Tuesday, February 1, 2011

Public Insurance Adjuster Contracts and New Licensing Requirements

Imagine that your home is destroyed in a fire overnight.  After family and friends, you would likely next call your insurance company to report the catastrophe and initiate a claim.  The person from the insurance company who investigates your claim and calculates the amount to be paid for the loss is called an "adjuster."  About this time you also attempt to read through the fine print morass that is your insurance policy, and realize the difficulty of making sense of it all.  Now imagine that after you report the claim you receive a letter from a "public adjuster," which helpfully points out to you that the insurance company's adjuster is an employee of the insurance company and therefore tied to the insurer's interests, and that the public adjuster is available to help you negotiate a better settlement with the insurance company, often for a percentage of the settlement proceeds, say for example 10 percent.  At that time, in the immediate wake of the loss and faced with the prospect of having to navigate the claims process on your own, the thought of having an adjuster "on your side," working for you, may be attractive.  Months later when the house is rebuilt, the public adjuster's work is done, and you realize you have 10 percent less of the proceeds available to put into the house, your perception might change.  But like it or not, that contract is still enforceable in Illinois (but see below regarding licensing requirements for public adjusters).  

This was the case in Golub and Associates, Inc. v. State Farm Fire and Casualty Company, Case No. 09-AR-281 (5th Dist. 2011).  Golub was a public adjuster retained by the homeowner pursuant to a written contract for 10% of the proceeds.  Once the contract was signed, the adjuster notified State Farm and requested that all checks issued be made out to both the homeowner and the adjuster.  Two months later, the homeowner had a change of heart and sought to terminate the agreement with the adjuster.  She notified her insurer and requested further checks be made out solely to her, and the insurer complied.  The adjuster then sued the homeowner for breach of contract and the insurance company for failing to retain the funds to which it was contractually entitled, which is a lien under Illinois law.  

On appeal, the Fifth District Appellate Court found that the contract was valid and enforceable against the homeowner, and also that the adjuster was correct, and that pursuant to 215 ILCS 5/512.52 of the Illinois Insurance Code, the adjuster had a lien against the insurance proceeds, and therefore the insurer could be held liable for releasing the funds to the homeowner without the adjuster's authorization.  The Court noted that the adjuster had performed its work and was entitled to be paid pursuant to the contract, and that the insurer "was wrong to go along with [the homeowner's] plan to deprive the [adjuster] of its rightfully earned fee."  

Now, the intent of this post is NOT to advise readers whether or not retain a public insurance adjuster.  That is a decision that must be made by each homeowner on a case-by-case basis, depending on the particular situation.  But homeowners would be well advised to not rush into such a decision, and to seek counsel from the Illinois Department of Insurance, the Illinois Attorney General's Office, or a licensed attorney before signing any agreement.  The Department of Insurance provides free advice to homeowners and can help the homeowner work with the insurance company.  I have included below some useful weblinks from these agencies. Homeowners should also note that Illinois' licensing requirements for public insurance adjusters changed effective January 1, 2011, pursuant to the Illinois Public Adjusters Law at 215 ILCS 5/1501, et. seq.  Any public insurance adjuster is required to be licensed by the State prior to soliciting business, their contract documents are required to meet Illinois law, and they are required to post a $20,000 surety bond or letter of credit.  A public adjuster's failure to comply with licensing requirements can be grounds to void the contract, and can also give rise to criminal proceedings by the Illinois Attorney General.  Any agreement for representation regarding a claim for fire damage, made within five days of the fire, is subject to a mandatory 10-day period in which the homeowner can void the agreement.  815 ILCS 625/1 (the "Fire Damage Representation Agreement Act").

IL Dept of Insurance - "When Disaster Strikes"
IL Dept of Insurance - "Disasters - Who Can You Contact?"
IL Dept of Insurance - "Public Adjusters"
IL Dept of Insurance - "Disaster" Brochure

If you wish to consider filing a consumer complaint, see the following, or speak with a licensed Illinois attorney.

