Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

In case you are not familiar, the FIC’s website says its vision is:

[T]o be the premier organization representing the insurance profession in Florida. The Council will be the recognized and preferred source of information on insurance matters including economic, legislative, regulatory, and consumer issues.

The main point of Marvin's letter seems to be –don’t worry, your insurance company will fairly and quickly handle your insurance claim in the event there is a storm. Mr. Marvin urges Florida policyholders not to hire a public adjuster. Marvin wrote:

Every insurer employs specially trained adjusters who can readily assess your damages and facilitate speedy payment for your losses, all at no cost to you.

Unfortunately, during times of catastrophe, there are some who see crisis situations as an opportunity to get the cash that your insurance company is paying you to help recover your losses.

Allowing anyone to skim 20 percent or more of the funds your insurance company pays for your damages is unnecessary. More importantly, it leaves homeowners unable to fully recover a catastrophic loss…

There is no need for the homeowner to bypass the insurer's adjuster in favor of a public adjuster. After all, any reputable adjuster would make the same determination of loss. The difference is that the public adjuster will keep 20 percent or more of your payment!

…Consumers should recognize that the vast majority of claims are handled promptly and fairly by your insurance company adjuster.

The Florida Association of Public Insurance Adjusters (“FAPIA”) promptly replied and explained where they felt Marvin got it wrong. The response was written by David Beasley, who is the current president of FAPIA. David Beasley was one of the first public adjusters I met when I began working on behalf of policyholders shortly after Hurricane Dennis.

David began the response by agreeing with his adversary: insureds should not panic after a hurricane. But he also explains:

The insurance company adjuster who comes to your house after the storm is there to protect the company's interests.

Following a catastrophic event such as a hurricane, it commonly takes two to six weeks for the insurance company adjuster to visit the property, and that visit is usually by an independent adjuster with no check-writing authority.

Public adjusters are the only individuals licensed by the state to represent consumers and assist with estimating, documenting and submitting claims. Yes, they receive a commission on the claim that is paid, but unlike Marvin's assertion that this represents 20 percent or more "skimmed" from the payment, the commission is capped by state law at 10 percent in the first 12 months following a hurricane.

Beasley goes on to urge homeowners to find reputable help:

…if the damage is more substantial? Is the insurance company adjuster going to focus on giving you the compensation you deserve? Public adjusters work for policyholders.

Their job is to ensure the policyholders receive every penny they deserve. As you might expect, insurance companies, and their representatives such as Marvin, aren't real happy about that.

The Florida Association of Public Insurance Adjusters recommends that homeowners identify reputable public adjusters in advance, so that they can quickly contact them should damage occur.

With the current tropical action in the Atlantic, it is important to stay calm, but it is also important to stay informed and be prepared. I think it is unfortunate that Marvin wrote this post without clarifying that Florida statue regulates the fees charged by public insurance adjusters and, for the first 12 months following a hurricane, the fee is limited to 10%.

I hope Floridians and others in hurricane prone areas understand they need to ensure the insurance company adjusts and pays for all the covered damages provided for in their insurance policy. The process can be challenging and frustrating, but hiring a professional to adjust the loss on your behalf may help a policyholder even the playing field.

Farm Bureau General Insurance Company of Michigan appealed a decision from a trial court in Mecosta Circuit Court in Michigan. In the appeal, Farm Bureau alleged various bases, including that the insured failed to file suit in the time period allowed under the policy and as provided under Michigan’s statute. The appellate court looked at the record of the case and affirmed the lower court’s ruling in favor of the policyholder. Two of the main issues raised in the original litigation were whether the suit was brought during the proper timeframe and when did Farm Bureau effectively deny the claim. Farm Bureau argued unsuccessfully that the claim could not be brought because suit was filed long after the claim was denied. Farm Bureau attempted to dispose of the case by filing a motion for summary disposition. The trial court said the timing of the lawsuit was an issue for the jury to decide, but Farm Bureau failed to re-raise this issue during the trial. The Appellant relied heavily upon the testimony and exhibits which related to the pre-litigation correspondence between the parties. The letters written during the adjustment of the claim and the language contained in the letters were extensively reviewed by the Court and quoted in the recent opinion.

This claim arose out of a fire loss at the Bundy Farmhouse in rural Michigan. The farmhouse was a total loss. The cause of the fire was listed as arson. Interestingly, the court wrote: “The cause of the fire was ‘undetermined’ because it could have been accidental or suspicious. It was thought to have been set by a serial arsonist in the area.”

The claim arose in March of 2003. It was not resolved by Farm Bureau and the insured was forced to file suit and take the case all the way to the jury. The jury responded favorably to the policyholder and awarded the following:

$3,000 for furnishings, $7,000 for other personal property, and $15,000 for lost rents. The trial court issued a judgment on the verdict for $69,500, reflecting the $50,000 policy limit on the building, $10,000 policy limit on lost rents, $3,000 for landlord furnishings, $2,500 policy limits for other personal property, and $4,000 for the stipulated debris removal.

No surprise, the insurance company appealed the ruling for many reasons, and the Court in entered this recent 2-1 opinion.

One of the reasons for the appeal related to whether the insureds filed suit in time under the law in Michigan at the time of the loss. This is quite a fact specific issue because of Farm Bureau’s actions.

The lawsuit against Farm Bureau was filed on October 5, 2004. In Michigan, the statute MCL 500.2833(1)(q) (2004) provided:

(1) each fire insurance policy issued or delivered in this state shall contain the following provisions:
(q) That an action under the policy may be commenced only after compliance with the policy requirements. An action must be commenced within 1 year after the loss or within the time period specified in the policy, whichever is longer. The time for commencing an action is tolled from the time the insured notifies the insurer until the insurer formally denies liability.

The claim was submitted to Farm Bureau promptly after the loss, but the insurance company indicated the claim would not be covered under the policy because:

‘nobody had lived in the house as a domicile since November 2001.” Under the ‘Increase in Hazard’ provision, the policy provided that defendant was not liable for losses occurring ‘[w]hile a described building, whether intended for occupancy by owner or tenant, is vacant beyond a period of sixty consecutive days or is unoccupied beyond a period of six consecutive months’ (Denial letter 1)

In April of 2003, the insured family hired Steve Shipper, the president and owner of Associated Adjuster’s Inc. to assist them as a public insurance adjuster for the fire loss.

I was able to speak to Stewart Shipper, and he said that Farm Bureau was one of the few carriers in Michigan that that apply the “vacancy exclusion” to fire losses. He said most policies exclude coverage for frozen pipes and vandalism if the property is abandoned, but Farm Bureau’s policy is more restrictive and the exclusion even applies to fire losses.

After being hired, Shipper promptly advised the insurance company in writing that Farm Bureau was wrong about the status of the property and provided additional documentation supporting the claim. Shipper sent a proof of loss and a contents inventory to Farm Bureau. Farm Bureau did not accept the proof but wrote back and said “this is not a denial of your claim.” Shipper documented the file and continued to write back to the carrier. Farm Bureau later sent a letter on June 26, 2003, that said “we feel we are justified in our denial of the claim.” (Denial letter 2) Four days later, Farm Bureau said it had reviewed additional information and was still denying the claim. (Denial letter 3)

If Farm Bureau was reviewing information, the previous denials must have been withdrawn. Farm Bureau may have been calling the claim “denied,” but its actions spoke louder than their words.

Shipper was able to convince the insurance company to respond to his letters, and, finally, Farm Bureau visited the loss site with Shipper in October of 2003. During this October meeting, the insurance company asked for utility records and property tax bills. Four days after the meeting, Shipper sent the requested records with a transmittal letter to help Farm Bureau with its claim evaluation. However, the final letter of denial came from Farm Bureau on the same day the records were sent. (Denial letter 4) Obviously, Farm Bureau poured over the tax records and utility bills.

The Court reviewed the facts of the case and looked at the language of the letters. The Court did not have to determine whether the lawsuit was timely filed, but whether the lower court handled this issue the right way. The Appellate Court agreed with the trial court’s determination that the issue was not a matter of law and was an issue of fact. The Court made this determination based on the testimony and documentation of the claim provided by Shipper.

What I found interesting, was just how much detail and information was listed by the court about the public adjuster. The opinion gives us a look into just how important a letter can be and how important it is to write to the insurance company and save the letters they send you. The insurance company argued the denial was an unbroken denial which began in April of 2003 and continued. The Court said “We agree with plaintiffs that the April 2003 denial was withdrawn.” The Court referenced the public adjuster’s affidavit which supported the position that the formal denials were withdrawn each time Farm Bureau decided to investigate/ evaluate the circumstances of the claim. The conduct of the parties, which was established in the correspondence file of the public adjuster, shows Farm Bureau withdrew the denials and continued to investigate the claim throughout most of 2003.

The Court ruled there was a question of material fact regarding this issue, and it seems , that the Court was able to evaluate that this issue because of the paper trail created by public insurance adjuster- Stewart Shipper.

After reading this opinion, I thought it was refreshing to see a court give credit to the public adjuster, rely on the information he provided to reach a favorable decision for policyholders, and explain the PA’s work in the opinion.

You can read the appellate court decision by clicking here.

Debbie Maroy, of ClaimSmentor and Dimechimes, which are excellent educational sites for adjusters, made the following observation:

Chip- I posted a link to this on our claims group at Linkedin as even independent adjusters who work for roofing firms when independent adjusting assignments are low are often faced with this problem when roofing firms ask them to act as negotiators with the insurers. I always point them to this California insurance commissioner case as many of them were approached by the contractor to work for them. I had warned them it sounded like public adjusting and sure enough not many months later the CA insurance department issued a press release about their unlicensed PA work....

....

I hope this helps independent adjusters as well make sure they are not participating in unlicensed public adjusting when working for roofing firms or other contractors. Thanks for bringing up this important topic.

The press release she referred to noted:

A Palos Verdes company and its operators will pay $200,000 in fines for posing as insurance claims adjusters after the Angora fire in South Lake Tahoe last summer.

Insurance Commissioner Steve Poizner says Paramount Disaster Recovery also agreed to pay the state $75,000 in litigation costs.

Steve Slepcevic, 39, of Palos Verdes, and Matthew Todd, 48, and Charlie Rose, 43, both of Redondo Beach, were ordered to cease and desist operations in August.

Poizner's office said they acted as certified public insurance adjusters and signed contracts with Tahoe-area fire victims.

The contract language language at issue in this matter was similar to that I have seen in dozens of contracts used by non-public adjusters:

13. On or around March 2000, the Department was informed that PARAMOUNT offered customers or potential customers Contract/Authorization/Designations that included the following language: “If insured elects not to repair property, but instead receives loss settlement from insurance company, Paramount shall receive 20% of THE AGREED UPON ESTIMATE, without deduction for depreciation or Insured’s deductible.”

14. After interviews and discussions between Department personnel and
PARAMOUNT regarding the contract language identified in paragraph number 13 herein, PARAMOUNT represented to the Department, in written correspondence dated January 22, 2003, that at that time the only contract they were using did not include the language contained in paragraph number 13 herein, but instead included the following contract language: “Paramount will be paid for in full for repairing/replacing Client’s damaged property. Paramount will receive the full amount of the total agreed upon estimate (i.e. the estimate Paramount and the Insurance Company agree upon), without deduction for depreciation or Client’s deductible. Paramount shall perform all work according to the agreed upon estimate and will perform all work to meet
current uniform building codes and/or restore property to pre-loss condition.

If you think that you may be in violation of adjusting laws, see an independent attorney and get a legal opinion about what to do. Many private emails suggested that these occurrences are not isolated, but that the enforcement divisions do little about this issue. I would not count on that continuing in the future.

Masood Khan is no stranger to the law. He is a licensed California attorney who found his calling in public adjusting. He has made a point of telling me that he does not practice law in his dealings with insurers. Masood is delightful and very engaging. I have enjoyed working with him on matters where legal representation was required to get a claim fairly paid. I hope he will take a more active role in the leadership of public adjusting because his background and views about the role of adjusters are insightful.

Here are some of his comments about unauthorized public adjusting:

We do not let our lawyers, doctors, real estate and insurance agents, etc. engage in their professions without being licensed. Even our mechanics and our hairstylists are regulated and held to a certain minimum standard. Accordingly, individuals negotiating and compromising the rights of policyholders, particularly after they have suffered a loss, must be regulated, licensed and held to a higher standard.

Unfortunately, there are an abundance of construction firms, water and smoke remediation firms, and accounting companies that are engaging in unauthorized public adjusting, and breaking the law regularly, mostly with impunity.
...

Unless a CPA is an employee of the insured, it’s illegal for them to represent a policyholder for compensation in the settlement of an insurance claim without a license. A CPA would be an improper person to measure inventory losses. Additionally, simply having a CPA designation will ensure he/she has the skills necessary to measure and adjust the business interruption aspect of the claim. An insured would need the skills of a forensic insurance accountant who has intimate knowledge of the particular business, and one who is skilled in representing policyholders.

The legal audit departments of some major accounting firms and publicly traded consulting companies probably have good cause to be concerned about this interview. United Policyholders' newsletters are read by the various departments of insurance. It does not take a genius to figure out that an enforcement officer of any department of insurance could simply look on the web to find those people that cannot legally practice public adjusting, but advertise that they provide those services. I am surprised that more public adjusters do not file a criminal notice or complaint. It does not take much to start a mandatory criminal investigation in many states.

So, in the spirit of "The Clash" between public adjusters and those hoping not to get arrested, this song seems an appropriate warning:

 

Chip Merlin posted details of the loss in Tennessee Floods and the Emotion of Disaster. The video in the post is worth watching a second time.

Now, some three months later, citizens of Tennessee continue to try to put their lives back together after this disaster. It is not an easy task. In an attempt to find out first-hand more details about the damage in Nashville and the surrounding areas, I contacted FirstCall, a public adjusting firm located in the heart of Nashville.

Many residents and business owners have realized the value of hiring a public insurance adjuster. This particular Nashville based firm was founded by Phil Breeden.

FirstCall has 20 employees and has been adjusting claims for policyholders since 1989. The company has gained a great reputation for helping folks with their insurance claims and has offered to share information about how they have been able to help the policyholders of Tennessee with their recent losses. FirstCall also explained the hurdles they face adjusting claims in throughout Tennessee (FirstCall is also licensed and practices in TX, OK, OH, MS, MI, LA, KY, KS, IL, GA, FL).

One hurdle facing FirstCall may be familiar to PAs all across the country. Stephanie Allen, the director of marketing for FirstCall explained:

Many people do not know the public adjusting profession even exists until after disaster strikes or after their claim has problems.

I have heard similar sentiments like this from countless public adjusters. Tennessee and its neighboring states have suffered extensive property damage recently and still insureds are not aware that adjusters are available to advocate for them. FirstCall is working to change the status quo.

To help people find out about public adjusting FirstCall has implemented the following business practices.

1. KISS-- Keep it simple. The language used to advertise your services should be written in a way the average person can understand. Too often, those of us in the industry speak, write and advertise using the insurance terms. Instead of using the terms insurer and insured, use homeowner, policyholder, person, etc. Remember the searches your potential clients might be entering into search engines may be something as simple as “help insurance company wrong”.

2. Differentiate yourself from the insurance company. Many clients do not have a grasp on who is on their side. Many clients call the insurance adjuster “their insurance agent”. Many clients refer to the independent or company adjuster as “my adjuster.” Provide literature and information which explains who works for whom and explain the benefits of leveling the playing field.

3. People are more comfortable hiring a professional to assist them when they realize the matter is complex. You take your clothes to the dry cleaner, your taxes to the accountant, why not your insurance claim to a public adjuster? Sure, you can try a dry-clean product at home and you can prepare your own taxes, but you run a much higher risk of a problem--perhaps an irreversible problem-- which could have been avoided if you sought professional assistance. Insurance policy provisions, exclusions and limitations are complicated. If this is explained to the consumer, they have a better understanding of the value of the service public adjusters provide.

4. Don’t wait until after the catastrophic event to educate the public. Billboards are less expensive than you may think and many people are visual learners. They have the ability to retain and recall information in a visual format more easily than auditory information. In addition, yard signs for current clients, community events, and advertising in trade association magazines are all ways to get in front of potential clients before they have a need.

To capitalize on these ideas, FirstCall has a marketing department devoted to showing the public that insurance claim advocates exist and are available to help policyholders reach advantageous results. While marketing departments may be out of the budget for smaller firms, the work done by the marketing team at FirstCall may give you an idea for your firm. FirstCall teamed up with local meteorologists in their area and sponsored events called “Surviving the Storm.” Nashville’s local NBC affiliate and FirstCall’s public adjusters put on live events where viewers were able meet their favorite meteorologists and learn about severe weather and how to prepare for it. The event occurred over a six week period and, coincidently, ended just days before the flood. FirstCall provided handouts and ‘Disaster Survival Kits’ to all attendees.

Almost exactly one year before this year’s disastrous flooding, tornados ripped through Murfreesboro, Tennessee, just 30 miles from Nashville. FirstCall was able to get free airtime on the local news to explain the need for adjuster advocates for homeowners. This saves on the cost of TV ads and reaches many potential customers at one time. Here is a look the media describing the work of public adjusters and explaining the benefits of hiring a PA.
 

Also, FirstCall was able to get positive news coverage when they helped an Iraq Vet and his family after a tornado loss.

Such a refreshing news stories compared to the article I posted last week in Public Adjusters and Sinkhole Claims.

FirstCall’s founder, Phil Breeden, was also interviewed in the Nashville Business Journal. Here are few of my favorite quotes from his interview:

Most important lesson learned:

You can always say something . . . you can never "un-say" it

Professional pet peeve:

Passivity. Doing nothing is almost always the wrong choice. Scott Jamison, our operations manager has coined the phrase: "Do the hard thing". If you do, you will get ahead of the crowd, because most choose to NOT do the hard thing.

We look forward to following up with Phil and others in Tennessee to learn more about the outcomes of the insurance claims arising from the recent losses. Stay tuned.

In my experience, when sinkhole claims are litigated, the most common issues raised by insurance companies seem to be the following:

• proper protocol to repair sinkhole damaged properties;
• whether a sinkhole is the reason for the damage;
• whether the claim for damages was promptly reported; and
• whether the cause of the damage manifested during insurance company X’s period of coverage.

According to the article, the conference discussed recent problems in a residential area of Port Richey where claims for sinkholes are on the rise.

One suggestion for insurers which might be helpful is to make sure the proper testing is performed to determine if sinkhole indicators are present. A simple guideline is to evaluate the subsurface conditions near the areas of damage. For example, if the majority of the damage is showing along a garage wall with stair step cracks, test the soils near this particular wall. I know the complexities of subsurface drilling can make testing in some areas of the property more difficult than others, but the locations of the tests should at least attempt to correlate with the areas of the property showing signs of damage.

Public insurance adjusters are often helpful in sinkhole claims. They know the right questions to ask of the insurance company to learn more about how the claim is being evaluated. Public adjusters are licensed, trained, and bonded professionals. Many of the public adjusters I know have a resume which includes insurance expertise. That’s right, company adjusters, agents, preferred contractor vendors, claims handlers, supervisors, and special investigators are the former occupations of many public insurance adjusters who now work for policyholders.

It is helpful to have a professional public adjuster helping with a sinkhole claim because the investigation process is more complex than many other property damages claims and the repair protocols are unique with this kind of loss.

An OPPAGA Report recently evaluated the growth, discipline and helpfulness of public insurance adjusters. Here is a direct link to this report titled “Public Adjuster Representation in Citizens Property Insurance Corporation Claims Extends the Time to Reach a Settlement and Also Increases Payments to Citizens’ Policyholders” http://www.oppaga.state.fl.us/MonitorDocs/Reports/pdf/1006rpt.pdf

A quick summary from the report reads:

The number of licensed public adjusters in Florida has grown significantly in the last six years, and the incidence of complaints, regulatory actions, and allegations of fraud involving public adjusters is generally low. Florida’s public adjuster laws are comparable to and in some cases more restrictive than those of other similar states.

Our analysis of Citizens Property Insurance Corporation claims data found that cases took longer to reach a settlement but received higher payments when claimants used public adjusters for claims filed in 2008 and 2009. Public adjusters represented policyholders in 26% of non-catastrophe and 39% of catastrophe claims filed during this period.

With respect to claim amounts and the need for policyholders to hire help, it states:

Policyholders with public adjuster representation typically received higher settlements than those without public adjusters. Policyholders that filed catastrophe claims in 2008 and 2009 generally received larger insurance settlements than policyholders that did not hire these persons. The typical payment to a policyholder represented by a public adjuster was $22,266 for claims filed in 2008 and 2009 related to the 2004 hurricanes (see Exhibit 6). In contrast, policyholders who did not use a public adjuster received typical payments of $18,659. The difference in payments was larger for claims related to 2005 hurricanes, with public adjuster claims resulting in payments that were 747% higher. However, as policyholders pay public adjuster fees as a percentage of their settlement, their net settlement would be lower than this amount.

