A Video Explaining the Need for Ethical Public Adjusters

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Public Adjusters are claims professionals who are employed exclusively by a policyholder who has sustained an insured first party property loss. The public adjuster handles every detail of the claim, working closely with the insured to provide the most equitable and prompt settlement possible.

The conduct of the public adjuster is governed, in most states, by statute. For example, the state of California uses the following statutes to regulate the business of a public insurance adjuster starting at §§ 15000 et seq of the Insurance Code and presented in full in Appendix 1. As a licensing statute, it attempts to require a public insurance adjuster to act ethically and in good faith on behalf of his or her client.

To perform the duties imposed upon a public adjuster to properly represent an insured should inspect the loss site immediately, analyze the damages, assemble claim support data, review the insured’s coverage, determine current replacement costs and exclusively serve the client, not the insurance company while working ethically with the insurer’s adjuster.

The National Association of Public Insurance Adjusters (NAPIA) publishes a code of conduct which sets forth the ethical standards that all public insurance adjusters should follow. It provides:

The public adjuster should not engage in the unauthorized practice of law, not engage in activities that may be construed as presenting a conflict of interest or obtaining a financial interest in salvaged property that is the subject of a claim, nor should the public adjuster use advertisements that violate the Insurance Code. The public adjuster must use contract forms that are approved by the commissioner.

Zalma Opinion

Public adjusters perform an important service to busy professionals who simply do not have the time or skill to deal with a first party property claim. By agreeing to pay the public adjuster a portion of the claim payment the policyholder understands that after the fee is paid the payment by the insurer will not be enough to complete repair and will take the cost as an expense worthy to save the insured the time needed to deal with the insurer. An ethical public adjuster will resolve a claim quickly and fairly. An unethical public adjuster will not. It is imperative that state regulators enforce the requirement that public adjusters comply with state law and ethically work to resolve claims.