IL Dept of Insurance - "I Want to File a Complaint"
IL Attorney General - "Protecting Consumers" 
IL Attorney General - Consumer Complaint Form





24 comments:

  1. Insurance Adjusters are really important in times of different catastrophes. They are the ones who settle claims and give the policies that are insured for casualties. Adjusters must have professional and educational background in Insurance industry along with their license in the state they work in. But for those who want to become an insurance adjuster, you must take a licensing exam. For example in Texas, there are lots of exam providers who offer Texas Adjusters License online for those who wish to start their career as an adjuster.

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  2. Really appreciate this post. Public adjusters assist homeowners in doing just that. The process is involved and time consuming, but well worth doing. BBB Adjuster

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  3. Where is it that I can find public insurance adjuster that can help me and my friend out. There is a site called http://citiwideadjusters.com that one of his family members told us about, but we do not know them or what they do. If you can help us out by giving us information, please let me know as soon as possible.

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  4. Thanks for sharing, and I'll be honest when I say that I don't know that much about public insurance adjusters for what they do. But I'm slowly trying to learn, so if anyone has any advice they would be willing to offer then that would be great and it would help me out a lot.

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  5. I am need of a new insurance company. It is hard to find insurance lately. Is there a way to get on an insurance plan?

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  6. Insurance has really been difficult to find for a cheap price lately. My husband was recently diagnosed with diabetes, so that made our rates shoot up quite a bit. I hope having insurance actually saves us money on the bills we would have paid anyways.
    Emily Merrell | http://www.aspenclaims.com/

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  7. I would positively suggest hiring a professional owing to these reasons. a lover of mine was hit by a automotive whereas she was crossing a cross walk. She spent for a while within the hospital, that was extremely dear.
    claimspages

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  8. I actually didn't know about some of these requirements. I don't work in the insurance business, but my brother wants to get into it. He's trying to figure out what things he will need to do in order to begin working as an adjuster.
    Gary Puntman | http://thebaldwinco.com

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  9. There is always a claim that can be had. If you are ever in a situation that you need help with, ask around. Don't just assume that there isn't a way out.
    Feruccio
    http://thebaldwinco.com/

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  10. This was such a valuable article for so many people! That's so true, Feruccio. Don't doubt that you can get help with your claim. You can always get help with these public adjusters.
    Sylvia | http://thebaldwinco.com/homeowners/why-you-need-a-public-adjuster/

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  11. I agree, making a decision on whether to hire a public adjustor or not depends on the situation. It's not exactly something that's called for each case. It's important to get advice from your state insurance agency and legal offices to make the right decision. Thanks for the information!
    Bill Li | http://thebaldwinco.com/homeowners/why-you-need-a-public-adjuster/

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  12. This comment has been removed by the author.

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  13. Claims adjusting is the process of determining coverage, legal liability, and settling a
    claim. The claim function exists to fulfill the insurer’s promises to its policyholders.Claim adjusting is integral to establishing an insurer’s relationship to its policyholders.The reputation of the insurer in settling claims directly impacts the marketing and retention of policyholder insurance.
    claims pages

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  14. Wow! This is a very useful page and I really enjoyed reading article and all users’ comments. A news for everybody- Class Action Adjusters, Inc.. We are different from the typical Public Insurance Adjuster firm. We do not operate a settlement mill. Public Adjusters refer to firms that take a large volume of losses and settle them cheaply without any intention to take increase settlement as a “settlement mills.” Thank you for sharing valuable information.

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  15. Thank you so very much for sharing such great blog! I am definitely going to bookmark this. public adjuster

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  16. Really appreciate this post.This is a very useful page.I know another public adjuster company that is http://1stepclaims.com/ which serves mold damage, fire damage claims.

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  17. About this time you also attempt to read through the fine print morass that is your insurance policy, and realize the difficulty of making sense of it all. Now imagine that after you report the claim you receive a letter from a "public adjuster," which helpfully points out to you that the insurance company's adjuster is an employee of the insurance company and therefore tied to the insurer's interests, and that the public adjuster is available to help you negotiate a better settlement with the insurance company, often for a percentage of the settlement proceeds, say for example 10 percent.
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