 

Orth’s article highlights the Department of Financial Services Neutral Evaluation Program and urges consumers to use this process:

The state has approved 43 experts as neutral evaluators with no connections to builders or insurance companies. Insurers typically pick up any expenses for the evaluations.

Many people still don't realize they have this option, though, Giordano said.

The “neutral” evaluation program however, should not be used in lieu of hiring a policyholder advocate. Many of our prior posts have explained how this program works and the pitfalls associated with the process. Neutral evaluation was discussed in “How Neutral are “Neutral Evaluators Certified by the DFS,” “Something is Rotten in the State of Denmark, I mean, Florida - Problems with the Proposed Sinkhole Legislation,” and “Neutral Evaluation of Sinkhole Claims: A Three-Ring Circus.”

Specifically in the post “Down and Dirty with Neutral Evaluation,” the neutrality of the evaluators was discussed. To become a neutral evaluator an applicant needs to fill out an application with the Florida Department of Financial Services and be either a geologist or a geotechnical engineer. To qualify as neutral, the applicant can receive up to 90% of his or her gross income or revenue in the past calendar year from property insurance companies. Also, since the cost for the neutral evaluation process is paid for by insurance companies, the neutral evaluators are in effect working “for” the carriers.

As policyholders are required by statute to go to neutral evaluation if requested by the insurance company, I have attended many neutral evaluations. Before the actual evaluation, I provide the expert reports which support my client’s claim for damage. This is information many unrepresented policyholders would not even be aware they need or something they might not be able to afford. Unless the policyholder hires a trained advocate or has the knowledge and resources to handle the matter without help, the neutral evaluator only receives the reports commissioned by the insurance company. This can make it difficult to truly evaluate what is happening at the property.

The appellate court opinion had some interesting facts about the case I was not aware of:

The documents filed by the Adjusters show that the Department sent
correspondence to Ameriloss and Premier advising them that investigations had been opened concerning their insurance-related activities in Florida.

...

The Adjusters...also filed affidavits stating that Gene Cashier (“Cashier”), an agent of the Department, traveled to Miami-Dade County, visited and interviewed East Coast’s clients, interviewed a contractor used by one of the clients, and advised the clients that East Coast was being investigated on suspicion of fraudulent or excessive claims. In addition, the Adjusters produced the affidavit of Premier’s president attesting that a special investigator from the office of the Chief Financial Officer visited Premier’s business location, advised Premier that it was under investigation, and obtained copies of Premier’s files and fee calculation for a particular claimant. Lastly, the Adjusters indicate that while the lawsuit was pending, the Department sent a letter in January 2010 to Premier requesting information and documentation as to one of its contracts that contained a commission of 25 percent, despite that “[u]nder Florida Statute 626.854(11)(b)(2), the cap is 20 percent.

It is noteworthy that the Adjusters’ affidavits pertaining to Cashier reference his activities as “investigating an alleged fraud by East Coast,” “investigating allegations that East Coast had filed an improper claim,” and advising East Coast’s former client that “an investigation had been initiated . . . because he believed that one of East Coast’s employees . . . had filed an excessive claim.” The affidavit filed by Premier’s president states that the Department’s agent was “investigating allegations that [Premier] had charged in excess of the fees allowable under Fla. Stat. 626.854.” We note that section 626.854 includes limitations on public adjuster fees outside of those in section 626.854(11)(b)(2). In response, the appellants filed two affidavits, including one by Cashier unequivocally stating that he had “not been asked to enforce, [nor had he] attempted to enforce or prosecute any person or entity with a violation of the 48-hour waiting period provision of section 626.854(6), Florida Statutes (2009) and the fee cap provisions of section 626.854(11)(b), Florida Statutes (2009).” Cashier further attested that “[n]one of the referenced investigations cited therein concerned allegations of misconduct pursuant to the above-referenced statutes.”

Filing affidavits that become public record and which indicate that the government is investigating your business for fraudulent or illegal conduct does not seem like a very smart marketing move. I suppose this was the only method the public adjusters' counsel could present evidence to keep the matter in Miami-Dade County.

These facts are timely in light of Tuesday's post, Insurance Agents Should Not Adjust Claims and Public Adjusters are Not Insurance Agents -- But They Need to Listen to One Another. It produced a number of private and some public comments about the regulation and reputation of public adjusters. I suggested a greater need for audit and closed claim file reviews of public adjusting firms by the Department of Financial Services. I indicated that review of files was rare, but maybe I was wrong about that in light some of these new facts.

Also, in that post, I was wrong about statutes not existing concerning adjusting by insurance agents. Writing publicly is a certain method to show ignorance and gain knowledge. A comment by Gary Ahrens noted:

626.862 Agents; adjustments by.--A licensed and appointed insurance agent may, without being licensed as an adjuster, adjust losses for the insurer represented by him or her as agent if so authorized by the insurer. The license and appointment of the agent may be suspended or revoked for violation of or misconduct prohibited by s. 626.611(6). (emphasis added)

Please note that the insurance agents are acting as adjusters for the insurer under such appointment. Insurance agents should clearly indicate that to their clients. This statute may be useful to prove that actions, errors and omissions in the formation of making insurance contracts can be attributable to the insurer directly. It might also be used as negligence per se if the agent commits actions within the definition of adjustment without the appointment. I also agree with Gary that the "statute gives the right to an agent of an insurer to adjust a claim. If they can do it correctly, remains to be seen."

In my next life, maybe I will be as gracious as Scott Johnson. He acknowledged with a smiley face ":)" that I "systematically" critiqued his argument. Then, continued the debate which significantly included the following:

Finally, while I respect your push for more oversight and audits of PA's, I'm really not advocating that. The Public Adjusters I've had the honor to know, are like you, good, honest, hardworking people interested in helping consumers. But, isn't it possible that a statewide prohibition against holding back is attracting some bad apples? The good organization you founded has around 425 members but, there are another 2600 or so out there (more than the next five states combined); again, because of the lack of any hold back. (emphasis added)

The answer to the question is "maybe," because how do you prove that? I have never heard a new public adjuster or one coming from another state say, "I got into the public adjuster business in Florida because Florida requires its insurers to pay replacement cost benefits right away rather than having to wait for replacement." The point is that Johnson and some in the insurance industry are using a mythical witch-hunt of "fraud" as a basis to overturn consumer protection laws that require Florida insurers to promptly pay replacement cost benefits. There is no proof to support what Johnson and others claim. Significantly, he wrote that the public adjusters he knows are "good, honest, hardworking people interested in helping consumers;"  this refutes his argument.

I am no lobbyist, but public adjusters should send this quote to every Florida legislator whenever any insurance industry leader or lobbyist wrongfully suggests that public adjusters are, as a whole, anything other than honest and dedicated professionals helping policyholders.

Since Scott Johnson was getting back to me with his comment and he likes the Beatles, this song is a very appropriate appendix:

Johnson recently wrote a piece in the Florida Underwriter, Public Adjusters, Part 2, which I suggest every public adjuster should contemplate. The part I have considered and disagree, only in part, with is the following:

Your readers need to understand that their homeowners' insurance premium already includes payment for claim service and post-claim consultation and that hiring a public adjuster results in paying "again." After a claim, one of the first things a policyholder should do is call their insurance agent. Many are "independent" and, while appointed by carriers, they hold licenses, which include state-sanctioned authority to adjust claims and assist policyholders in receiving fair payment. Not only are they prohibited from charging additional sums for this service, their locally-owned business and livelihood is based on customer satisfaction.

I am pretty familiar with the adjuster and public adjuster licensing statutes. I have never heard an insurance agent claim he or she can legally do all the activities that constitute being an adjuster. If so, maybe that is an entirely new area of insurance agent errors and omissions I should investigate when things go wrong after a loss. I cannot find where a statute that gives a Florida insurance agent the legal right to act as an adjuster. While they do cover instances where the agent fails to forward notice of the loss to the insurer, I have seen no insurance agent errors and omission policies that would cover negligent adjustment conduct. Perhaps I have been missing the boat.

Indeed, my reading of the Florida licensing statutes seem to indicate otherwise: 

626.112 License and appointment required; agents, customer representatives, adjusters, insurance agencies, service representatives, managing general agents.--
(1)(a) No person may be, act as, or advertise or hold himself or herself out to be an insurance agent, insurance adjuster, or customer representative unless he or she is currently licensed by the department and appointed by an appropriate appointing entity or person.
(b) Except as provided in subsection (6) or in applicable department rules, and in addition to other conduct described in this chapter with respect to particular types of agents, a license as an insurance agent, service representative, customer representative, or limited customer representative is required in order to engage in the solicitation of insurance. For purposes of this requirement, as applicable to any of the license types described in this section, the solicitation of insurance is the attempt to persuade any person to purchase an insurance product by:
1. Describing the benefits or terms of insurance coverage, including premiums or rates of return;
2. Distributing an invitation to contract to prospective purchasers;
3. Making general or specific recommendations as to insurance products;
4. Completing orders or applications for insurance products;
5. Comparing insurance products, advising as to insurance matters, or interpreting policies or coverages; or

6. Offering or attempting to negotiate on behalf of another person a viatical settlement contract as defined in s. 626.9911.
...

(3) No person shall act as an adjuster as to any class of business for which he or she is not then licensed and appointed.

...

(9) Any person who knowingly transacts insurance or otherwise engages in insurance activities in this state without a license in violation of this section commits a felony of the third degree.... (emphasis added)

On the other hand, some public adjusters, even "consultants," have started a new type of business, signing up Florida policyholders to provide advice and compare insurance policies. They provide these additional services if a policyholder signs a public adjusting contract in advance of a loss. This is illegal because those individuals are acting as an insurance agent without a license. Attorneys are exempt from both license requirements, so yours truly has no such problem. Public adjuster errors and omission policies do not cover these agent activities either.

Further, the most important part of Scott Johnson's message might get lost in all this statutory legal discussion. For that, you have to read Johnson's prior article, Public Adjusters and RCV - The Messenger and the Message. I think that Johnson wrongfully takes advantage of a wrongful incident I reported on in Public Adjusters Arrested in Broken Tile Insurance Fraud Scheme. He uses it to buttress an argument that smears all public adjusters and justifies taking away policyholders legal rights:

Facts of his arrest reveal an intimate marriage between PAs and replacement cost coverage — one is the messenger; the other, the message.

The message — the pot of gold that used to be at the end of the rainbow — is now at the beginning. Instead of actually spending new dollars to replace old property, you can get all your money up front, and, even better, you can spend it however you want: on a new big screen TV, on a new car, a vacation, some lingering bad debts, or all of the above. All you have to do is give 20 percent to the messenger.

...

For those who still believe that a purchase of replacement cost coverage warrants replacement cost payments without a hold back, consider this: The price for RCV is roughly 25 percent more than ACV with a hold back provision! Without a hold back provision (ala Espinosa) it's more like 75 percent more and climbing. Florida is the only venue in the entire world that does not have a hold back provision for replacement cost. Replacement cost would not exist if it were not for the hold back provision.

Look at what Espinosa and other bad PAs are doing (though most not as overtly) and ask yourself: Is it any wonder that frequency and severity have skyrocketed? Is it any wonder that losses per policy are up 65 percent? Is it any wonder Florida has 3,200 new PA messengers, almost 90 percent of who are located in Dade and Broward counties?

There's no room for subtlety. Senate Bill 2044 was just a start. For a return to normalcy, we must limit the activities of PAs and completely eliminate the prohibition against a replacement cost hold back provision. (emphasis added)

Scott Johnson is wrong about replacement cost holdbacks not existing absent the provision. A number of insurance carriers sell this product in states without the law and seem to do very well making profits--they keep selling the product. Further, Florida has a longstanding common law allowing for no holdbacks for real property loss. I noted the fallacy of his arguments in An Interesting Day in Tallahassee and Thoughts on the Pending Replacement Cost Coverage Legislation. Scott Johnson is bootstrapping two different issues:

1. Should we reduce policyholder benefits by removing consumer protection statutes?
2. Should there be stronger oversight of public insurance adjusters?

From the policyholder's viewpoint, I think the answers are:

1. No
2. Yes

I will understandably catch grief from insurers and public adjusters for these answers. Yet, when I helped form the Florida Association of Public Insurance Adjusters eighteen years ago, I told those in attendance that they would succeed so long as they always looked at their vocation as first serving policyholders. If so, they would always be "on the side of angels." I suggest that the same should hold true for those managing insurance companies, insurance agencies and those making laws for Florida citizens.

Nobody likes to read bad press. It is worse when some suggest that criminal acts are automatically attributable to the group, as Scott Johnson suggested. Yet, his views are shared by many within the leadership of Florida's insurance industry. While I acknowledge that it is in the insurance industry's interest to have this viewpoint, the same way it was in the interest of Halliburton to support the view that Saddam Hussein had a significant number of weapons of mass destruction, the question posed to public adjusters should be:

Can you better serve policyholders by raising the professional bar of what is expected of you and your peers?

Scott Johnson is an honorable person and his perception that some public adjusters charge too much in return for too little is worthy of reflection. I have talked with Johnson on various insurance matters and have read his book regarding the history of Florida's independent agents, From Cartel's To Competition (2004). He has a deep commitment to Florida's insurance market and to the extent he has expressed a view, I am certain many others share it as well.

I have been very up-front when people ask me what changes I would suggest could be made. Keeping it simple, I suggest a significant raise in the public adjuster licensing fee so that more market conduct studies of public adjusters files would routinely be conducted by the Office of Insurance Regulation. The law is already in place to do so, but it is rarely done regarding public insurance adjuster files. Knowing that regulators will periodically be looking at files and talking with clients is one sure way of raising the professional bar of public insurance adjusters.

Could you imagine how honest all Americans would be regarding income tax if there were no audits? This simple regulatory step would be significant if used with significant penalties for non-compliance. Hardworking, honest and professional public adjusters would support this change as well because it would show either their industry has significant problems, as suggested by the insurers, and help clean it up, or, alternatively, it would help prevent wrongful conduct by adding a significant risk that otherwise honest public adjusters would be caught.

Maybe we can come together and make some win-win laws and regulations. And with that kumbaya thought, how about this appropriate song from one of the best rock and rollers of all time:

After the untimely death of his wife, Al picked up and moved from Boston to sunny Miami Beach. Al had worked as a public adjuster since 1930 in the Boston area and, when he came to Florida, he was the only public adjuster doing business. I repeat, the only public adjuster in Florida. The competition would begin to grow, and soon Al knew of two other gentlemen who were public adjusters in Florida.

As a founding member of NAPIA, the National Association of Public Insurance Adjusters, Al realized the importance of banding together in camaraderie with other public adjusters. Alfred Lesser paved the way for public insurance adjusters in Florida and other states through his company’s adjustment of claims for policyholders in the U.S. and beyond. The company still operates from its office in Miami Beach and is now called Lesser & Company, Inc.. Recently, I had the privilege to sit down and chat with Norman Lesser. Norman, David and Melvin kept the company going after Alfred passed the business down. Today, Norman still works claims and still visits losses. After over sixty years in the business, he says he can’t stop and he won’t stop now. A true, living legend. I asked Norm to recount some of the stories of the past for me. I wanted to get an idea of what public adjusting was like in the 1950’s and 1960’s. Well, Norman started at the beginning…

He said when his uncle Al started adjusting in Florida, he offered a service to those who suffered a loss. The company would “ADJUST” the claim for the policyholder and communicate with the insurance company. Even decades ago, people were busy, insurance contracts were confusing, and the benefit of the dollar was not provided to the insured. The Lessers were the professionals hired to do the work-up of the claim and navigate the insurance obligations and coverages for the client. Just as you would hire an accountant for taxes, if you had an insurance claim, you would hire Al. In those days, the adjustment was done onsite with the insurance company, and the insurance company’s representative had the ability to resolve a claim with finality and pay a claim. Norm said that in the 60+ years he has been in this business, he has seen lots of change and strife, but he has also witnessed insurance companies pay multi-million dollar losses in a matter of a few days. This was before Federal Express delivery, text messages, or estimating software. The check was written out and delivered promptly--because it was owed. Norm explained that something has stayed the same since he started adjusting claims in 1954--the hard work. The company continues scoping larges losses until all hours of the night, evaluating the business personal property of millions of widgets in large warehouses, and wading through the rubble to find the policy, the policy with the provision that provides just a little more coverage or leverage for the policyholder.

If you are reading this article and have adjusted a claim in Florida, then you have a connection with Lesser & Company, Inc. Prior to 1957, the State of Florida did not have a licensing law for public insurance adjusters. PA’s were not regulated. Recognizing the need for licensing in the profession and the need to increase professionalism, Lesser and Sons, Inc., worked to push for regulation of their industry. Florida public adjusting licensing was adopted into law in 1957. However, after the licensing statute was enacted, the legislature took the regulation too far with a separate statute which banned “personal solicitation.”

In 1957, Florida Statute §636.23 defined a public adjuster as:

(5) ‘Public adjuster’ shall mean any person, except a duly licensed attorney at law as hereinafter provided, who, for money, commission, or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract, other than life, annuity, accident and health, or who advertises for employment as an adjuster of such claims; and shall also include any person who, for money, commission or any other thing of value, investigates or adjusts such claims on behalf of any such public adjuster.

However, Florida Statute §636.261 was the regulation which caused the problems. This statute prohibited the following:

No public adjuster shall personally solicit or contact, either directly or indirectly, on his own behalf or on the behalf of any other person, firm or corporation any person or their legal representatives, husband or wife, dependents or next of kin for the purpose of representing their interest in any claim arising out of a contract or policy of insurance as defined in §636.23(3). Upon proof of any violation of this section, the commissioner may revoke said adjuster's license.

This regulation, had it remained the law in Florida, would have completely changed the ability for policyholders in Florida to get help with an insurance claim. It is hard enough now. On a regular basis, I find myself explaining who a public insurance adjuster is and what they do for insureds. Friends, family and non-insurance professionals have often never heard of a public adjuster unless they have suffered a loss or happen to be related to a PA. The profession of public insurance adjusters is not as well known as insurance adjusters who work for the insurance companies, and if public adjusters would have been prohibited from solicitation in 1957, I am afraid the profession would be an endangered species now.

The courts in Florida wrestled with the statutory language and considered whether it was constitutional after Melvin Lesser filed a declaratory action. The litigation began when Melvin asked the court to define his rights and privileges as a licensed public adjuster. Melvin explained to the court that his only source of income was derived from public adjusting, and that the bar on solicitation was illegal, arbitrary, and discriminatory. Finally, the case was heard by the Supreme Court of Florida. In a 4-3 decision the Florida Supreme Court ruled that the statute was unconstitutional. Affirming the lower court decision, the court explained:

In sum… the effect of Section 636.261, Florida Statutes 1957, F.S.A., would be to make it impossible from a practical standpoint for public adjusters to engage in a business which is otherwise recognized by statute as being lawful.

The Court made it known they agreed there was no public need for the so-called statutory regulation prohibiting solicitation. The privilege of engaging in the business of a public adjuster had been recognized as a valid and legitimate occupation and there was no reason why for the safety, health and welfare of the public that such a restriction needed to be imposed.

This was not just a great ruling for public adjusters and insureds, this decision also laid the foundation for allowing the proper advocacy for policyholders in Florida and beyond.

The funny part is…the Lesser family business grew and grew, so much so that the clients sought out Lesser and Company for their claims, and, in 1992, Lesser and Company did not personally solicit a single Hurricane Andrew claim—even though the statute said they could.

In addition, some insureds turn to the local media to try to get the insurance company’s attention. I recently came across an article where a homeowner and her public adjuster have tried this. The damage to the property is very clear. A willow tree crashed into the house on April 29, 2010, and , as of July 9, 2010, the claim has yet to be resolved by Allstate Insurance Company. According to the article, the insured was forced to hire a public insurance adjuster to help with the claim. The public adjuster finally received a verbal response from Allstate regarding the structure assessment of the claim on July 8, 2010, ten weeks after the tree smashed through the roof of the home.

The insurance company must have missed the news segment which reported the extensive damage to the insured’s property immediately after the storm. Now, the claim is making news again because of Allstate’s delay. The insured is obviously beyond frustrated. As you will see from the video, the family has been displaced from the home, and, while Allstate has paid for living expenses, it has not issued any payments for the home.

Allstate was contacted for the story, but the regional spokesman’s response was confusing and contradictory:

Allstate regional spokesman, Brett Ludwig, said, “We discovered that it had already been paid and closed. As the complexity of the claim goes up, so does the time it takes to get it resolved.”

The comments from the homeowner indicate that she has been waiting for the initial claim assessment. As of the date of the article, the claim was not one where the scope or the price was in dispute because Allstate had not yet provided its adjustment information to the insured.

Will the resolution of this claim be handled any differently because the media was contacted? Maybe or maybe not, but someone will remember this story. They will remember the family that spent 10 weeks in limbo while Allstate seemed to lose track of their claim and attempted to determine whether it was open or closed. Stories like these help the general public understand that filing a claim with an insurer can be a long and arduous process.

At the conclusion of the article a link is posted for the Connecticut Insurance Department (CID). This web page offers helpful information for those filing insurance claims. This may be helpful general information for public adjusters in any state to use to explain the insurance process to policyholders.

Here is a copy of the eight claim process tips provided by CID :

Eight Tips for Making the Claim Process Easier

1. Know Your Policy
Understand what your policy says. The policy is a contract between you and your insurance company. Know what is covered, what is excluded, and what the deductibles are.

2. File Claims as Soon as Possible
Don’t let the bills or receipts pile up. Call your agent or your company’s claims hotline as soon as possible. Your policy might require that you make the notification within a certain time frame.

3. Provide Complete, Correct Information
Be certain to give your insurance company all the information they need. Incorrect or incomplete information will only cause a delay in processing your claim.

4. Keep Copies of all Correspondence
Whenever you communicate with your insurance company, be sure to keep copies and records of all correspondence. Write down information about your telephone and in-person contacts, including the date, name and title of the person you spoke with, and what was said. Also, keep a record of your time and expenses.

5. Ask Questions
If there is a disagreement about the claim settlement, ask the company for the specific language in the policy that is in question. Find out if the disagreement is because you and the insurance company interpret your policy differently. If this disagreement results in a claim denial, make sure you obtain a written letter explaining the reason for the denial and the specific policy language under which the claim is being denied.

6. Don’t Rush into a Settlement
If the first offer made by an insurance company does not meet your expectations, be prepared to negotiate to get a fair settlement. If you have any questions regarding the fairness of your settlement, seek a second opinion, or you may contact the Consumer Affairs Division regarding your rights under your policy.

7. Accident and Health Claims
Ask your physician to provide your insurance company with details about your treatment, medical conditions, and prognosis.

If you suspect a provider is overcharging, ask the insurance company to audit the bill and verify whether the provider used the proper billing procedure.

8. Auto and Homeowners Claims
Auto and homeowners policies might require you to make temporary repairs to protect your property from further damage. Your policy should cover the cost of these temporary repairs, so keep all receipts. Also, maintain any damaged personal property for the adjuster to inspect. If possible, take photographs or video of the damage before making temporary repairs.

• Don’t make permanent repairs. An insurance company may deny a claim if you make permanent repairs before the damage is inspected.
• If possible, determine what it will cost to repair your property before you meet with the claims adjuster.
• Provide the claims adjuster with records of any improvements you made to your property.
• Ask the claims adjuster for an itemized explanation of the claim settlement offer.

A former president of MAPIA, the Massachusetts Association of Public Insurance Adjusters, and a member of NAPIA, this adjuster has also worked with the Massachusetts Commissioners office regarding public adjuster standard contract form and licensing. In addition, he is a member of CAI, Condo Association, and IREM, Real Estate Management Association.

After discussing his practice and adjustment of claims in Massachusetts, I asked him to share a few success stories to illustrate how claims adjusting occurred in his area, and he sent me the following in an email:

1. Worked with an excellent Independent Adjuster to resolve a hail claim on a roof. Went back and forth to determine scope and price. Final settlement was 3.4 times the initial offer, but the negotiation was congenial and respectful—the way it should happen.
2. Settled another roof claim at ten times the initial offer. Damage was caused by icicles from a radio tower that punctured a flat, membrane roof 164 times. Plotted each hole to show the extent of the damage and convinced the insurer that claim was valid and that roof should be replaced.
3. Adjusted an explosion claim for a pharmaceutical company that was a startup with no profitable experience. Company could not have rebuilt the manufacturing plant in the same location. Would have taken two years to reopen in another location due to FDA permitting and they would have gone out of business. Spent a great deal of time with the company’s president to understand his business and arrive at a solution. Worked with the insurer to provide my client with the full amount of the BI/Extra Expense coverage available to enable them to buy a competitor, the only way they could have survived. It helped a great deal that the adjuster had a great deal of experience and had a reputation of being fair. He understood the problems and recommended payment.
4. Took an aerial photo of an apartment complex while roof was being removed and tarped over after Hurricane Rita. When a thunderstorm tore off the tarp and caused significant additional damage, the adjuster denied the claim on the basis that the tarp was inadequate. After I showed the photo (which proved that the tarp was secured properly) to the insurer’s attorneys at a settlement meeting, the claim was paid. (My Perry Mason moment.)

LESSONS LEARNED

I was really impressed with these success stories; in just a few short paragraphs there are lessons for every public adjuster to note.

Success Story 1
A compliment to an adversary? Very impressive. The independent adjuster is complimented in the first sentence as being “excellent” and the claim adjustment was respectful and congenial! Now, I am sure if you are a public adjuster reading this you are thinking—if my opposing side was excellent the claim would be too. However, I think it is important that the two sides did not agree at the onset. Something had to happen to get to the final favorable agreement. I think it was reached because each side presented the claim in a professional way. Even though the claim took extensive negotiation, it was resolved on the high road. Now, this public adjuster has earned the respect of the independent adjuster and respects the independent adjuster. This will be beneficial to both sides the next time they meet at a loss because the two have developed a professional working relationship. The public adjuster also told me not all independent adjusters have authority in the field, and this was an exception because most of the claims are reviewed by an inside examiner who does not visit the property.

Success Story 2
This sounds like the familiar story of repair vs. replace the roof. The plotting of each area of damage on the roof is no small task, but I think it showed the carrier three things. Number one, the roof was damaged in 164 separate and distinct areas. Number two, this public adjuster can document and prove the damage to anyone (even a jury) based on his hard work and the plotting of each individual area of damage. Finally, the claim has to be paid.

Success Story 3
This claim was a commercial loss where the building was so badly damaged that a rebuild could not be done and a new build would take too long. At this point, I think most people would have given up. However, this public adjuster did not and he should be proud of the resolution because this was more than adjusting, this was client advocacy with creativity. Even if you have been adjusting for several years or your entire life, it is important to remember the resolution for each client can be different. What worked for you on another successful loss, might not work for a new client. You need to keep the current client’s individual circumstances at the forefront. The best option for this pharmaceutical company was to buy out the competitor, but for this start-up company it is no small act to convince a carrier to pay limits on Business Income and Extra Expense Coverage. Documentation and claim presentation was key in this claim. The public adjuster explained the situation the client was facing (including the alternative) in the claim package and a resolution was achieved. Kudos to the public adjuster!

Success Story 4
Going the extra mile. The foresight to take the aerial photo of the loss after the tarp was placed saved this claim. I know most adjusters take photos of the damage but here, taking photos of the mitigation efforts resolved the claim.

One final note, what I really liked about the success stories from this Massachusetts-based public insurance adjuster was how he explained his proud moments. He did not list the figures of the settlements or tell me how much money he made. Instead, he told me how he properly adjusted and how his adjustment helped the clients.

I asked this public adjuster if he had any advice for other public adjusters, and he explained that he learned a long time ago to spend time on the claims (even the small claims), and give the adjuster two copies of his claim presentation with support in a organized book or binder—one for the adjuster and the other for the claims manager who is really calling the shots. I think this is a very helpful and simple suggestion—show them the proof!

Want to share your story with Merlin Law Group? Email Nicole Vinson at nvinson@Merlinlawgroup.com.

Because this is a public blog, I do not write the names of the firms or adjusters unless mentioned in a published opinion. I do note community involvement and professional associations.

If you would like to learn more about the firm listed here, contact me and I will forward your information to the PA.

One of the most interesting shows is Modern Marvels, which answers questions of how or why things work and it makes understanding the history interesting. I think when you actually are interested in something like, how the Earth was formed or the strongest building materials, you pay attention and remember the information, and it impacts (maybe even just slightly) your future decisions because you have more knowledge.

The same thing is true if you are the youngest sibling in a family; the youngest quickly figures out how to make his or her life easier based on the misadventures and successes of the older kids in the family. The youngest knows the history because he watched the battles of the other kids and now knows that Plan A and Plan B often failed, but Plan C gets you the extra cookie every time.

How does this relate to public adjusting? Well, to know what to expect in the future, you must look at the past.

History cannot give us a program for the future, but it can give us a fuller understanding of ourselves, and of our common humanity, so that we can better face the future.
-Robert Penn Warren

I want to chronicle both the history of public adjusting and your case stories. In How to Make More Money, I provided information about a public adjusting contract in New York and how the contract was upheld by the court. I provided information learned from public adjuster contributions in the post, Contents Inventories and Public Adjusters. I want add more personal in depth stories about public adjusters as well as get the story behind cases—most often, published cases do not mention the public adjuster.

To do this the right way, I need to know about what is going on in the field and what has been going on since you started as a public adjuster. So I am providing a form. If you think that history is important for public adjusters, please take just a few minutes and email the form answers to me at nvinson@merlinlawgroup.com You can fill in as much or as little detail as you like. I know we all are busy, but let me hear what is on your mind and what you have been through.

The resources currently available, at least those available to the general public, do not properly and justly spotlight public adjusting as a profession or provide a complete history of public adjusters. Just like Norman Lesser, I want to share your story and know your background. But I need the information from the source. Mr. Lesser agreed to sit down and talk to me to tell his story and I am setting up a meeting with him this month to learn more.

Now, when I begin to post the detailed public adjuster stories, please feel free to comment -- but also to send me your story. I am starting with the materials available to me and trying to expound. If you do an internet search on public adjusting, you will see there is not much substantive information being shared in a public forum about the profession, the people, the cases –triumphs and losses. Sure, everyone has their own website, but websites serve different purposes than a chronicle.

So email me the responses, then let’s chat so that I may share your story and find out what American History your files contain.

Thank you in advance for taking the time to send this information to me. If you would like to contact me by telephone, I can be reached at 813-229-1000. If you think there is additional information that should be gathered from the public adjusters throughout the state, please let me know so that we can learn more about the past for even greater success in the future.

Nicole Vinson's observations in Public Adjusters and Continuing Education: The Education Pays Off are certainly correct. Adding to that, is my belief that people pay a lot of money to come to these seminars and they deserve their money’s worth. From surveys our firm has conducted, we find that people want to bring back practical knowledge which will make their work easier, more enjoyable and more profitable. This is what my speeches and presentations try to accomplish. The law is left to the paper in the handout. The part to take home is found in the speech.

Tips and techniques are important. Learning from those who have experience from the other side of the table is extraordinarily valuable. Recognizing that methods used in the past need to be changed to achieve a better outcome for the client is paramount. I bet there are quite a few adjusters and insurer attorneys for that would love to put their two cents in on this presentation. Many public adjusters could do a much better job for the policyholder if they would just consider and appreciate the needs and role of the insurance adjuster.

On Wednesday, the conference will be over and everyone who attended will be back to work—business as usual. Or, maybe not. After spending three days at a conference with “our side of the industry,” I am recharged. I am invigorated to advocate on behalf of the policyholders. The feeling is a little hard to explain, but after spending time surrounded with others who fight on the same side, it is kind of like a pep rally before the big game.

At education conferences, I try to learn more than the materials in the handouts, and take advantage of the opportunity to sit and discuss issues with those of you who are working the claims in the field. Sometimes this will happen during a random elevator ride or in line at breakfast. The discussions vary. Sometimes I hear in-depth testimonials of big wins and disappointing losses. I get more than the summary of the claim; I hear the passionate details of the claims. I have a better perspective into the actions of insurers and the situations of insureds. And after the conference has come to a close, these stories and comments that stick with me. When I am doing legal research or trying to formulate a good strategy for a mediation, I am more motivated to advocate for the policyholders. I work harder, push a little further.

Like most conferences in any industry, for the public adjusters who attend conferences, the competition is all around. In this economic climate, I can see how the room could be filled with hostility. However, in my experience, most public adjusters at educational conferences are friendly and treat each other with professionalism. I think this approach of working together as a more unified front or group makes sense and is very beneficial to each of you as an individual and for your business.

I think everyone should join voluntary associations and take advantage of continuing education events, no matter your occupation. So I encourage you to reach out to those who may be the competition. Join associations, make associations and learn from each other. We all have something to share and many things to learn. It is important to take these steps and keep an open mind.

As I explained in the beginning of this series in my post, Public Adjusting Case Stories, I think sharing information will help all of us. I think it is important to share resources, especially from others who are in the same line of work. The information is very valuable but not always easily accessible.

On the scale of different insurance coverages, personal property losses sound and look a lot less complicated than many others, but the claim should be handled with expert care. In speaking with several public adjusters on this topic over the past few weeks, I think we are seeing trends in the field where the carriers are providing less support to clients who need to submit contents forms and increased pressure on the insureds to quickly file a perfect contents claim.

In most residential insurance policies, coverage is provided for personal property in the event of a covered loss. In the industry, this is commonly called a contents claim or a coverage “c” claim (State Farm labels it as a coverage “d” claim). The policyholder who suffered a total fire loss, however, is calling the contents claim, the “everything I owned and cherished is gone” claim. When someone has personal property that is damaged, it is a very emotional and difficult loss. These are very personal belongings, the part of your life you move with you from house to house, the items that hold memories and items you picked with care or inherited with pride. Almost all of my clients have a difficult time when they have to talk or think about such items lost in a devastating fire or total loss. Many times, the clients are still emotional several months after the actual loss when discussing the details. Sometimes, I have been with a client who is telling me a story about an item they lost and suddenly sadness overwhelms them; the insured remembers something else they lost that they had forgotten about until just that moment. When this happens, the client must try to recall whether the baby’s christening dress or grandma’s handmade quilt was on “the list.” Adjusters in the field have explained to me that even the most through investigations and documentation of a claim will often inadvertently omit items lost by an insured. Adjusters have explained to me that, for years after a loss, clients will think of additional things which were not listed. Because of the nature of these claims, it is best to have an experienced person help you fill out the list.

The List

The list matters. The list must include several columns of information where each and every item damaged or destroyed is noted. However, when handed to insureds who just learned their home is charred, the form is now another overwhelming and daunting task to be completed in a time of tragedy. The format of the contents inventory may not have to be submitted on the form supplied by the insurance company, so long as there is no policy provision or statute making it a requirement. Also, the inventory can be submitted with documents supporting the lost or damaged items, which can help answer questions before the insurance company even asks.

After a devastating loss, the insured is required to fill out the form in order to submit the claim, but many times the form comes without a letter explaining how to complete it or giving guidance on how important the form is to the claim. If instructions were not provided, I ask clients if the insurance company verbally explained how to use the form; the answer is almost always NO. Many times, I hear something like… “the insurance company provided me just one form to list all the things I lost,” or “the form only has room for thirty items and they told me to make copies of the blank form if I need to list more.” I am sure many public adjusters have heard this time and time again. Maybe you are wondering like I am, how in the world is an insured, who just suffered a major loss and can’t find the photos from the wedding or the birth certificates for their children, supposed to put their life on a 81/2 x 11 sheet of paper? The answer to this question? --HIRE A PROFESSIONAL.

If you have a claim and you are attempting to fill out the form alone, hiring a professional could really help. Professionals know being charged with the task of helping a client with an inventory is not an easy task. It is one that I think public adjusters need to take on with the clients’ full support, cooperation and devotion. The highest amount of care needs to be used for several reasons.

Here is the list of best practices which have been shared so far:

• Explain to the client what the insurance company needs and why it is important to be accurate in the contents inventory. (Red flags on an inventory can delay or deny claims)
• Be truthful, accurate and detailed.
• When in doubt, leave it out- not sure if you lost the item during the event or lost the item years ago, leave the item off the list.
• Hire a contents inventory company, experts often use other experts.
• Help the client list the damaged items one room at time, one section at a time. Don’t forget the closets.
• Use a computer program to detail the items damaged or destroyed, the find function is a simple short-cut tool that can be used to make sure items are not duplicated.
• Have an independent person review for duplication or black boxes.
• When listing an item, describe it as completely as possible the first time it is discussed. Take pictures. Look for model numbers on items still available. Document your file with information used to fill out the form.
• Get the story behind the item and learn all the details about it, the purchase and significance.
• Find out the owner of each item, who uses the item, and where it is usually stored.
• Ask questions if an item is listed as damaged or the item does not belong in that area of the house. The insurance company is going to ask about the items, the PA should know the answer too. When there is a reasonable explanation for something that appears odd, advising the insurance company ahead of time may help. For example, informing the insurer the clients’ daughter just got married and all the centerpieces and chairs from the reception were in the garage at the time of the loss can explain the massive numbers of vases, chairs, ribbons and bows.
• Make notes about extra details the insureds provide. This information may come in handy years later when memories fade.
• Make sure the client feels comfortable speaking with you in detail about the personal belongings. Sometimes people (especially during a loss) feel vulnerable and as if everyone is judging them. Make sure the client knows the list must be accurate and reflect the loss even if that means you have to list items you may not want to admit were owned. If your mattress was 25 years old, admit your mattress was 25 years old.
• Explain to the client what happens if the contents inventory does not accurately reflect the items in the loss. (Have them contact a first-party Plaintiffs’ insurance lawyer if they need help questions about submission. These matters are often easier for the lawyer if the information is provided early and often.)

Have more to add? I would love to hear from you. Please post a comment or send me your thoughts on other best practices for helping clients get full and prompt contents loss payments where inventories are submitted.

Things begin with the CE Ethics class for public adjusters from 4p – 5p at the Club Room, 777 South Flagler Drive, West Palm Beach, Florida, 33401 (please arrive by 3:30p to sign in and get a good seat. This easy and informative way to receive an hour credit towards your ethics CE requirement fills up quickly!)

Immediately following, Florida public adjusters are invited to join Merlin Law Group attorneys from 5p – 7p also in the Club Room as we celebrate with food and drinks our latest location – West Palm Beach, Florida. It’s also an opportunity to meet some of the latest members of our staff of attorneys. We are excited for this chance to show our valued public adjusters that we are where you need us and we are who you need when it comes to advocating and assisting Florida policyholders.

If you are attending one or both events, please be sure to RSVP to Kendra Kenney, Merlin Law Group’s Marketing Director, at kkenney@merlinlawgroup.com or 813 229 1000 x 235.

TOPIC: GETTING PAID

Your contract with the policyholders governs how you will get paid. If only the contract could tell you when you would get paid. Payment dates and payment amounts are very easy to determine, so long as you have a crystal ball. Fresh out of time machines and crystal balls? Me too, so I guess we have to make smart decisions. There is always a risk when you sign-up a new client. Most public adjusters take a percentage of recovery (usually on funds received after their involvement) and the percentage is paid by the client when and if the carrier issues payment.

Insurance companys often have some comment to make about public adjuster fees. I think the fact that the public adjuster has an interest in proceeds burns the company adjusters because they are not paid in the same way. Perhaps it’s envy. But, what the insurance adjusters may not realize is that the public adjuster must completely adjust a claim and jump every hurdle placed by the insurance company before his or her payday. Sure, there are claims when undisputed amounts are paid and the public adjuster gets a percentage of the recovery before the claim is finally resolved, but there is no hard and fast timeframe for public adjusters to get paid. In fact, in many instances I have encountered public adjusters who wait for their fee until the final recovery. Also, certain PAs don’t take fees out of additional living expense checks and/or contents payments.

So, what we know is that public adjusters don’t know when they will get money, or if they will get money. Nor can they really project the amount of the final recovery in order to calculate an anticipated fee. This sure makes it difficult to structure a business. Now, consider a case where everything goes as planned, the claim is resolved through hard work and dedication and the carrier pays the claim—but fee is still out of reach.

Public adjusters are no stranger to this problem. Even after the check comes in, there are issues with endorsements from mortgage companies, clients who want to play Let’s Make a Deal and so on.

But in this case, the public adjusting firm wins! “Judgment for the [public] adjuster.” In Ochocinska v. National Fire Adjustment Co., 577 N.Y.S. 2d 998 (4th Dept.1991), the public adjusters had to litigate against the policyholder in order to receive their compensation. The case arose out of fire loss at the property of Geraldine Ochosinska. The public adjusting firm worked the case and the claim was paid. The case states, “[n]ational Fire succeeded in adjusting her fire loss claim in an amount acceptable her.” However, the client did not want to pay for the services and wanted the contract cancelled.

The contract agreement between the client and the public adjuster stated the time period the client had if she wished to cancel the contract. The statutory requirement in New York at that time the contract was signed allowed the client to cancel the contract before midnight of the third business day following the date of the agreement. The contract contained notice of the right to cancel, but the date listed on the contract was December 31, 1989, which was a Sunday. Under the law in New York, at the time the agreement was reached, the time period should have been extended to January 2, 2010.

The client didn’t attempt to cancel the contract until after the loss was successfully adjusted. She argued to the court that she should be able to cancel anytime because the contract was wrong, and that she should be able to cancel at anytime until the error in her contract was corrected. The trial court agreed and granted her motion for summary judgment on this issue. The public adjuster was to be paid nothing.

BUT THERE IS MORE TO THE STORY --- 

The public adjusting firm appealed the decision. The appeals court determined that the first court was wrong and should have found for the public adjuster:

There is no assertion that plaintiff was confused or misled by the insertion of the obviously incorrect date. Plaintiff does not urge that, had she known that she could have canceled on January 2, she would have canceled the agreement at that time. The record shows the contrary.

The client and the public adjuster in this case had frequent commutations regarding the progress of the negotiations. The client even complained the process was taking too long, but she never expressed a desire to cancel until after the services were performed. The court held the incorrect date on the contract did not prejudice Ms. Ochosinska because she did not want to cancel extended 5 day cancellation period.

LESSONS LEARNED

• All sections of the contract matter;

• Sometimes to get what you agreed to a court must be involved;

• Communication with the client helped the court decide the case in the public adjuster's favor —document your files

• Make sure you have updates on the contract requirements so you don't make an inadvertant error that could cost you;

• The question posed at the beginneing of the blog was how to make more money. The answer is -- in part -- make smart decisions, accurately document the file, and fight for what is right.

If you worked on this case or have more information about the other details, please post comments, we would love to hear more of the story.

This has been a year long study for me, and the point for all of us is that professional conduct leads to better results and a more satisfying life. The problem is few works truly break down exactly what professionalism consists of and how it drives results for individuals and organizations. Some may say that it is common sense. From observation, I am convinced that some ignorantly believe that professionalism is for losers.

Jim Beneke, a past president of NAPIA, wrote me a letter on professionalism that I hope he will allow to be published in its entirety. Part of what he wrote explains how teaching and mentoring make the teacher and mentor much better for the effort. He stated:

...about a year ago, I hired a young, trainee adjuster, Matt Thannisch. He has a very bright future in this business. I promise you that you don’t have a good appreciation for what you know until you have to explain every step you take every day of the week. Having worked more or less alone for almost 20 years, I have developed a routine and habits that just come naturally to me. Being responsible for a young adjuster has caused me to take stock in what we do, and focus on issues that I had long since left behind.

...over the last year, I have been involved in the reemergence of TAPIA, and am the current President. Historically, TAPIA has been made up of "experienced" adjusters who have practiced in Texas for years. This time around, the group is made up, primarily, of new public adjusters. Every meeting is an eye opener (one guy wanted to know why we couldn’t add 10 and 10 to our fee!), and is a reminder that what we really do is take care of the small details in making sure that our clients are treated fairly.

All of us pride ourselves on the biggest of our successes, but it wouldn’t hurt any of us to step back and take a look at what we are doing through the eyes of a newcomer. I think it will surprise you what you learn.

I look forward to more discussion on the topic of professionalism and to my presentation of this important topic on Thursday. Since my presentation is in the Los Angeles area and one of my favorites is the recently deceased John Wooden, this may be of interest to those making it this far:

“Case Law:” you have probably heard this term a lot and chances are that, if you are reading this blog, you are familiar with insurance case law. Client claims can turn into case law or “common law.” When a court issues an opinion and it is published, the rules of law applied to the facts of the claim become case law. Generally, the opinion includes past claims opinions for support. The facts and the rulings are used or cited by lawyers as guides for future cases. When I am making an argument or I need to find out how the courts are dealing with an issue, I research the case law. Using a favorite legal research database, I can do a keyword search, statute search, or even list a name of a party to find out about the cases in state or federal courts.

Often, the difficult part is when I have persuade a court that a particular legal issue is the same or different from the cases which have come before the court or a higher court. The published opinions include rules of law and facts particular to the case. The facts detailed in opinions really matter and make a difference.

For instance, when I am looking to find authority to help my client, I want to find favorable cases that have similar facts, and I want distinguish cases with unfavorable opinions. The particular facts of the opinions I use must be explained to the court in a pleading or in an oral argument. The judge needs to see how the case law relates to my client’s situation so the right ruling can be made. Also, case law is used to show why an action requested by the insurer should not be granted. To do this, I try to show how the cases relied on by the other side do not apply to my client’s case.

Case law research has become much easier through the use of online databases. With the right app, I can even find a case on my cell phone. It’s pretty amazing. Legal research databases are a valuable learning tool. Many times, the lawyers and clients who make the case law pave the road for a successful resolution of my clients’ claims.

I believe and online database for public adjusters could help in the same way. An online forum where public insurance adjusters could share information about current cases, insurance experts, and outcomes could help us all to represent our clients more effectively. An adjuster’s background and individual experiences can contribute significantly to how a claim is presented. Sometimes, a different outlook or opinion can make a big difference in the presentation of a claim. Hopefully, this series will provide such an opportunity

So, I’ll be here on Saturdays to facilitate this information sharing. Discussions of difficult claims, behind-the-scenes public adjusting, and the untold facts behind a claim resolution will benefit us all. So, send me an email, or call me at (813) 415-8758. I look forward to this new forum.

Pat's obituary was certainly right when it indicated that he was a "passionate fighter and a true advocate for the policyholder's rights." A lawyer by training, we would share ideas and perspectives about the subtle issues of coverage, adjustment, and unfair claims practice. It was easy to tell that Pat loved the law and lore of insurance. Maybe because of his legal background, he shared transcripts of depositions and his thoughts regarding how to attack an insurance company's denial of coverage. He made me a better lawyer.

He was very proud of his website MySmartClaims.com. We spent several hours together as he explained the concept and showed me the Google analytics results. He was especially amused at how many hits he received from Bloomington, Illinois. He joked that the State Farm Home Office executives were learning how to adjust homeowners claims based on his website. To say that Pat enjoyed the fight against the largest insurers would be a significant understatement; he loved the battle.

I will miss Pat and our vibrant discussions about the law, insurance and adjusting. There is a time when all fighters eventually find peace.

Yesterday, I was talking to a lawyer who practices in a different area of the law and in a different state. We were having a friendly chat, but then the conversation turned. She began telling me how unhappy she had become practicing in her area of the law. She felt she was not serving her client. My friend wanted to be evaluated on her assistance to the client and the client trust she built over the years but, instead, her boss recently only offered her feedback on the number of hours she billed. She asked me whether I thought her client relationships and quality of assistance mattered. I told her that her clients appreciated her work, even if the firm seemed to have a different focus. She then told me she felt it was time to change from defending medical malpractice claims to something new. She said she wanted to help people and wanted her work to have meaning. She wants to do plaintiffs work.

It sounds simple, but helping a client can be a challenge. Assisting policyholders with insurance claims is a great way to help people get what they rightfully deserve -- the benefit of what they bargained for when they purchased an insurance policy. However, the path and tactics used to help the client can vary.

With respect to demands for examinations under oath, the best approach is what will help the client. Consider how your actions affect the client’s claim in the short term and in the long run. Think about how your actions will encourage a positive resolution for the client. The words seem simple, but I think public adjusters sometimes feel personally attacked when an insurance company adds an additional hurdle to a claim payment. If the insurance policy has a provision which stretches the EUO requirement to those other than the insured, consider the claim, the client and what is the best way to get the claim paid quickly. Whenever an examination under oath is demanded, a lawyer should be retained.

Lawyers who handle examinations frequently know how important the examinations can be in connection with the claim as a whole. Also, a lawyer who has a “client focus” can help to ensure the actions taken before, after, and during the EUO are in the client’s best interest. One example of a way to help includes pre-EUO stipulations. The lawyer can help the client with the claim by reaching agreements about who will testify, the documents requested, and the time, place, and manner in which the EUO will occur. The lawyer may be able to substitute the requested testimony of one insured for another or for a public adjuster. Depending on the case, a public adjuster’s assistance in the EUO may help the client’s claim reach a prompt and proper resolution.

By making sure your focus is on the client, you will be able to best resolve the claim. For example, consider the elderly or widowed client who has relied on hired professionals for the entire claim. If the insurance company really wants answers about the claim presentation, the PA may be the best person to testify. The client’s responses may be incomplete, and the public adjuster may be able to speak to various aspects of the claim and explain the claim evaluation in a sophisticated manner based on first-hand knowledge. As in any industry, there a common language in insurance, and an EUO between two professionals may go more quickly and with fewer instances of miscommunication.

In sum, I challenge you to truly consider what is the best for a prompt resolution of your client’s claim.

Before the change in Citizens’ policy, analysis of a requirement for an examination focused on the word “insured.” The insured is usually required to submit to an examination under oath when demanded. The term insured is usually defined in the policy, and this helps lawyers to determine who is required to give an EUO. A look at the case law shows that arguments have been made about how far the definition of insured can stretch with respect to commercial policies and commercial- residential policies. This debate has been going on for decades.

Recently, in Florida Gaming Corp. v. Affiliated FM Ins. Co., 502 F. Supp. 2d 1257 ( S.D. Fla. 2007), the U.S. District Court for the Southern District of Florida addressed issues regarding who is required to give an examination under oath under the Affiliated policy issued to Florida Gaming. It is important to remember that in Florida Gaming, the policy language was different than the policy considered in this blog. The facts of this case, like all cases, are unique.

In Florida Gaming, the Court considered who should be required to give an EUO. The Vice President of the company gave a lengthy EUO but could not answer all questions. He admitted that he had no personal knowledge relating to the amount of loss and relied on the public adjuster’s analysis and the contractor, who was hired by the public adjuster, to estimate the damages. The insurance company requested that the contractor be subject to an EUO. Based upon the policy and the facts, the Court declined the request, stating:

Affiliated argues that Florida Gaming must submit Al Paxton to an examination under oath because PCA performed the analysis upon which Florida Gaming has relied in its sworn proof of loss. Florida Gaming responds that the policy requires only that “the insured” submit to examinations under oath. The Court agrees with Florida Gaming, that given the language of the policy, which authorized the examination of “the insured,” an examination of the insured's adjuster (or its agents or representatives) does not appear to have been contemplated. The Court therefore applies the rule requiring that the policy be interpreted in favor of the insured, and finds as a matter of law that Al Paxton is not required to submit to an examination under oath.

The Court’s explains is important; the obligations of those involved were determined by the policy provisions and what was contemplated by the wording of the policy at the time of drafting. This is how insurance policies and other contracts are routinely interpreted, and it provides some guidance in interpreting the new Citizens policy.

Does the exact wording of the provision matter?

Yes.

In Florida Gaming, the Court also explained that when a policy of insurance is ambiguous, the ambiguity is resolved in favor of the insured. This may be an angle used to help public adjusters determine their responsibility with the Citizens policy. The language requesting the EUO does not say “public insurance adjuster,” it says “anyone you hire in connection with your claim.” Perhaps there is enough ambiguity here for a court to agree the policy is unclear and overly burdensome.

What about the policyholder?

One of the common themes in the comments and the discussion about this provision relates to the policyholder. Suppose the insured has a loss and has problems or a complicated claim. The policyholder needs help and hires a public adjuster. The public adjuster’s contract is signed and the claim is presented to Citizens. Citizens demands examinations under oath and lawyers are hired. There is a dispute concerning the obligations of all involved, and the matter ends up in court. The matter is one of many pending on a very full docket. Meanwhile, the insured has to wait just to figure out what is required under the policy. The insured’s home or business is in limbo and the public adjuster is spending more and more time attempting to figure out how to help the client.

While the purpose of this blog is to have a discussion and evaluation of this issue, I also want to remind everyone that examinations under oath must be demanded. If there is no demand, there is no issue. Until an EUO of a public adjuster is demanded and the matter litigated, we will have no definitive guidance on the issue. While no one can predict the future and changes are always happening with property insurance, everyone should understand the policy provisions and be aware of new policy language that could affect your job and your clients’ claims. In the meantime, taking extra care to be prompt in communications and forthcoming with the claim presentation may save unnecessary headaches later.

The provision reads:

As often as we reasonably require:
1. Show us the damaged property
2. Provide us with records and documents we request and permit us to make copies
3. You or any "insured" under this policy MUST:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;
4. If you are an association, corporation, or other entity; any members, officers, directors, partners or similar representatives of the association must:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;
5. Anyone you hire in connection with your claim and anyone insured under this policy other than an "insured" in (3) or (4) above, must:
a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;

Keeping the discussion limited to public adjusters for this post, these are the questions I have received most frequently:

1. What happens if the PA refuses?
2. Is the PA always required to give an EUO?
3. Can the PA fill the shoes of the policyholder and give the only EUO?
4. How can the statements given by the PA during an EUO change a claim decision?

The answer is the same for each question. It depends. The first thing to consider is the policy. At this time, the Citizens form seems to be unique. The entire policy should be reviewed by a qualified lawyer to determine the obligations of the parties.

Generally, the parties to an insurance contract are the insurer and the insured. The public adjuster is not a party to the contract, however, the PA is paid based upon the claim and has an interest. In fact, the first thing most public adjusters do is notify the insurance company of their involvement and request to be listed as payee on the settlement proceeds. The assignment of the claim payments and actual payment afforded to the PA is done pursuant to another contract; the contract entered into between the policyholder and the public adjusting firm. The contract with the public adjuster may say something like this…

In consideration of the services rendered by XYZ Public Adjusters, we hereby assign and agree to pay XYZ Public Adjusters a certain percentage___ of the funds when recovered in connection with this claim.

The insurance policy will likely have three more important sections to consider. The first is the definition section. Under the definitions, the term “you” should be defined. Typically, the “you” in an insurance policy is the insured and those who are bound to perform the obligations under the policy. The “loss payment” clause should be considered too. Does the insurance policy state what has to happen for the payment to be made? This section may outline what each party needs to do for payment to be issued. Also, the concealment and fraud provisions should be considered to determine if and how the testimony of a PA might affect a policyholder’s claim.

After looking at the policy, the claim needs to be evaluated. The status of a claim can make all the difference in how an EUO demand is handled. One thing to look for is whether the demand for the EUO is timely. Did the insurance company waive the right to take the EUO? Has the claim been denied or has there been a material breach of the contract by the carrier? While each claim is different and providing claim information to the insurance company is necessary, these questions should be answered by a trained lawyer. Depending on the case, sometimes providing an EUO (even if there was waiver) may help a claim to be resolved more quickly and leave the insurance company one less defense to the payment. However, an EUO should not be given by anyone without a lawyer. The insurance company has hired a lawyer to represent it at the EUO and a policyholder should always retain counsel too. An EUO is not an opportunity for a policyholder to try out his or her Matlock skills. Remember, even lawyers hire lawyers and doctors see doctors.

When the policy is originally issued, the average policyholder did not consider provisions that may affect non-parties to the contract, nor did they consider who would end up being paid insurance benefits from a claim for damage. Thus, who is the PA in connection with the contract? Is the PA a third party beneficiary or a non-party? A public adjuster involved in a claim typically should not be considered an intended third-party beneficiary. However, the public adjuster receives a benefit only if obligations of the contract are carried out by both parties. If the policy in total supports such a requirement, the public adjuster may have an obligation to sit for an examination under oath. Again, this will depend on the specific policy language regarding EUO and the contract with the policyholder. Remember, looking at one portion of a policy without considering the whole contract is similar to applying sunscreen to just one arm and assuming you won’t get burned after a day at the beach.

This post will continue on Monday. In the meantime, if you have given an EUO and having been dealing with similar issues and would like to share your experience, please send me an email at nvinson@merlinlawgroup.com, call directly at 813-415-8758, or post your comment here.

The editorial noted:

Two provisions, however, could spell trouble for Florida policyholders.

One opens the door to rolling back mitigation discounts that companies provided to homeowners, if they can make a convincing case that premium reductions were too high.

Another allows increases of no more than 10 percent under ``expedited review'' for certain fixed costs -- provided insurers forgo filings to increase base rates the same year.

At best, this makes the bill a 50-50 proposition for consumers. It offers a variety of provisions that protect policyholders, but it also creates loopholes that unscrupulous insurers could exploit, at the expense of consumers.

The best course for Gov. Crist is to veto this bill and insist that legislators give him a clean bill during the upcoming special session -- one he can sign without reservations.

The Miami Herald editorialists missed the part of the bill which reduces replacement cost benefits. A follow up story in the Miami Herald, Veto Watch in Place for Property Insurance Bill, made that point, quoting from Florida House of Representative Rick Kriseman:

He cites three main concerns in the language that give insurers the ability to:

• Withhold a full claims payment until homeowners repair structural damage, contrary to current replacement-cost-value policies;

• Increase rates each year up to 10 percent to cover reinsurance and inflation costs under a separate filing that gets ``expedited review;``

• And offer fewer mitigation discounts to policyholders who strengthen homes against storms and even charge fees to those with inferior protections.

But more than anything, Kriseman said, he disliked the way the Republican leadership in the Legislature strong-armed the bill, blocking all amendments and limiting debate.

``I think there is good reason to veto it,'' he said. ``Just the mere process alone, the way it was shoved down our throats.''

A leading condomium law firm, Becker & Poliakoff, did not miss problems with the property insurance bill when reporting to its legion of clients and readers in Industry Leaders Request Veto of SB 2044 Citing Ability for Insurer's to Withhold Partial Payment of Claims:

One part of the bill purportedly bars homeowners from filing claims. It says that the insured must provide notice of any claim (including supplemental or reopened claims) based on a windstorm or hurricane loss to the carrier within three (3) years of the date of the storm. While it doesn't change the applicable statute of limitations for civil actions, in some cases homeowners do not have a full understanding of all the damages caused by the windstorm/hurricane until after demolition and reconstruction begins. Thus, the three (3) year time frame may result in loss of insurance proceeds, depending upon whether the homeowner has the ability to attend to reconstruction after the storm.

Another section of the bill allows the insurance carrier to change the terms of the policy upon renewal by use of a notice entitled "Notice of Change in Policy Terms". Payment of the renewal premium constitutes acceptance of the new terms.

Most importantly, the bill removes the prompt payment requirements on the part of carriers. It only requires the carrier to pay "actual cash value" minus the deductible, regardless of whether the homeowner paid for replacement cost coverage. The carrier then only pays additional amounts once a contract for reconstruction is in place and the costs are incurred (as the work progresses). Critics argue that this provision disproportionately impacts lower income families that do not have funds available to pay for reconstruction (along with all the non-insured items) and/or replacement of personal property without insurance proceeds.

A comment by Mike Rump to that post hit the mark regarding the replacement cost benefit loss:

This new law should be veto'd. The legislature quickly forgets the number of complaints filed by consumers regarding the filing of holdback depreciation claims during our very recent and busy storm seasons. Consumers who pay for replacement cost did not understand why the carriers were allowed to hold back depreciation until proof of repairs were presented. Consumers saw this as another delay tactic by the carriers and it forced consumers to jump through more hoops after a disaster to completely recover the money they desperately needed for repairs. For this reason, the legislature passed a statute barring carriers from holding back depreciation on fire and hurricane claims only.

Well, now the issue is back on the table and this should come as no surprise. The current legislation will once again allow carriers to hold back depreciation on all first party claims. Property Insurance carriers stand to gain millions and Florida's consumers stand to gain additional paperwork and hassles in fully collecting what they are owed. Veto this Bill Governor.

This past weekend, I noted two important reasons why the law should be vetoed in Is the Proposed Property Insurance Bill Bad for the Average Florida Insurance Consumer? and Is the Property Insurance Bill Unconstitutional Because It Establishes Support for a Christian Organization and No Other Religious Based Organizations? In Senators Mike Fasano and Rhonda Storms Come to the Rescue of Policyholders and An Interesting Day in Tallahassee and Thoughts on the Pending Replacement Cost Coverage Legislation, I explained my frustrations that the current legislation takes away benefits from my future clients, and I gave credit to legislators who stood up to this poor insurance bill.

All this begs the simple question calling for the veto, Pay Higher Premiums and Get Less Coverage Legislation -- Can Anybody Explain Why This is Good for Floridians?

This is the Examination Under Oath (EUO) requirement in the Citizens’ policy. The highlighted portion, lines 5 a-b, are new and controversial part:

FORM CIT HO-01 10

As often as we reasonably require:

1. Show us the damaged property

2. Provide us with records and documents we request and permit us to make copies

3. You or any "insured" under this policy MUST:

a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;

4. If you are an association, corporation, or other entity; any members, officers, directors, partners or similar representatives of the association must:

a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured"; and
b. Sign the same;

5. Anyone you hire in connection with your claim and anyone insured under this policy other than an "insured" in (3) or (4) above, must:

a. Submit to examinations under oath and recorded statements, while not in the presence of any other "insured;"and
b. Sign the same;

Generally, insurance policies contain a requirement that the insured must give both a recorded statement and an Examination Under Oath (EUO) in the “Conditions” section of a policy. A recorded statement may be used to gather information by insurance company at the onset of the claim. An EUO is a more in-depth interrogation by a lawyer for the insurance company. The requirements of policyholders in connection with an EUO depend on the policy language. Many policies require insureds to sit for an EUO, sign the recorded transcription, and give the EUO while not in the presence of any other insured. Essentially, an attorney for the insurance company asks a long series of questions while a court reporter records the whole thing. An EUO is more similar to a deposition than a simple recorded statement, except that the EUO is governed by the rules explained in the policy and not the Rules of Civil Procedure. EUOs are adversarial. Now, at least for Citizens claims, it seems public adjusters are subject to the same requirements.

The insurance company has many other ways to learn about a claim and the public adjuster’s involvement and evaluation of it. This series of posts will consider the implications of Citizens’ new policy language and will discuss what is happening now on the front lines.

-Nicole Vinson

The end of yesterday's post, Is the Proposed Property Insurance Bill Bad for the Average Florida Insurance Consumer?, addressed the subject legislation. My emotional response was:

While a Christian, I believe in separation of church and state. Nobody I know in the insurance adjusting community has ever opined that membership in this particular organization renders an adjuster more educated, experienced or qualified to do the job. The qualifications for membership in the Christian one, the National Association of Christian Catastrophe Insurance Adjusters, certainly do not meet the level of experience and knowledge required of a CPCU or AIC in adjusting.

I wonder what my Jewish adjuster friends think of it?

What would happen if the organization was the National Association of Atheist Catastrophe Insurance Adjusters? Suppose that organization allowed any other religious individuals to join. And, assume that it required that all of its members subscribe to a Code of Ethics that promoted fairness, honesty, professionalism, required an Associate in Claims (AIC) designation followed by three years of catastrophe experience. Does anybody think any Florida politician would support such a measure? The answer is obviously "no" because it is much more politically expedient to pander to the religious majority rather than those whose religious beliefs are in the minority.

I know nothing about the reputation of the National Association of Christian Catastrophe Insurance Adjusters. Maybe it has a large, excellent and very silent membership base. Certainly, if I were an adjuster, I would comply with many of its stated ethical obligations. Still, after calling around, nobody I know of in the insurance industry has ever heard of this group before, and I know a lot of people on all sides of the business. I am not taking "pot shots" at the group, I am simply pointing out that the legislation exempts members of this group from a qualifications test required of every other public adjuster, and there is nothing to indicate that membership in this group requires the skill and qualifications that would justify this exemption. People have a right to assemble in this country. Indeed, the leadership of this group, which is not revealed on its website, has done a marvelous job of promoting some very high ethical standards.

Yet, can our government legally grant privileges to a certain religious based organization, or even support its growth, by granting its members an exemption to our insurance licensing laws? Whatever the right answer, it will probably be found in cases discussing the Establishment Clause of the Constitution.

The Establishment Clause of the First Amendment refers to the language which provides that "Congress shall make no law respecting an establishment of religion."The Free Exercise Clause is equally important because it prevents laws which "prohibit[ing] the free exercise [of religion]."Both clauses are considered when analyzing religion debates under the First Amendment. Religion is very personal, and the debates can become very heated.

Everson v. Board of Education, 330 U.S. 1 (1947)[upheld a state statute funding student transportation to schools, whether parochial or not. The United States Supreme Court held that:

The "establishment of religion" clause of the First Amendment means at least this: Neither a state nor the federal government can set up a church. Neither can pass laws which aid one religion, aid all religions, or prefer one religion over another. Neither can force nor influence a person to go to or to remain away from church against his will or force him to profess a belief or disbelief in any religion. No person can be punished for entertaining or professing religious beliefs or disbeliefs, for church attendance or non-attendance. No tax in any amount, large or small, can be levied to support any religious activities or institutions, whatever they may be called, or whatever form they may adopt to teach or practice religion. Neither a state nor the Federal Government can, openly or secretly, participate in the affairs of any religious organizations or groups and vice versa. In the words of Jefferson, the clause against establishment of religion by law was intended to erect "a wall of separation between church and State.

The state law was upheld because it applied "to all its citizens without regard to their religious belief." I am not certain the current property insurance legislation can be read that way. It seems to aid one religion. And, the associate membership status of the subject organization seems to prefer Christians over non-Christians.

Yet, in Lemon v. Kurtzman, 403 U.S. 602 (1971), the United States Supreme Court outlined a three prong test which is makes the legal result questionable. If any of the following three prongs are violated, the state statute will be found as unconstitutional:

1. The government's action must have a secular legislative purpose;
2. The government's action must not have the primary effect of either advancing or inhibiting religion;
3. The government's action must not result in an "excessive government entanglement" with religion.

So, the bottom line is that I do not know if it is unconstitutional, but I agree Mark Phillips’ comment:

God is now looking with favor on my ability to provide the best "Christian adjustment" possible per contract terms? I know they must certainly want to upgrade perceptions of the "Adjusting Profession", but I really think this is more of a ploy to market to the Carriers, don't you?

I don't think Moses or Christ carried any kind of branding marketing theme. They just simply prodded our brains and hearts to simply pay it forward and do what's right.

Therefore, adjust the damn claim the right way for the right reasons - the consumer paid his premium and deserves every right of indemnification, regardless if he prays with the adjuster when he arrives at his doorstep.

Amen.

The post, Public Adjusters Arrested in Broken Tile Insurance Fraud Scheme, set records for “hits” on this site. I also received all kinds of emails and discussion from others. At lunch with six attorneys in our firm, I mentioned that I have been doing this line of work since 1983 and have never handled a broken tile claim. Four others had the same experience, one attorney had a couple, and only Michelle Claverol, in our Coral Gables office, had more than a few.

I learned that some experts conducted tests regarding the breaking of tile. They found that breaking tile is not as easy at it may seem. A pot, shoe, or falling object has got to hit a tile just right or the tile has to be loose or set improperly for breakage to occur. They are not fragile. The back side of a hammer is sharp enough to cause the breakage quite easily with a strong strike.

I was reminded that an attorney friend of mine advertised for broken tile claims at the Windstorm Conference several years ago. Apparently, he had a fake million dollar check with his firm and that of a public adjuster as payees. The space in the bottom left had “one cracked tile’ written on the explanation line. The Florida Bar certainly would not have approved of such an advertisement. Indeed, it is quite unprofessional. To imply to public adjusters and the public that attorneys can help obtain large recoveries for a small cracked tile loss begs for the type of conduct that happened as indicated in the post. This past legislative session, some in the Florida Legislature mentioned this type of conduct as a reason to change longstanding consumer protections regarding insurance. If public adjusters and policyholder attorneys want a bad reputation can be developed, all we need is for some to continue this type of conduct. Insurance adjusters and insurance company management are rightfully upset, and so are the rest of us. A few bad apples are harming legitimate and law abiding public adjusters and consumers.

Finally, the oil spill issues are dynamic. Following my post, Accountants and Business Interruption Experts Will Play an Important Role Recovering BP Oil Spill Income Loss Claims, a dozen or so accountants have offered their services for lost income and earning capacity oil spill claims. Two weeks ago, I was in Steve Riggs’ office at Carr, Riggs & Ingram when I appeared on Fox News in the following interview regarding the oil spill:
 

I suggest that businesses consult with their accountants regarding these lost income claims. On anything more than a simple loss, I encourage businesses impacted by the oil spill to at least discuss the matter with qualified counsel. Proof and presentation of these claims and proving the full impact of the loss of earning capacity are what business interruption attorneys do all the time. Whether counsel should be retained should be determined on an individual basis. Often, no attorneys will be needed.

Truth is stranger than fiction. I will keep this post short so you can read this bizarre story. I have never heard of a house being wired by a CIA agent spouse in a divorce. The attempts to destroy this evidence are amusing. I am not certain what my attorney friend, Ken Duboff's relationship with Global Adjusters is, so that he was quickly on the scene. However, his instructions not to tamper with the criminal and civil evidence were proper, although allegedly not followed.

As I write this, I am thinking about the dozens of very honorable and ethical public adjusters across the country that will call, write and speak to me about this. They have done so in the past. Since many look to me for information, and sometimes leadership, about what happens in Florida insurance adjusting, I am aghast and saddened by these acts. In A Few Bad Apples, I noted:

The insurance industry claims billions of dollars are lost as a result of insurance fraud. They insinuate that their otherwise honest customers become crooks at the time a loss occurs. If that were true, insurance would be the most socially defective product ever imagined and marketed.

It has been our experience that insurance fraud by customers occurs, but in a very limited instances. Yet, when it does, the insurance companies, police, and departments of insurance act in concert with publicists to show they are doing their anti-fraud jobs and make an impression on the public that some are engaged in wrongful behavior.

When a public adjuster is involved, it reinforces the perception by those acting on behalf of the insurance industry that 'public adjusters just cannot be trusted.' The old adage, "a few bad apples can destroy an entire basket," comes to mind when I hear or read stories like the one cited above. Public adjusters must beware that if this perception persists, they could be in danger of having licensing statutes disappear or severely limited in the states that allow public adjusting.

I am giving a speech about professionalism and ethics at the National Association of Public Insurance Adjuster's Annual Convention next month. The title, “Fantastic Adjustment Results through Professionalism and Ethical Conduct: Tips from the Masters and Lessons from the School of Hard Knocks,” will certainly be timely given this situation. The problem is that the people who need these lessons the most will not even be in the audience.

The first public adjuster lawsuit is in the Third District Court of Appeal, as I last noted in Sink Appeals Public Adjuster Suit: Delay Possible For Miami-Dade County Public Adjuster Lawsuit. Oral arguments have been reset from May 19^th to July 6^th regarding the issue of venue and whether that case will stay in Miami-Dade County. This case is going nowhere fast and has not been helped by the adverse developments in the other public adjuster matter. Trial judges can come to different conclusions on novel issues of law. The ruling in Kortum is not binding on another trial judge, but it can be used as persuasive authority.
 

The Court noted that the Department of Financial Services interpreted the statute to be a ban on conduct rather than a suppression of commercial speech. It specifically noted that the Department argued the statute did not ban "e-mails or letters, flyers or door hangars" during the 48 hour period.

The trial court judgment found that the statute exists for a legitimate public purpose to:

provide a citizen that has been traumatized by a casualty loss with some breathing room before making the decisions that will be necessary to begin to put his or her life back together. The statute provides the respite the legislature feels that the victim of a casualty needs. To the Court, that is a substantial and legitimate and important governmental purpose.

The Court went on to note that the statute was drafted narrowly lasting "only 48 hours" and did not attempt to curb the message or alternative forms of commercial speech--just face to face solicitation and telephone calls.

I am certain that there will be discussions of appeal. I am not certain how this will impact public adjusters’ views on the current proposed insurance bill. I will keep the public adjusting community abreast of developments and thoughts regarding this important topic.

While Ruck was going through the legal implications of the bill, I went to Julie Patel of the Sun Sentinel to find her Reader's Digest report on this important bill. The title to her report, Measure to Raise Property Insurance Rates and Lower Insurers' Costs Clears House, suggests that the bill is very favorable to the insurance companies and that Florida insurance customers will pay more for fewer benefits.

Public adjusters will also be impacted:

Rep. Bill Proctor, R-St. Augustine, said the bill boils down to "one thing:" curbing the growth of the public adjusting industry. The bill would also create new restrictions for public insurance adjusters – who are typically hired by policyholders during claims disputes with their insurers – such as caps on what they can charge and how they can advertise.

However, the language is far different than that originally of concern to public insurance adjusters when I posted Policyholders and Public Adjusting Under Attack in the Florida House of Representatives. While a number of public adjusters do not like the content of this bill, the language which I referred to as a "nuclear bomb" was removed.

As Patel noted, this legislative battle is not over:

The bill, SB 2044, initially cleared the Florida Senate and was approved Wednesday by the House with a minor change. If the Senate makes additional changes to the bill, it would have to go back to the House before it's sent to Gov. Charlie Crist."

Stay tuned. We will have more to report on this tomorrow.

Key points from the Senate legislation that passed:

1. Certain statements in public adjuster’s advertisement or solicitation would be considered deceptive or misleading and a violation of § 626.9541.
2. Defines “written advertisement” as including only newspapers, magazines, flyers, brochures and mailers.
3. All written advertisements require a disclaimer.
4. Limits compensation for a supplemental or reopened claim to no more than 20% of the supplemental or reopened claim payment.
5. Public adjuster would ensure that notice of the claim and a copy of the contract be provided to the insurer.
6. Public adjuster cannot obstruct or prevent an insurer or its adjuster from communicating directly with the insured.
7. Provides an exception to the prohibition of a licensed contractor from adjusting a claim, if he is asked by the homeowner or insurer to discuss or explain a bid for repair, and is doing so for the usual and customary fees for the work to be performed.
8. The above points apply only to residential and condominium association policies.

In order to qualify for a public adjuster license, a public adjuster apprentice shall complete a minimum of 8 hours of continuing education specific to the practice of public adjusting, 2 hours of which must relate to ethics.

A public adjuster contract must contain:

1. Full name, permanent business address, and license number of the public adjuster;
2. Full name of the public adjusting firm;
3. Insured’s full name and street address;
4. Brief description of the loss;
5. Percentage of compensation for the public adjuster’s services;
6. The type of claim (including emergency, nonemergency or supplemental claim);
7. Signatures of the public adjuster and the insured;
8. Date that the contract was signed;
9. A copy of the contract must be remitted to the insurer within 30 days.

A claim, supplemental claim, or reopened claim for damage caused by windstorm or hurricane is barred unless notice of the claim, supplemental claim or reopened claim was given to the insurer within 3 years after the hurricane first made landfall or the windstorm caused the covered damage. this

1. Only applies to personal lines residential coverage.
2. Only applies to hurricane or windstorm damage claims.
3. Defines supplemental and reopen claims as "any additional claim for recovery from the insurer for losses from the same hurricane or windstorm for which the insurer has previously adjusted pursuant to the initial claim.”

You can read the entire bill by clicking on the image below:

The highlighted changes are:

• Changes the title of the bill from "an act relating to public adjusters" to "an act relating to property insurance claims";
• Changes the amount of compensation for a reopened or supplemental claim from 30 percent to 20 percent of the claim payment;
• Maintains current law that reopened or supplemental claims are not subject to other compensation cap limitations;
• Clarifies that one year after a declaration of emergency, the compensation cap that applies to non-emergencies goes into effect;
• Requires persons acting on behalf of an insurer to provide at least 48 hours’ notice to an insured or claimant, public adjuster, or legal representative prior to scheduling a meeting with the claimant or an onsite inspection of the insured property;
• Prohibits an insurer from excluding a public adjuster from an in-person meeting with the insured;
• Requires the insurer and the public adjuster to meet or communicate in an effort to reach an agreement as to the scope of the covered loss under the insurance policy;
• Prohibits a public adjuster from restricting or preventing an attorney, as well as other persons acting on behalf of the insurer, from having reasonable access at reasonable times to any insured or claimant or to the insured property;
• Provides that a licensed contractor or subcontract may not adjust a claim on behalf of an insured without being licensed and compliant as a public adjuster;
• Requires a public adjuster contract to be signed by all named insureds;
• Changes the effective date from July 1, 2010, to January 1, 2011.

The one thing I can promise is that nobody knows for certain what the final version will be when the legislative session comes to an end. We will post on developments.

Genuinely helping others to the best of your ability at a time of catastrophic trouble is “noble.” The insurance industry recognizes that its claims adjusters obtain a satisfaction in their occupation that goes beyond a mere paycheck because of the importance of properly conducting the claims function. Many of the books written by insurance companies which explain their history proudly describe instances where claims activities were carried out, despite great personal hardship to the claims adjusters, so that the promise of the insurance contract-- prompt and full indemnification—
was fulfilled.

Claims representatives are taught honest and honorable ways to handle claims. The standard textbook for claims handlers, which leads to an Associate in Claims designation, was historically James J. Markham, et al., The Claims Environment (1st ed., Insurance Institute America 1993). There is now a revision to that book. Doris Hoopes, The Claims Environment (2d ed., Insurance Institute of America 2000). These textbooks for claims handlers and students of insurance set forth simple, clear claims handling principles that highlight duties of ethical and good faith treatment owed to policyholders.

Indeed, the Insurance Institute of America has published a treatise dealing exclusively with this basic relationship. William Park Rokes, Aggressive Good Faith and Successful Claims Handling (1st ed., Insurance Institute of America 1987). In another claims management reference which specifically discusses ethical behavior, the Insurance Institute of America provided:

The business of insurance, perhaps more than any other, is based on trust and commitment. Insurance products are intangible and simply reflect a promise on the part of insurance companies to indemnify insureds for financial losses if an insured event occurs in the future. The contract between the insurer and the insured is a contract of utmost good faith and requires honesty and trust from both parties.

George A. White, Ronald Duska & Victor D. Lincoln, Organizational Behavior in Insurance, vol. 1, 62 (1st ed., Insurance Institute of America 1992).

Many, if not most, executive claims managers possess the Society of Chartered Property and Casualty Underwriters designation, CPCU. A CPCU agrees to abide by the Canons of the CPCU Code of Professional Ethics, which include, in part:

CANON 1: CPCUs should endeavor at all times to place the public interest above their own.

CANON 2: CPCUs should seek continually to maintain and improve their professional knowledge, skills and competence.

CANON 3: CPCUs should obey all laws and regulations; and should avoid any conduct or activity which would cause unjust harm to others.

CANON 4: CPCUs should be diligent in the performance of their occupational duties and should continually strive to improve the functioning of the insurance mechanism.

CANON 5: CPCUs should assist in maintaining and raising professional standards in the insurance business.

CANON 6: CPCUs should strive to establish and maintain dignified and honorable relationships with those whom they serve, with fellow insurance practitioners, and with members of other professions.

So, to those who suggest that claims handling is not supposed to be a “noble” occupation, you may be unfamiliar with these guidelines or may not have witnessed noble conduct.

For public adjusters, I did not mean to suggest that the public adjusting certifications were not to be obtained. Instead, I would also suggest public adjusters obtain the AIC and CPCU designations as well either the CPPA or SPPA designation. What is the downside to being better educated? Public adjusters should strive to obtain the NAPIA sponsored certifications which are described as follows:

The Certified Professional Public Adjuster (CPPA) and Senior Professional Public Adjuster (SPPA) designations are awarded to public insurance adjusters who have met specific experience and educational requirements, completed a qualifying examination prescribed by a Board of Examiners, and subscribe to a code of ethics for business and professional conduct. The program is sponsored by the National Association of Public Insurance Adjusters (NAPIA).

The Certification program requires experience and credentials—it is not as easy as simply taking a test:

The CPPA/SPPA designations are awarded by NAPIA. The American Institute for CPCU / Insurance Institute of America (AICPCU/IIA) is responsible for administration of the examinations.

Candidates are required to have at least five (5) years experience in adjusting on a full-time basis to sit for the CPPA examination. Ten (10) years full-time adjusting experience is required to sit for the SPPA examination.

Applicants must have a college degree or its equivalent in education, experience, or knowledge. Applicants who are not college graduates or who cannot obtain acceptable educational credentials should write to the Board of Examiners at NAPIA regarding methods of establishing the equivalent.

Obtaining and maintaining peer reviewed certifications is not easy, but I feel that it is worth every penny and minute spent. I believe my own experience in becoming a Florida Bar Board Certified Civil Trial Lawyer is well worth the time and money. Attorneys are ethically prohibited from advertising as being “specialists” except for few exceptions. This is what the Florida Bar says about my Certification:

While all lawyers are allowed to advertise, only certified attorneys are allowed to identify themselves as "Florida Bar Board Certified" or as a "specialist." Certification is the highest level of recognition by The Florida Bar of the competency and experience of attorneys in the areas of law approved for certification by the Supreme Court of Florida.

A lawyer who is a member in good standing of The Florida Bar and who meets the standards set by the Supreme Court of Florida, may become a "Board Certified Civil Trial Lawyer."

Certified lawyers in civil trial law deal with litigation of civil controversies in all areas of substantive law before state and federal courts, administrative agencies and arbitrators. In addition to actual pretrial and trial process, civil trial law includes evaluating, handling and resolving civil controversies prior to the initiation of suit.

Every board certified civil trial lawyer has practiced law for at least five years and been substantially involved -- 30 percent or more -- in the area of civil trial law during the three years preceding application. To be certified, the lawyer is required to have conducted at least 15 contested civil cases in courts of general jurisdiction during the lawyer's practice, including cases before a jury and as lead counsel….

Each certified lawyer must also have passed peer review, completed 50 hours of continuing legal education within the three years preceding application and passed a written examination demonstrating knowledge, skills and proficiency in the field of civil trial law to justify the representation of special competence.

Board certification is valid for five years, during which time the attorney must continue to practice law and attend Florida Bar-approved continuing legal education courses. To be recertified, requirements similar to those for initial certification must be met. Not all qualified lawyers are certified, but those who are board certified have taken the extra step to have their competence and experience recognized.

When you are engaged in jobs that are intertwined with helping others in distress and at their most vulnerable moments, why wouldn’t you want to be as well trained as you can be? Why would anybody suggest that the alternative is better? Do yourself, your career, and the public a favor and invest in educational and ethical training that promotes the highest ideals of your profession. 

The Committee Substitute for the original House Bill 1181 appears to have passed the Florida House of Representatives Insurance, Business & Financial Affairs Policy Committee. From my reading of the events posted on the internet last night, the Committee adopted the same language as the Senate. Here is a link to the text of the Committee Substitute for Senate Bill 2264 for those interested.

The amended bill, which passed 8-0, reads as follows:

Click on the image above to read the complete amendment to SB 2264

...told the committee the association's legal counsel looked at the same issue raised by Rep. Manderino. Veno said under the provisions of the legislation, if someone has a malfeasance or forgets to file an application or does something of an incompetent nature, it would be raised to a third degree felony. He told the committee the association thinks that "is a little hard for that individual." According to Veno, the association's legal counsel has drafted an amendment which provides anytime a third degree felony is offered it really has to do with fraudulent activities, absconding of funds and incorrect information as it relates to the policy holder or insurance company. Veno said, "They are clearly felonies and we wholeheartedly support that type of language but where there is a mistake made or some application is in error that should not be a third degree felony.

Many may not be familiar with AAPIA. Its website has a message from Gene Veno which provides an interesting perspective about the organization:

As the AAPIA enters an era of growth and expansion, we are pleased to introduce what we trust will serve as an invaluable tool for networking, marketing and communication among our members and friends. There has never been a better time to enjoy all that AAPIA offers to enhance your success as a Public Adjuster.

The AAPIA is a leading professional organization representing Public Adjusters from all over the United States. The AAPIA sponsors educational, social and networking programs throughout the year. Our website allows us to take our efforts to the next level as we plan to offer in the future such features as continuing education, research, and a message board....

...

.... AAPIA [has] worked on some of the largest issues including the National Association of Insurance Commissioners Public Adjuster Model Act, Pennsylvania House Bill 1954, as well as the Louisiana Public Adjuster Act. We also provide education, and in the future, certification programs, which will further improve your business. AAPIA will serve our membership in the following ways:

AAPIA represents all insureds!

AAPIA represents Public Insurance Adjusters!

AAPIA's mission is to provide for its members a fair and open market place!

Gene interviewed me a couple weeks ago for two different Podcasts regarding public adjusting in Florida and our law firm. I had never been interviewed for such media--I suppose that shows my age, which increases by one year tomorrow.

Congratulations to Gene and best wishes for success.

I previously discussed this legislation in a post, Policyholders and Public Adjusting Under Attack in the Florida House of Representatives. I have met with and discussed the proposed House Legislation with Representative Janet Long which lead to a post last week, Representative Janet Long Gets a Hug From Chip Merlin.

Many Public Adjusters are quite understandably concerned about this legislation. I would urge those that would like to participate in this process to contact and do so through the National Association of Public Insurance Adjusters (NAPIA) and the Florida Association of Public Insurance Adjusters (FAPIA) to learn how your participation can be most positively effective.

Here is the Senate Bill as it currently reads:
 

Florida Senate - 2010                                    SB 2264

      By Senator Bennett

       21-01397-10                                           20102264__

    1                        A bill to be entitled                      

    2         An act relating to public adjusters; amending s.

    3         626.854, F.S.; providing a definition; prohibiting

    4         public adjusters from making certain employment

    5         solicitations; prohibiting certain unsolicited written

    6         communications; providing exception requirements;

    7         revising prohibited solicitations; revising prohibited

    8         charges by public adjusters; providing a definition;

    9         amending s. 626.8796, F.S.; specifying required

   10         information in public adjuster contracts; creating s.

   11         626.70132, F.S.; barring certain personal lines

   12         residential coverage insurance claims subject to

   13         certain notice requirements; providing a definition;

   14         providing nonapplicability to certain civil actions

   15         limitations; providing an effective date.

   16 

   17 Be It Enacted by the Legislature of the State of Florida:

   18 

   19         Subsections (5), (6), and (11) of section Section 1.

   20 626.854, Florida Statutes, are amended to read:

   21         “Public adjuster” defined; prohibitions.—The 626.854

   22 Legislature finds that it is necessary for the protection of the

   23 public to regulate public insurance adjusters and to prevent the

   24 unauthorized practice of law.

   25         (5)As used in this subsection, the term “solicit” or (a)

   26 “solicitation” means contact in person or by telephone,

   27 facsimile, United States postal service, electronic mail, or any

   28 other method of communication directed to a specific recipient.

   29         Except as provided in paragraph (c), a public adjuster (b)

   30 may not solicit professional employment from a prospective

   31 customer with whom the public adjuster has no family or prior

   32 professional relationship, in person or otherwise, when a

   33 significant motive for the public adjuster’s doing so is the

   34 public adjuster’s pecuniary gain.

   35         An unsolicited written communication to an insured for (c)

   36 the purpose of obtaining professional employment is prohibited

   37 unless it complies with the following requirements:

   38         The first page and the lower left corner of the face of 1.

   39 the envelope of such written communication shall be plainly

   40 marked “ADVERTISEMENT” in red ink in 14-point font.

   41         The communication must be sent only by regular United 2.

   42 States mail and not by registered mail or any other form of

   43 restricted delivery.

   44         The communication may not be made to resemble legal 3.

   45 pleadings or other legal documents.

   46         The communication may not contain any information as to 4.

   47 the public adjuster’s or public adjusting firm’s record or

   48 history in obtaining claim payments or settlements for other

   49 insureds.

   50         The communication may not be mailed less than 30 days 5.

   51 after the occurrence of an event that may be the subject of a

   52 claim under an insurance policy. A public adjuster may not

   53 directly or indirectly through any other person or entity

   54 solicit an insured or claimant by any means except on Monday

   55 through Saturday of each week and only between the hours of 8

   56 a.m. and 8 p.m. on those days.

   57         A public adjuster may not (6) directly or indirectly

   58 through any other person or entity initiate contact or engage in

   59 face-to-face or telephonic solicitation or enter into a contract

   60 with any insured or claimant under an insurance policy until at

   61 least 48 hours after the occurrence of an event that may be the

   62 subject of a claim under the insurance policy unless contact is

   63 initiated by the insured or claimant.

   64         If a public adjuster enters into a contract with an (11)(a)

   65 insured or claimant to reopen a claim or to file a supplemental

  66 claim that seeks additional payments for a claim that has been

   67 previously paid in part or in full or settled by the insurer,

   68 the public adjuster may not charge, agree to, or accept any

   69 compensation, payment, commission, fee, or other thing of value

   70 based on a previous settlement or previous claim payments by the

   71 insurer for the same cause of loss. The charge, compensation,

   72 payment, commission, fee, or other thing of value may be based

   73 only on the claim payments or settlement obtained through the

   74 work of the public adjuster after entering into the contract

   75 with the insured or claimant. The contracts described in this

   76 paragraph are not subject to the limitations in paragraph (b).

   77         A public adjuster may not charge, agree to, or accept (b)

   78 any compensation, payment, commission, fee, or other thing of

   79 value in excess of:

   80         Ten percent of 1. any the amount in excess of the insurance

   81 company’s claim valuation to repair or replace damage to covered

   82 property payments by the insurer for claims based on events that

   83 are the subject of a declaration of a state of emergency by the

   84 Governor. This provision applies to claims made during the

   85 period of 1 year after the declaration of emergency.

   86         Twenty percent of 2. any the amount in excess of the all

   87 other insurance company’s claim valuation to repair or replace

   88 damage to covered property for all other insurance claim

   89 payments.

   90         For purposes of this subsection, the term “claim (c)

   91 valuation” means the total amount offered in writing or actually

   92 paid, or any combination of such amounts, by the insurance

   93 company to the policyholder for the claim for the damaged

   94 property, including loss of use, additional living, emergency,

   95 and any other expenses required to be paid under the terms of

   96 the policy.

   97 

   98 The provisions of subsections (5)-(13) apply only to residential

   99 property insurance policies and condominium association policies

 100 as defined in s. 718.111(11).

 101         Section 626.8796, Florida Statutes, is amended Section 2.

 102 to read:

 103         Public adjuster contracts; fraud statement.— 626.8796

 104         (1)All contracts for public adjuster services must be in 

 105 writing and must prominently display the following statement on

 106 the contract: “Pursuant to s. 817.234, Florida Statutes, any

 107 person who, with the intent to injure, defraud, or deceive any

 108 insurer or insured, prepares, presents, or causes to be

 109 presented a proof of loss or estimate of cost or repair of

 110 damaged property in support of a claim under an insurance policy

 111 knowing that the proof of loss or estimate of claim or repairs

 112 contains any false, incomplete, or misleading information

 113 concerning any fact or thing material to the claim commits a

 114 felony of the third degree, punishable as provided in s.

 115 775.082, s. 775.083, or s. 775.084, Florida Statutes.”

 116         A public adjuster contract must contain the names and (2)

 117 addresses of the public adjuster, the public adjusting firm, and

 118 the insured, together with the signatures of the public adjuster

 119 and the insured and the signature date. A copy of the contract

 120 must be remitted to the insurer within 30 days after execution.

 121         Section 626.70132, Florida Statutes, is created Section 3.

 122 to read:

 123         626.70132Duty to file windstorm or hurricane claim.—A 

 124 claim, supplemental claim, or reopened claim under an insurance

 125 policy that provides personal lines residential coverage, as

 126 defined in s. 627.4025, for loss or damage caused by the peril

 127 of windstorm or hurricane is barred unless notice of the claim

 128 was given to the insurer in accordance with the terms of the

 129 policy within 3 years after the windstorm or hurricane first

 130 made landfall, or the windstorm caused the covered damage, in

 131 this state. For purposes of this section, the term “supplemental

 132 or reopened claim” means a claim for recovery of additional

 133 payments from the insurer for losses from the same hurricane for

 134 which the insurer has previously paid pursuant to the initial

 135 claim. This section may not be interpreted to affect any

 136 applicable limitation on civil actions provided in s. 95.11.

 137         This act shall take effect July 1, 2010. Section 4.

The Florida Insurance Council provided a press release on it website that continued the insurance industry mantra:

The Florida Insurance Council shares concerns expressed by three Cabinet members today about unending claims from Hurricane Wilma and the pending 30 percent increase in a statewide surcharge on all Floridians. FIC today formally endorsed legislation (HB 1181, SB 2264) filed by Rep. Janet Long, D-St. Petersburg, and Sen. Mike Bennett, R-Bradenton, requiring hurricane claims to be filed within three years of landfall instead of five years as in current law.

"As Chief Financial Officer Alex Sink noted, three years is more than enough time for a homeowner to know if they have had damage from a hurricane," said Guy Marvin, President of the Florida Insurance Council. "We will work with Rep. Long and Sen, Bennett."

"We share concerns of SBA members that many of the more recent Wilma claims are illegitimate and involve inappropriate activities by public adjusters," Marvin said. "We share concerns that with the statewide assessment going up, millions of Floridians are paying more on their insurance because of improper claims by some homeowners and some public adjusters in south Florida."

My post, Policyholders and Public Adjusting Under Attack in the Florida House of Representatives, had a number of comments. I replied that I suggest many public adjusters take to heart and then make a commitment on behalf of themselves and most importantly, the policyholders they help:

Everybody reading this should remember a few important aspects about our democratic process, the need to participate, and the need to reform when criticism is warranted:

1. Most elected officials truly want to make the "world, country, state" a better place to live and work. They are not corrupt, but are truly well meaning people.

2. Politicians viewpoints on issues are often ignorant because nobody knows everything. If full-time insurance lobbyists show propaganda to these elected officials that only shows that policyholders are getting something they do not deserve and that public adjusters are fleecing insurance companies and policyholders, you do not need to be a genius to appreciate their impressions and viewpoints.

3. Many insurance companies require and train their employees and agents to speak with elected representatives about issues in such a way to slant impressions to elected representatives about the need for laws that protect insurance company interests over consumer interests. They often have these scripted out as talking points so that the propaganda actually makes it sound like the proposed law is in favor of the policyholder---usually through the promise of lower rates which then never materialize or do so at the cost of not having coverage.

4. Unless interested people take an active role to visit with, write, and support representatives that appreciate the truth and the need for policyholder protection, the full time lobyists and employees of the insurance industry will prevail with their message.

5. You have to participate if you want justice to work in a democracy because large corporate interests have already figured this out and spend massive money and time coordinating special interests by industry.

6. Public adjusters have made numerous changes in the law and have made more suggestions for improving their trade and preventing abuses by some. This reform within the public adjuster trade through leaders in FAPIA and NAPIA needs to be explained and continue.

7. Show up and support representatives that appreciate the consumer side of insurance. You need to encourage and provide financial support to consumer organizations and FAPIA's legislative efforts, including showing up next Tuesday for Frank Artiles in Coral Gables.

8. If you want justice, you cannot just sit back and expect others to do it all for you. You have to work at it with your time and money. Make a commitment and stick to it. If it is important enough, make a big commitment and encourage others. One person can make a difference.

9. Do not get discouraged. I have visited with and provided information to various representatives for a number of years. Sometimes, I have felt like it is just me, a few lobbyists I have personally hired because I have to work on my cases, and just a handful of others in Tallahassee trying to push for laws that favor consumers and explaining the important role of public adjusters. I feel as if I have wasted a significant amount of money and time while some other colleagues simply do nothing and provide no support. And, I still keep at it.

In contrast, the insurance lobbying effort is massive, professional, and full time. They can outspend and provide greater numbers of individuals in their efforts.

And, policyholders cannot give up because the alternative is unjust laws. Those well meaning political representatives understand the enormous wealth and resources of corporations. Contrary to popular rhetoric and demeaning criticism, most elected representatives are not "paid off" or "corrupt." They will listen if you can present a credible and persuasive impression that is based on genuine and authentic truth of an issue.

The Bill introduced by State Representative Janet Long has raised many critical concerns among those aligned with the interests of insurance consumers. Given the significant campaign contributions to Representative Long by insurance lawyer lobbyists, insurance companies such as Allstate, Tower Hill, Travelers and many insurance agents, is there any doubt as to the interests she was protecting when introducing this legislation?

This is probably the first of many anti-policyholder laws that will be proposed. And, many of the most devastating laws will first be proposed as amendments in the final hours on the last days of legislative session. For consumers and hard working policyholders who are not funding an army of professional lawyer lobbyists and public relations firms like the insurance industry, such last minute changes to proposed insurance laws do not provide enough time. The average Floridian cannot counter the onslaught of insurance industry legislative deals worked out months before in private meetings with legislators, such as Representative Janet Long. I truly believe that insurance company interests will be prominent in the 2010 Florida legislative session. The title to this post is for everyone, including those who are not in the insurance industry. Insurance is an important product, and it impacts everyone. Over the last few years, many voters have not been provided the truth regarding the insurance industry agenda of higher insurance rates and less regulation. This agenda fosters the biggest problem with insurance-- insurance companies that are denying, delaying and not paying claims. Suddenly, Public Adjusters and greedy policyholders are being singled out as the cause of problems in insurance. This is not by accident and has been orchestrated by very effective public relations techniques and constant lobbying of Florida leaders by the insurance industry.

We need to get involved in our political process. We need to recognize who our elected officials are. We have civic obligations to inform them about the issues of which we have specialized knowledge and training. Public adjusters need to explain what we do for our clients, and take our clients to our legislators and to Tallahassee so that the insurance company lawyers and lobbyists will be called out for the lies and deception they are attempting. Letters, videos and face to face accounts by policyholders of what really goes on during the claims process is the best evidence of the need for insurance company claim reform. This will also demonstrate why Floridians need professional and trained claims experts on their side immediately after a loss.

I strongly recommend that any Public Adjuster that lives in Representative Janet Long’s District 51 call and make an appointment with her. Those with policyholder clients should be taken to her local office and in Tallahassee. Policyholder clients in her district should be contacted by phone, email, and letters advising them to petition Representative Long to withdraw her anti-policyholder legislation and explaining how their public adjuster helped obtain a fair settlement from the insurance company. These letters, calls and visits from her constituents will draw attention to the overbroad claims of fraud and inflated claims the insurance industry has made. These will further draw attention that the real need is for laws that prevent insurers from abusing homeowners and business owners at claim time.

Next, the same effort that is made for Representative Long should be made with every legislator in Florida. Policyholder clients must tell their story to their elected representative and Senator and they should explain the services we provide.

Finally, those previously not joining the legislative effort must stop sitting on the sideline and letting everyone else work and pay the costs of these efforts. Plenty complain and criticize without joining the effort. Policyholders and public adjusters can join organizations that support consumer interests and flush out the insurance industry’s deception. Public adjusters should join FAPIA or other organizations that will lobby against the formidable insurance industry.

Everyone must join together to do the right thing for Floridians. Protecting policyholder homeowners and business owners is my pledge and honor. I am proud to be a public adjuster, working with my colleagues to make our profession better, and actively “doing” in the political process as Thomas Jefferson suggested is the duty of all long ago.

Below, I have attached the membership list for the Insurance, Business and Financial Affairs Policy Committee: 

Patterson, Pat (R) -- Chair
Grady, Tom (R) -- Vice Chair
Rader, Kevin J. G. (D) -- Democratic Ranking Member
Domino, Carl J. (R)
Eisnaugle, Eric (R)
Flores, Anitere (R)
Hays, D. Alan (R)
Jenne, Evan (D)
Long, Janet C. (D)
Nehr, Peter (R)
Nelson, Bryan (R)
Taylor, Dwayne L. (D)
Wood, John (R)
Workman, Ritch (R)

This proposed law is a means for insurers to prevent policyholders from having access to professional help at the time they most need it. Under Long's proposal, the impact will be that insurers will pay less in claims to policyholders in the short term and the long term. The insurance industry lobby has done a wonderful job getting in Representative Long's ear on this one because it is not going to help her constituents at all--unless they are insurance executives and insurance lobbyists.

The significant portions of this bill do the following:

1. Severely restrict public adjusters’ ability to earn a living by limiting solicitation and income.

2. There would be no solicitation of a loss within 30 days by a public adjuster.

3. There would be no face to face solicitation except with prior clients or family members.

4. The values to be charged by the public adjuster are always in excess values determined or paid by the insurance company.

5. The notice of loss for a claim has a deadline of three years. This has little impact on newly filed claims since insurers have a contractual clause requiring prompt notice as soon as practical. While the statute says it does not shorten the time, it obviously does because amounts not specifically claimed within the three years are also outside the deadline. This comes up all the time in cases where carriers delay payment and construction does not even start for a couple years after a storm. Hidden damages found during reconstruction or which show up later will have an effective three year time limit for claims to be made.

The description of the House Bill 1181 listed on the Florida House of Representatives Website is fairly close to my conclusions except for the impact on the Statute of Limitations of five years:

Public Adjusters: Prohibits public adjusters from making specified employment solicitations; prohibits specified unsolicited written communications; provides exception requirements; revises prohibited solicitations; revises prohibited charges by public adjusters; specifies required information in public adjuster contracts; bars specified personal lines residential coverage insurance claims subject to specified notice requirements; provides for nonapplicability to specified civil actions limitations.

Here is the language regarding the solicitation:

626.854 "Public adjuster" defined; prohibitions.—The Legislature finds that it is necessary for the protection of the public to regulate public insurance adjusters and to prevent the unauthorized practice of law.

(5)(a) As used in this subsection, the term "solicit" or "solicitation" means contact in person or by telephone, facsimile, United States postal service, electronic mail, or any other method of communication directed to a specific recipient.

(b) Except as provided in paragraph (c), a public adjuster may not solicit professional employment from a prospective customer with whom the public adjuster has no family or prior professional relationship, in person or otherwise, when a significant motive for the public adjuster's doing so is the public adjuster's pecuniary gain.

(c) An unsolicited written communication to an insured for the purpose of obtaining professional employment is prohibited unless it complies with the following requirements:

1. The first page and the lower left corner of the face of the envelope of such written communication shall be plainly marked "ADVERTISEMENT" in red ink in 14-point font.
2. The communication must be sent only by regular United States mail and not by registered mail or any other form of restricted delivery.
3. The communication may not be made to resemble legal pleadings or other legal documents.
4. The communication may not contain any information as to the public adjuster's or public adjusting firm's record or history in obtaining claim payments or settlements for other insureds.
5. The communication may not be mailed less than 30 days after the occurrence of an event that may be the subject of a claim under an insurance policy.
6. A public adjuster may not indirectly through any other person or entity 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.

Here is the language relating to the limitation of the fee which can be charged by public adjusters:

A public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value in excess of:

1. Ten percent of any amount in excess of the insurance company's claim valuation to repair or replace damage to covered property for claims based on events that are the subject of a declaration of a state of emergency by the Governor.

2. Twenty percent of any amount in excess of the insurance company's claim valuation to repair or replace damage to covered property for all other insurance claim payments.

(c) For purposes of this subsection, the term "claim valuation" means the total amount offered in writing or actually paid, or any combination of such amounts, by the insurance company to the policyholder for the claim for the damaged property, including loss of use, additional living, emergency, and any other expenses required to be paid under the terms of the policy.

The language which may effectively shorten the five year statute of limitations is:

626.70132 Duty to file windstorm or hurricane claim.—A claim, supplemental claim, or reopened claim under an insurance policy that provides personal lines residential coverage, as defined in s. 627.4025, for loss or damage caused by the peril of windstorm or hurricane is barred unless notice of the claim was given to the insurer in accordance with the terms of the policy within 3 years after the windstorm or hurricane first made landfall, or the windstorm caused the covered damage, in this state. For purposes of this section, the term "supplemental or reopened claim" means a claim for recovery of additional payments from the insurer for losses from the same hurricane for which the insurer has previously paid pursuant to the initial claim. This section may not be interpreted to affect any applicable limitation on civil actions provided in s. 95.11.

Mary Fortson and I were recently reviewing some matters raised by the leadership of the National Association of Public Insurance Adjusters and Florida Association of Public Insurance Adjusters, when I asked her to provide me the Florida regulations pertaining to these ethical rules. Mary is the General Counsel to the Florida Association of Public Insurance Adjusters, and we were certain that many of the conduct issues being raised by the leadership of these organizations were covered in these rules. The violation of which subjects an adjuster to severe penalties, including the possible loss of license. These rules were made to protect the public and consumers of insurance as stated in the first part of the ethical code:

Code of Ethics. The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster's own interests in every instance.

Claims managers need to make certain that they are also adhering to this law. Public adjusters who find company and independent adjusters breaking these rules but do not promptly report the violations to the Department of Financial Services also violate the rules. I recently heard a claims manager suggest that his adjusters had a right to immediate access to the damaged property. Certainly, most policyholders welcome prompt investigation and evaluation, but because of some abuses, access into a policyholder’s home or business is covered in these ethical provisions:

(s) A company adjuster, independent adjuster, attorney, investigator, or other person acting on behalf of an insurer that needs access to an insured or claimant or to the insured property that is the subject of a claim shall provide at least 48 hours notice to the insured or claimant prior to scheduling a meeting with the claimant or an on-site inspection of the insured property. The insured or claimant may deny access to the property if this notice has not been provided.

The Florida Association of Public Insurance Adjusters has a Code of Ethics as well. It also has a committee that reviews every complaint regarding its members. I suggest that when company or independent adjusters report ethical violations to the Department of Financial Services that they also copy the violation to FAPIA. Here is the FAPIA Code of Ethics:

All members of FAPIA are required to abide by the following Rules of Professional Conduct and Ethics. This better enables us to ensure that our clients, members of the public, are able to receive proper and ethical treatment at all times.

1. The members shall conduct themselves in a spirit of fairness and justice to their clients, the Insurance Companies, and the public.

2. Members shall refrain from improper solicitation.

3. No misrepresentation of any kind shall be made to an insured or to the Insurance Companies.

4. Commission rates shall be fair and equitable, and strictly in accordance with the prevailing laws or regulations of the Florida Insurance Department.

5. Members shall conduct themselves so as to command respect and confidence. They shall work in harmony with one another, with their clients, and the Insurance Companies' representatives, so as to foster a cordial and harmonious relationship with all branches of the insurance business, and with the general public.

6. Members must be fitted, by the knowledge and experience, for the work they undertake. They must not endanger the interests of the public adjusting profession, or risk injustice to insureds or to the Insurance Companies, by attempting to handle losses or claims for which they are not qualified, and for which they cannot find competent technical assistance.

7. Members shall not engage in the unauthorized practice of law.

8. Members shall not acquire any interest in salvaged property or participate in any way, directly or indirectly, in the reconstruction, repair, or restoration of damaged property, except with the knowledge, consent and permission of the insured.

9. Members shall be cooperative and assist one another in every possible way.

10. Members shall not disseminate or use any form of agreement, advertising, or any printed matter that is harmful to the profession of public adjusting, or which does not comply with the rules and regulations of the Florida Insurance Department, or which might subject public adjusting and public adjusters to criticism or disrespect.

The enforcement of ethical rules by adjusters leads to a recurrent theme that has to be addressed by Alex Sink and the people operating the Department of Financial Services. Alex Sink is a wonderful public servant. Many in the insurance industry are wholeheartedly supporting her quest to become Florida’s next governor. And, when I hear adjusters and their managers say that when they follow the law, report serious violations of ethical laws to the Department of Financial Services, but the Department essentially says that they are “too busy” to do anything about it, I know she will make a change or change the people who are not doing their job. The California Insurance Commissioner was once sued for not fulfilling the statutory duties of that job.

Somebody needs to find out if our paid regulators are either too lazy or too overworked to do the important job of enforcing the laws. This is a serious matter, but many have been complaining about the lack of action by the Department of Financial Services for far too long. Something has to change soon.

Good, honest, and “playing by the rules” adjusters need to know that their profession and the state will hold wrongdoers accountable for breaking rules. Otherwise, why have any rules?

Here are the ethical requirements of adjusters in Florida:

69B-220.201. Ethical Requirements.

(1) Definitions. The following definitions shall apply for purposes of this rule:

(a) “Adjuster,“ when used without further specification, includes all types and classes of insurance adjusters, (company, independent, and public), subject to Chapter 626, Florida Statutes, regardless of whether resident or nonresident, and whether permanent, temporary, or emergency licensees.

(b) “Client“ includes both clients and potential clients; and means any person who consults with or hires an adjuster to provide adjusting services.

(c) “Department“ means the Florida Department of Financial Services.

(d) “Person“ includes natural persons and legal entities.

(2) Violation.

(a) Violation of any provision of this rule shall constitute grounds for administrative action against the licensee.

(b) A breach of any provision of this rule constitutes an unfair claims settlement practice.

(3) Code of Ethics. The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster's own interests in every instance. The following are standards of conduct that define ethical behavior, and shall constitute a code of ethics that shall be binding on all adjusters:

(a) An adjuster shall: not directly or indirectly refer or steer any claimant needing repairs or other services in connection with a loss to any person with whom the adjuster has an undisclosed financial interest, or who will or is reasonably anticipated to provide the adjuster any direct or indirect compensation for the referral or for any resulting business.

(b) An adjuster shall treat all claimants equally.

1. An adjuster shall not provide favored treatment to any claimant.

2. An adjuster shall adjust all claims strictly in accordance with the insurance contract.

(c) An adjuster shall not approach investigations, adjustments, and settlements in a manner prejudicial to the in-sured.

(d) An adjuster shall make truthful and unbiased reports of the facts after making a complete investigation.

(e) An adjuster shall handle every adjustment and settlement with honesty and integrity, and allow a fair adjustment or settlement to all parties without any remuneration to himself except that to which he is legally entitled.

(f) An adjuster, upon undertaking the handling of a claim, shall act with dispatch and due diligence in achieving a proper disposition of the claim.

(g) An adjuster shall promptly report to the Department any conduct by any licensed insurance representative of this state which violates any provision of the Insurance Code or Department rule or order.

(h) An adjuster shall exercise extraordinary care when dealing with elderly clients to assure that they are not disadvantaged in their claims transactions by failing memory or impaired cognitive processes.

(i) An adjuster shall not negotiate or effect settlement directly or indirectly with any third-party claimant repre-sented by an attorney, if the adjuster has knowledge of such representation, except with the consent of the attorney. For purposes of this subsection, the term “third-party claimant“ does not include the insured or the insured's resident relatives.

(j) An adjuster is permitted to interview any witness, or prospective witness, without the consent of opposing counsel or party. In doing so, however, the adjuster shall scrupulously avoid any suggestion calculated to induce a witness to suppress or deviate from the truth, or in any degree affect the witness's appearance or testimony during deposition or at the trial. If any witness making or giving a signed or recorded statement so requests, the witness shall be given a copy of the statement.

(k) An adjuster shall not advise a claimant to refrain from seeking legal advice, nor advise against the retention of counsel to protect the claimant's interest.

(l) An adjuster shall not attempt to negotiate with or obtain any statement from a claimant or witness at a time that the claimant or witness is, or would reasonably be expected to be, in shock or serious mental or emotional distress as a result of physical, mental, or emotional trauma associated with a loss. The adjuster shall not conclude a set-tlement when the settlement would be disadvantageous to, or to the detriment of, a claimant who is in the traumatic or distressed state described above.

(m) An adjuster shall not knowingly fail to advise a claimant of the claimant's claim rights in accordance with the terms and conditions of the contract and of the applicable laws of this state. An adjuster shall exercise care not to engage in the unlicensed practice of law as prescribed by the Florida Bar.

(n) A company or independent adjuster shall not draft special releases called for by the unusual circumstances of any settlement or otherwise draft any form of release, unless advance written approval by the insurer can be demonstrated to the Department. Except as provided above, a company or independent adjuster is permitted only to fill in the blanks in a release form approved by the insurer they represent.

(o) An adjuster shall not undertake the adjustment of any claim concerning which the adjuster is not currently competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the adjuster's current expertise.

(p) No person shall, as a public adjuster, represent any person or entity whose claim the adjuster has previously adjusted while acting as an adjuster representing any insurer or independent adjusting firm. No person shall, as a company or independent adjuster, represent him or herself or any insurer or independent adjusting firm against any person or entity that the adjuster previously represented as a public adjuster.

(q) A public adjuster shall not represent or imply to any client or potential client that insurers, company adjusters, or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy. No insurer, independent adjuster, or company adjuster shall represent or imply to any claimant that public adjusters are unscrupulous, or that engaging a public adjuster will delay or have other adverse effect upon the settlement of a claim.

(r) No public adjuster, while so licensed in the Department's records, may represent or act as a company adjuster, independent adjuster, or general lines agent.

(s) A company adjuster, independent adjuster, attorney, investigator, or other person acting on behalf of an insurer that needs access to an insured or claimant or to the insured property that is the subject of a claim shall provide at least 48 hours notice to the insured or claimant prior to scheduling a meeting with the claimant or an on-site inspection of the insured property. The insured or claimant may deny access to the property if this notice has not been provided.

The inspection and re-inspection process by the insurance carrier serves many purposes. The initial inspection serves to provide the carrier with information about the damage immediately after the loss, and the re-inspection serves to educate the carrier about what repairs if any have been done, what materials were used, how much money was spent in the repairs, as a means for the carrier to bolster their case for an upcoming negotiation, and finally, it serves as a means to wear down and further frustrate the insured. Sometimes, cases can be settled shortly after a re-inspection, many times this is not the case.

It is imperative that the public adjuster control the inspections/re-inspections at all times, particularly when it involves a multi-family condominium or apartment complex. A great deal of preparation is involved in controlling the inspection process and it all begins with a written understanding between the public adjuster and the carrier’s adjuster as to what exactly will take place during the inspection process, when the inspection process will begin, who will be present, and how long the process is expected to take. Answering the question of how long it will take is sometimes impossible, but there should be a minimum timeline. Answering some of the questions:

• What - We have agreed to inspect the interior and exterior of buildings A and B, each building has approximately 55 condominium units each. The inspections will consist of only visual observation and photographs of each unit. There will not be interviews or questions of unit owners or insured’s employees, all questions will be answered by me during the inspection or after the inspection.
• When- The inspections will begin at 9:00 AM on Tuesday February 16, 2010, we will meet in the parking lot in front of the club house located at 1 Clear Pool Lane, Miami, FL.
• Who - You have agreed to provide me the names and title of all individuals who will be attending the inspections with you including the name of the company that employs each individual no later than 3 days prior to February 16, 2010.
• How long - We expect the inspections will take 3 days, but will re-evaluate whether this process can be accomplished sooner after the first day of inspections.

Before the meeting takes place, the property manager or other representative at the property must give notice to the unit owners, in many cases, the notice must be provided at least ten days in advance. The maintenance person should be easily accessible during the inspections to ensure that there is access to the roofs and other portions of the buildings usually locked to avoid accidents or vandalism. The maintenance person should not have direct contact with the carrier’s adjusters if the insured is being represented by a public adjuster or attorney, many times there is a lack of communication between the maintenance person and the carrier’s adjuster and all of sudden the insurance carrier begins to analyze the damages relying on the misinformation provided.

The public adjuster should have plenty of people present to ensure that if the carrier’s adjuster wants to divide the group into two or three separate groups, this can be accomplished while still having the ability to control the inspection process. When you first meet with the carrier’s adjuster and his group of people, make sure that you get business cards from everyone. If the individual does not have a business card, ask that person the same information that you would expect would be on his business card.

You must set the ground rules, one team or two teams, who is in charge on their side for each team, no one goes inside the unit until you have had an opportunity to go inside first and speak with unit owner confirming they can come in, re-affirm no questions or comments to the unit owners, it is expected that all involved will be polite and respectful of unit owners and their property. There have been too many times when ego’s clash during inspections and the process fails, this should be avoided at all costs, the carrier has a right to the inspections, and you do not always have to agree to scope or pricing. If the case is one that should not be resolved in appraisal, then there should not be any attempt to agree on the scope during the inspections. An agreement on scope during inspections will allow the carrier to argue the case belongs in appraisal because the scope was agreed to during the inspections and the only thing left to argue about is value. If the case is one that should be resolved in appraisal then getting an agreement on scope works in your favor.

If the carrier’s adjuster seems to be conducting an inspection that exceeds the agreement in writing, then a judgment call must be made on whether to allow for such inspection or testing because the carrier may claim lack of cooperation. However, because you have documented ahead of time exactly what the carrier will do and not do during the inspection process, you will have the documentation to avoid this problem and refute their defense.

In Public Adjuster Lawsuit Challenging State's Cap on Fees and Solicitation Ban Survives Venue Change, I noted that the trial court in Dade County ruled that the matter could proceed there. Unfortunately for those public adjusters, Alex Sink appealed that ruling. By the time those appellate issues are finally resolved, the second lawsuit may be over.

These are important cases raising important constitutional questions. We will keep abreast of the developments in both.
 

The article noted a growing trend of delay and nonpayment many months following a loss:

A large property insurance claim can turn into a soap opera, with dozens of high-end, big personalities trying to steer the plot line. It's not a secret to claims experts, or any risk manager who's faced one, that settling a large loss has only gotten more dramatic, and difficult, in the last couple decades....

...34 percent of physical damage claims are settled before the property is repaired or replaced and 37 percent up to six months after.

Only 17 percent of time/element claims, on the other hand, were settled before the end of the period of liability, while 68 percent took one to 12 months after the period for settlement.

The general trend, however, is that larger, complex losses are taking more time to settle...

As Harvey Goodman often does, he disagreed in part with the article's conclusion that more complex claims require various claims experts or consultants that slow the claim process. He made an important point that the survey never considered public adjusters, which is kind of interesting since they are the only legally licensed individuals who can adjust the loss for policyholders. Goodman commented:

"Take the question about what types of outside professionals were hired by the insured. Goodman took umbrage with the fact that he and his colleagues--public adjusters--weren't even an option...

Insureds bring in Goodman and his colleagues to make sure their interests are being represented as the claims resolution plot unfolds. And we're not just talking about large Fortune 1000 clients. He's dealt with $50 million companies with multimillion dollar losses and no in-house risk management.

"They are so thinly staffed they often have no resources to dedicate to the insurance claims process," he said.

Goodman disagreed with the survey's finding that insureds' expectations about the extent of their insurance coverage diminish significantly during the course of claims settlement. His experience is that expectations increase the longer a settlement takes.

The veteran adjuster also didn't agree with the key takeaway, that property insurance can never fully cover a loss. Sure, there might be disagreement over numbers. But there is coverage out there to cover other economic hits, like loss of value and potential damage to business relationships: for instance, extended business income coverage.

Most importantly, Goodman stressed, it's up to insureds to properly measure their loss. If you don't ask for the right amount, you're not going to get it."

It has been my impression that many get around state licensing requirements by calling themselves "consultants." These "consultants" are out of control in the insurance claims business. Insurance regulators and State Legal Bars need to start prosecuting so called unlicensed "loss consultants" and "claims consultants" for adjusting without a license and practicing law. Legal rules regarding licenses need to followed and those responsible for enforcing the rules need to do their jobs because the rules were made to protect the public from exactly what is going on in the claims industry.

Policyholders should hire licensed, experienced, and dedicated professionals. They should be careful about any individuals or organizations claiming to be "loss consultants." These “loss consultants” are violating the regulatory, and often criminal, laws of most states and have no regulator looking over their ethics and work to determine whether they are acting in accordance with the law.

How many times has a public adjuster met with a an insurance claims adjuster at the loss site and the insurance adjuster refused to communicate, failed to acknowledge the public adjuster, and left without asking any pertinent questions about causation, age of damaged items, prior repairs or claims, etc? The job of the insurance adjuster is not to be an adversary, but to facilitate the claims process so the property owner can be made whole as quickly as possible. In order to accomplish this task, the claims adjuster must adjust this loss with the property owner or his public adjuster. It is extremely important that letters sent to the insurance adjuster remind him of this obligation, and it is just as important that the public adjuster help facilitate the process for the claims adjuster.

When writing a letter to an insurance claims adjuster, explain to the carrier that you want to adjust the loss together. Insurance adjusters are taught that they must share information and cooperate with the insured to adjust a property loss. The letter of representation from the public adjuster should ask for a copy of estimates prepared, photographs, and all correspondence, verbal or written, between the insured and the carrier. The purpose of the request is to allow for complete transparency, in order to avoid any misconceptions and improper assumptions regarding the scope, value and cause of damages. An estimate prepared by the claims adjuster that does not properly represent the scope and value of the damages is an improper estimate.

A letter of representation by the public adjuster should be careful to address whether the claim presented is the original claim (re-open) or is a supplemental claim. A supplemental claim is one where the damages were not obvious or were not present at the time the insurance adjuster inspected the loss. Therefore, if the letter of representation by the public adjuster refers to the loss as a supplemental claim rather than a re-opened claim, the public adjuster could be acquiescing to the original insurance adjuster’s estimate as the proper and valid estimate of damages. A re-open claim, on the other hand, is one where damage could be observed and was present at the time the field adjuster wrote his estimate, but the adjuster’s estimate is low on value, or is missing items on the scope.

Why don’t you want to call it a supplemental claim if it isn’t one?

If the adjuster got the estimate wrong and the public adjuster sends a letter telling the carrier it is a supplemental claim, he gives the adjuster and the insurance company a free pass; the insurer can argue that they did the estimate correctly the first time and this new claim is for damage that was not present or could not be seen during the first inspection.

When interviewing the policyholder, the public adjuster should be careful and through in documenting whether the damages that are visible today were also visible at the time the insurance adjuster inspected the property. This will help the public adjuster determine whether it is a re-open or supplemental claim.

If you are involved in hurricane claims in any manner, you need to register and go to the 2010 Windstorm Insurance Conference. It will be held from January 25 through 28, at the Hyatt Regency Riverfront in Jacksonville, Florida. It is the only Conference devoted solely to windstorm insurance issues.

The Conference has special training sessions for those seeking Umpire Certification in appraisal disputes. There is also a special Flood Adjusters program leading to certification as well.

The bottom line is that the Conference offers valuable instruction on how to handle windstorm insurance claims from a number of different perspectives. If you want to know what the top people working in the insurance industry are doing, go to this conference.

A January 6, 2010 article in Claims Magazine, "Conference Preview: Go With the Wind," had an interesting question and answer section with the Executive Director of the Windstorm Network, Michelle Griffin:

What sessions/speakers are you most excited about this year?

We offer a fresh group of workshop topics each year, which is a source of excitement and pride for us. This year is no exception. The presenters and educators leading the workshops are among the top in our industry. Each of our 30 workshop classes will be fair and balanced, with at least one representative from the insured/plaintiff side and another from the carrier/defense side. Our general session speakers will offer a range of topics to appeal to varied professional backgrounds. Aside from the new classes, we always strive to offer additional continuing education credits for as many states and professional organizations as possible.

Last year, you noted that the Umpire Directory and Certification Program was an area you desired to expand. Have you made headway?

Our WIND Umpire Program is constantly evolving to reflect industry needs. In fact, we’ve made some updates and additions to the WIND Umpire Directory, which we will be announcing at the conference. Long term, we are analyzing ways to move the program forward to reflect industry changes and concerns. I expect these areas to be announced in the near future.

What’s the typical profile of a Windstorm Conference attendee?

Our attendees come from all facets of the insurance industry, from senior management to the independent adjuster. Attorneys, engineers, underwriters, contractors, as well as other related professions attend the WIND Conference to obtain information about industry trends and accumulate continuing education credits. This year marks our 11th annual conference, and it’s important to note that in such a short time, it has become a national event, attracting professionals from more than 35 states and Canada, and England. About 1,400 professionals from all areas of the windstorm insurance industry attended last year’s event.

In what areas of training are you seeing the most demand?

We are always listening to our members and attendee suggestions for classes, and of course we keep abreast of industry hot topics in order to offer relevant and timely educational sessions. One topic in particular is estimating software training. Each year, new claim professionals join our organization and seek out training about how to use the most widely employed estimating software programs. We also receive feedback to provide better training about general claim issues, for a range of experience levels, from the beginner to the well-seasoned professional. These areas include scoping property damage, large loss adjusting, sink holes, and appraisal/umpire training.

I was a little disappointed that she did not feel that my seminar topic, "Gulf Coast Case Law Update: Texas, Mississippi, and Louisiana," was one of the more exciting workshops. Compared to the "Advanced Building Code Update," my seminar presentation with co-presenter, Steve Pate, will be thrilling. Just show up, and you'll see why. 
 

The job of a public insurance adjuster requires a great deal of knowledge of the law, but an adjuster must be careful not to practice law; a great deal of knowledge about insurance policies and principles; a thorough understanding of negotiation principles; the skill of insurance estimating; perfection in his/her analysis of damages; satisfying the needs of the property owner during one of the most difficult times that property owner will ever face. An adjuster is often required to negotiate against some of the most powerful companies in the world. This will be the first of several blogs that I will have the privilege of writing with respect to this topic, in hopes of assisting public insurance adjusters in their difficult and complex profession.

Insurance provides a great benefit to society, and in this day and age, it is extremely difficult to think about any profession or type of business that is not insured. However, if an insurance company is to remain in existence, it must make a profit. In making profits, insurance companies are insuring businesses and properties with the hopes of earning an underwriting profit. The property insured is referred to as a risk, and if the expenses and claim payments do not exceed one-hundred percent of the insurance premium, then the insurance carrier has earned an underwriting profit. In fact, many underwriters earn large bonuses at the end of the year after the insurance company has determined that the policies they underwrote have earned an underwriting profit. Insureds and public adjusters face a very difficult task, sometimes monumental, when filing an insurance claim in light of the insurance companies business motives and need for survival/profits.

The first step in preparing a claim for a property owner is to carefully interview the property owner about the ownership, maintenance, damage, and yes, even the cause of the damage. In today’s market, real estate ventures, investment properties, and even the homes of many families have gone into foreclosure, or are only a few months away from being served with foreclosure papers. Sometimes, resolution of the insurance claim is what’s needed to keep some of these properties from going into foreclosure, and time is of the essence. Other times, the public adjuster enters into a contract with a property owner that is too far into the foreclosure process and the property is lost before the claim can be resolved. In that instance, the only winner is the insurance company and the underwriter, because it may never have to pay claim--keeping the expenses below the underwriting premium and earning a profit.

In every property insurance policy, lack of maintenance is an exclusion to insurance coverage. Every insurance company adjuster is trained to look and identify potential maintenance problems. If the field adjuster does not identify this condition, his supervisor will question his ability to properly scope a loss. If the issue of maintenance is addressed up front during the public adjuster’s meeting with the insured and inspection of the property, then the issues of maintenance can quickly and easily be addressed during the first meeting with the field adjuster. Telling the adjuster that your interview with the property owner revealed that there was regular maintenance of the roof with documentation or names of service providers, for example, could dramatically shorten the time it might otherwise take to get a claim paid. If the issue of maintenance can be addressed during the first inspection, the filed adjuster will be satisfied that he has met his duty to address the issues of maintenance and will no longer be concerned about his/her ability to do their job.

A public adjuster should NEVER write their estimate in a way that the total damages do not result from damage caused by a covered peril. We cannot look back in time, but the property owner is one very important source when walking the property and preparing your scope of damage. Many times I hear, “I gotta write it as I see it”; I submit to you that this approach is taking a big risk and the bigger the property, the bigger the risk of having your own estimate used against you by the field adjuster, the claims supervisor, and the defense attorney in an EUO, deposition or trial. The credibility of a public insurance adjuster in the eyes of a jury, and even the field adjuster, is only as good as the accuracy of the estimate and detailed notes kept by that public adjuster. When it comes to negotiating with an insurance adjuster, you have the power of knowledge because you have total access to the owner and the property. The more accurate you are in providing the correct information to the field adjuster, the more powerful you become to that field adjuster. The easier it is for the field adjuster to make his/her recommendations for payment, the faster the claim should be resolved.

A public adjuster’s involvement also frequently increases the dollar amount of a policyholder’s final settlement. By some accounts, the average settlement rises by as much as 20 to 50 percent. See, Peter C. Beller, In the Wake of Disaster, Help for Hire, New York Times (Feb. 2, 2006); and Brian D. Mockenhaupt, For Public Adjusters, Disaster Means Business, Providence (R.I.) Journal-Bulletin (Jan. 18, 1998). The Florida Legislature’ own program policy analysis office has found that, in claims related to the 2005 hurricanes filed by policyholders of the state-run Citizens Property Insurance Corporation, settlements averaged 747 percent higher ...The same legislative report found a smaller but still significant increase – 574 percent -- in settlements when public adjusters represented Citizens policyholders in non-catastrophe claims.

I was amazed at the statistics found and published by Citizens. I think it is far overstated and policyholders should not expect that type of percentage increase unless they have a smaller claim. While I may criticize Citizens' claim handling, there is no way it is that bad and it underpays to that extent that often. If I were a public adjuster, I would advertise this statistic every time I talked with a prospective client. 

This lawsuit seems to be moving along quite a bit faster than a similar public adjuster lawsuit in Dade County which I noted in two earlier posts, Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps, and Public Adjuster Lawsuit Challenging State's Cap on Fees and Solicitation Ban Survives Venue Change. I expect that the summary judgment will be heard within the next sixty days. Pre-trial hearings are set and the judge seems to be moving this matter along pretty quickly.

The interesting discovery phase will now start. I expect it to be a blockbuster.

Here is the Order denying the change of venue:

My friend, public adjuster Ron Reitz, found himself unable to practice his adjusting trade in Nevada. He stood up to the Nevada residency law, and the wrongful law lost. Good for him.

In Reitz v. Kipper, the trial court held that the residency requirement for public adjusters in the Nevada licensing statute is unconstitutional.

Nevada was the sole remaining state that had a residency requirement. This is a major victory for the public adjusting profession.

Ron Reitz should be congratulated for his determination and patience in bringing this litigation. His very fine attorney did great work in this matter.

I often feel as if one gets a lot more from teaching a subject than simply being taught by another because you have to research, prepare, write about, present and answer questions on the issues. Teaching aspects of insurance coverage makes me a much better insurance attorney.

Roof damage disputes have been significant areas of contention lately because many of the insurance company expert vendors have been providing opinions, seemingly minimizing the impact that wind has on roofs. Accordingly, I need to know this area to do my job. I felt that others in the field needed more knowledge on the topic as well.

Our law firm has a competitive edge over many other policyholder firms because we have invested in a full time “Knowledge Manager.” Ruck DeMinico is an attorney with a library science background. He can help us find rather obscure, but significant, information regarding our cases that can literally mean the difference between winning and losing. Often, the amounts of recovery for our clients are enhanced because information is power and provides our attorneys with better arguments than the insurance counsel we oppose.

Regarding my presentation on the effects of wind on roofs, I asked Ruck to make a bibliography on the topic so others could have a list of scientific references for use in their cases. Some of the more important papers include:

• Baskaran, A., Murty, B. and Wu, J. “Calculating roof membrane deformation under simulated moderate wind uplift pressures”
• Xu, Y. L. “Fatigue damage estimation of metal roof cladding subject to wind loading”
• Lee, K., Rosowsky, D. V. “Fragility assessment for roof sheathing failure in high wind regions”
• Ali, H. M., Senseny, P. E. “Models for standing seam roofs”
• Baskaran, B. A., Koa, S., & Molleti, S. “A novel approach to estimate the wind uplift resistance of roofing systems”
• Cochran, L. “Wind engineering as related to tropical cyclones”

For readers of my Blog, simply click for a download of the bibliography.

I cannot emphasize enough how important it is to understand the physics of wind loads and flow if you are going to be able to fully find and explain the extent of damage caused by wind. Many of these scientific papers develop concepts of how subtle fatigue damage during a high wind event can lessen a structure’s life expectancy because the fastening and structural systems were altered as a result of having been pushed and pulled by the wind. I have been amazed at the numerous engineering committee comments regarding building integrity issues.

Tim Marshall has been my partner in this presentation. He is the other Tim Marshall, and not the infamous one from HAAG Engineering that is the insurance industry’s darling forensic engineer. I suggest that policyholders may want to hire Tim so that they can freak out the insurance industry by claiming that they have a report from Tim Marshall that found significant roof damage.

To be fair to HAAG and its Tim Marshall, they sponsor an in-depth roofing class that provides significant information regarding roof damage claims. While I have heard grumblings that the class is more concerned about how to not find roof damage and thereby lower claims payments, virtually everybody I have talked with urges others to go and learn from HAAG’s experiences on this topic and from what that Tim Marshall has to teach.

I am sorry that everybody could not attend the seminar here in Providence. I promised that the PowerPoint presentation would be placed up for review by all, and it will be available here following the Conference. I will make this topic part of firm’s regular seminar presentations to public adjusters in the future because it is important to understand these issues.

Slaten Bickford of Adjusters International grew up in the business of public adjusting. His father, Pat Bickford is a past president of the National Association of Public Insurance Adjusters. Slaten graduated from Columbia, an Ivy League school. From personal experience, he is one of the smartest, most passionate, and hardest working young public adjusters in the business.

Slaten Bickford spent a couple days driving me to each part of the Port of New Orleans property after we were retained as counsel in the fall of 2007. We had to cover 26 miles of property along the Mississippi River. Even after two years following Katrina, various parts of the Port were difficult to traverse. Indeed, one of the unique supplements to the claim were the tires that were ruined from nails and debris.

Slaten moved to New Orleans from Denver to help adjust this massive claim. Teams of estimators and adjusters were poring over the loss locations. It was obvious to me that while there were older and more experienced adjusters for the insurance companies and with Adjusters International, Slaten was going to be the best choice for me to rely upon as our client's primary adjuster. He was the one person with the detailed knowledge of the claims from all perspectives. He had the organizational skills, creativity, and historical knowledge of what had transpired before to help me refigure the damage into a proof which would withstand a critical review by the insurance company's team of attorneys and experts.

As a result of our close working relationship, I became very familiar with Slaten and his work habits. Since he is about twenty years younger than I, there are some humorous generational differences in how we approach things. I am convinced that professionals 30 years of age and younger live their lives on a laptop and a cellphone. Everything that Slaten produced or was presented to him regarding the Port claim was on his laptop. I asked a question, he looked at his laptop--no paper and nothing tangible that I could hold. For a guy that learned how to practice law with the IBM Selectric and carbon paper copies, he and I would laugh as I tried to navigate in his virtual file world of photos, spreadsheets, scanned images, and emails.

I also learned from Slaten that "the office" was the place his laptop was at, and at the time he was working. Neither were normal nor set. Going to another country to romance a young woman who would later become his fiancé' did not mean stopping work for the Port of New Orleans. 'Where are you working from?' was a question I frequently asked. The answer had some pretty exotic and out of the way venues.

The estimators reporting to him also lived in this virtual world of information sharing with massive data on spreadsheets exchanged and worked on collaboratively despite these individuals being thousands of miles from each other. I was amused while standing at a particular structure and after asking a question to Slaten, as his laptop would open and then he would communicate on cell and email--often discussing photos and videos of damaged structures with others to get my inquiry satisfied immediately. This type of efficient productivity was not possible when I was a young professional, but is the current status of how people work together in the modern adjustment era.

Slaten announced one day at lunch that he planned to propose to his Tulane medical student girfriend. I cannot remember a person as positive and ready to become engaged. Laura and Slaten are both very bright and share a love for informality in their affairs. For example, their wedding was a typical New Orleans affair with beer being served during the ceremony. If brains are determined by genetics, their children will be brilliant.

I was happy to see that so many of the estimators Slaten worked with were there to share the moment. While I demanded that certain work be done until it was done right, Slaten was the guy in the field, drinking beer with those guys, and explaining why my needs as the Port's attorney required work to be reconfigured for proof at a trial---and always right away. I am certain that, but for Slaten, some of those hardworking estimators would have simply walked off the job rather than deal with my demands.

Many of us in my line of work tend to be nomads going from one unfortunate place of disaster to another. The marriage of Lara Yanovsky and Slaten Bickford will certainly be a case study of logistics because Slaten works long and hard in far away places, and most doctors work pretty long hours in one place. I guess modern technology will help them stay close even if they are far away.

So, yesterday was a good time in New Orleans. As we flew over the Mississippi Coast and New Orleans, I was reminded of how many other good things can sometimes come out of catastrophe. 

Public adjusters can do a lot of good for policyholders. Their ability to do so can be highly controversial with the legal bar. Knowing insurance law is as important to a public adjuster as knowing criminal search and seizure law is to a police officer. However, neither may practice law.

The National Association of Public Insurance Adjusters (NAPIA) had a long time general counsel, Paul Cordish. Although deceased, his legacy endures with a Cordish legal writing award to a law student writing the best legal paper on an insurance subject designated by NAPIA. NAPIA presents this award at its annual meeting, and the law student provides a presentation of his or her legal work.

Every six months at every NAPIA mid-year and annual meeting, Cordish presented his views on the current state of public adjusting throughout the country. Cordish always provided wisdom and true insightful thoughts. Many of us miss him greatly.

Today, Brian Goodman performs the same function as General Counsel to NAPIA and does a wonderful job eloquently expressing many of the same messages to the general membership as Paul Cordish. In my view, NAPIA has been blessed by these two attorneys providing terrific counsel to a profession often under attack by the insurance industry and then by the legal bar.

Mary Fortson provides oversight to our firm regarding ethics and logistical oversight of our attorneys. She has attended many NAPIA meetings over the past decade and has heard one clear message from Brian Goodman to all public adjusters, the same message Paul Cordish gave over the five decades he was NAPIA's general counsel. That message is:

Do not practice law if you are a public adjuster. The unauthorized practice of law represents the most serious threat to public adjusters as a profession because the bar associations may limit or prevent the activities of public adjusting under the guise of protecting the public.

So, I was not surprised when Mary Fortson and TAPIA's first President, Jim Beneke, asked me to provide a one hour presentation on the unauthorized practice of law at TAPIA's first meeting. It is an important subject and one professional public adjusters take very seriously.

While I will not provide a detailed analysis of this topic in a limited blog, my view is that many public adjusters hear the warnings, but they still practice law everyday in letters and phone calls. Most of the offenses come in advocating legal issues and coverage disputes with insurance adjusters. The other major offenses come at the time of providing advice to policyholders as to which legal resolution process should be taken to resolve disputes. Advocating a legal position and telling a policyholder to file or not file a lawsuit are acts of practicing law that are routinely breached by well meaning public insurance adjusters.

Over the past year, I have given the same presentation four times. Each time I cringe as I provide examples to the audience of what may constitute the unauthorized practice of law because I can see that public adjusters in the audience are squirming as I explain what they do is illegal--and I am a friend.

The truth is that many insurance company adjusters could make life horrible for those public adjusters who routinely write long legal dissertations about an interpretation of coverage with case law and statutes. I am surprised more public adjusters do not become grieved to the department of insurance and the local bar association.

Most professional public adjusters do not get themselves into this predicament. My hope is that my message and warning will save other public adjusters from the turmoil of such accusations in the future.

The most recent lawsuit succinctly states the issue and controversy:

This action challenges the constitutionality of Florida Statutes limiting the ability of public insurance adjusters to engage in truthful commercial speech. Specifically, the challenge is to the following provision of Section 626.854, Florida Statutes (2008) (referred to hereafter as the “challenged statute”):

6) A public adjuster may not directly or indirectly through any other
person or entity 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.

The pleadings in the current lawsuit fairly set forth some general activities of what public insurance adjusters do:

Public insurance adjusters exclusively represent insurance policyholders, advocating for the best settlement possible from insurance companies. Typically, public insurance adjusters contact and contract with an insured owner or renter only after a disaster or mishap, not before. Then they assist with preparing, filing, and adjusting insurance claims. The work of a public insurance adjuster includes assisting in the inventory of lost items, estimating damages, appraising the policyholder’s loss, and attempting to negotiate settlements for the insured. A public insurance adjuster also may advise clients on policy conditions regarding temporary repairs and protective measures. The range of responsibilities depends on the contract with the insured.

…The fees charged by public insurance adjusters are capped by state law
at certain percentages of the insurance claim payments received by their clients.
Studies show that the work of public insurance adjusters can increase the average settlement by an amount greater than the fee charged by a public adjuster for that work.

The pleadings also set out the some of the factual basis for the unconstitutionality:

Statutes and regulations provide numerous consumer protections against deception by public insurance adjusters, and also provide strict penalties for
deceptive practice. Yet no pattern of generally false or misleading speech has been
found to exist in the profession of public insurance adjusting.

… A legislatively created 2007 Task Force on Citizens Property Insurance
Claims Handling & Resolution concluded that the public needs to be protected
from unscrupulous public insurance adjusters. However, on information and
belief, the Plaintiff alleges that no testimony or other evidence was presented to the
task force or to legislators who considered the task force recommendations to
demonstrate that a 48-hour ban on early solicitation would directly advance the
state’s goal of protecting the public.

…The Plaintiff further alleges …that DFS has not received any complaints from the public during the past five fiscal years establishing a pattern of problems with public insurance adjusters soliciting within the first 48 hours after claim-producing events.

…There are no time restrictions on other licensed or unlicensed businesspeople or professionals -- such as insurance company adjusters, cleaning services, contractors, roofers, smoke-mitigation or water-damage experts, etc. -- who may freely approach and contract with policyholders in the immediate aftermath of claim-producing events.

Very good constitutional attorneys are representing the public adjusters in both lawsuits. While not easy, I predict that the constitutional challenge to the 48 hour ban will be successful. The value to policyholders of having public adjusters assist in the claims process is best immediately after the loss. There was no evidence showing why a ban would help the public—the insurance industry lobby simply got the language into law. I think that some Florida legislators felt the entire practice of helping policyholders collect full benefits under the policy and charging for that service is a bit “unsavory.” Other Florida legislators may have heard stories that some public adjusters are unscrupulous, and therefore, felt any legislation limiting public adjuster participation in insurance claims was a worthy legislative goal.

You are invited to attend the inaugural meeting of the Texas Association of Public Insurance Adjusters (TAPIA). The meeting is being held at the Hotel Derek in Houston, Texas on October 15, 2009 from 10:00am until 3:00pm. There is no charge to attend this meeting, which will also include lunch.

 Please register for the meeting on the TAPIA website, mytapia.org, where you will also find an application for membership that includes information about the membership fee. You are encouraged to join TAPIA before the annual meeting, although the opportunity to join will also be available at that time. Future TAPIA meetings will be for members only.

 On the agenda for the October 15th meeting, in addition to business items regarding the organization, is a discussion of the current issue with the Texas Department of Insurance regarding the public adjuster’s fee cap and other contract-related items. Attorneys David Weber and Kim Yelkin from Gardere Wynne Sewell LLP will be there to lead the discussion. Also on the agenda is attorney William “Chip” Merlin from Merlin Law Group who will present valuable information for public adjusters on the topic of The Unauthorized Practice of Law.

 On behalf of the TAPIA board, I strongly encourage you to become a TAPIA member and attend the annual meeting. We are at a critical time in the development of our industry in Texas and need the participation of all pubic adjusters to make certain that consumers receive the best service possible. (emphasis added)

The importance of TAPIA as an organization serving consumers cannot be overemphasized. The insurance industry is supposed to serve its customers, but rarely do I see any insurance industry executives leading the charge to self-regulate or promote laws that protect their own customers from improper treatment. The only licensed individuals, other than attorneys, that stand up for the interests of policyholders are public adjusters. It is no wonder that many in the insurance claims industry are antagonistic to them.

I feel fortunate to speak at this inaugural meeting and look forward to providing an informative and worthwhile presentation to all in attendance.

If you are a licensed public adjuster in Texas, you have to be at this important meeting.

While researching and writing materials for my upcoming presentation, I came across a fascinating web site that may be useful to adjusters, policyholders, and other attorneys with building issues. The site, InspectAPedia, is developed by Daniel Friedman. Friedman’s resume indicates that his present occupation as follows:

• Journalist, since 1953 (cub reporter, