate and respond to the claim.

Additionally, the insurer may not exclude the public adjuster from its in-person meetings with the insured, and the insurer shall meet or communicate with the public adjuster in an effort to reach an agreement as to the scope of the covered loss under the insurance policy. A public adjuster may not restrict or prevent an insurer’s representative from having reasonable access at reasonable times to an insured or claimant or to the insured property that is the subject of a claim.

A public adjuster may not act or fail to reasonably act in any manner that obstructs or prevents an insurer or insurer’s adjuster from timely conducting an inspection of any part of the insured property for which there is a claim for loss or damage. However, the public adjuster representing the insured may be present for the insurer’s inspection, but if the unavailability of the public adjuster otherwise delays the insurer’s timely inspection of the property, the public adjuster or the insured must allow the insurer to have access to the property without the participation or presence of the public adjuster or insured in order to facilitate the insurer’s prompt inspection of the loss or damage.

Licensed Contractor Limitations (F.S. §626.854(16)–Effective January 1, 2012)

Under the new law, a licensed contractor or subcontractor, may not adjust a claim on behalf of an insured unless licensed and compliant as a public adjuster. However, the contractor may discuss or explain a bid for construction or repair of covered property with the residential property owner who has suffered a loss or damage covered by a property insurance policy, or the insurer of such property, if the contractor is doing so for the usual and customary fees applicable to the work to be performed as stated in the contract between the contractor and the insured.

Contract Requirements (F.S. §626.8796(2)–Effective January 1, 2012)

The amended law creates section 626.8796(2), which deals with required contractual provisions. Under the new law, a public adjuster contract relating to a property and casualty claim must contain: the full name, permanent business address, and license number of the public adjuster; the full name of the public adjusting firm; and the insured’s full name and street address, together with a brief description of the loss.

Additionally, the contract must state the percentage of compensation for the public adjuster’s services; the type of claim, including an emergency claim, nonemergency claim, or supplemental claim; the signatures of the public adjuster and all named insureds; and the signature date. If all of the named insureds signatures are not available, the public adjuster must submit an affidavit signed by the available named insureds attesting that they have authority to enter into the contract and settle all claim issues on behalf of the named insureds.

This new statutory section provides that an unaltered copy of the executed contract must be remitted to the insurer within 30 days after execution.

Finally, as of publication of this article, there is a development regarding a current provision of Florida’s Insurance Adjusters Law. Under section 626.854(6), a public adjuster may not directly or indirectly initiate contact or engage in face-to-face or telephonic solicitation, or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event that may be the subject of a claim under the insurance policy, unless contact is initiated by the insured or claimant.

On December 29, 2010, a Florida appellate court held that the 48-hour limitation constitutes an unconstitutional prohibition against the free speech rights of public adjusters. The case is currently pending before the Florida Supreme Court. Depending on how the Court rules in this case, the 48-hour limitation may be removed from the current law.

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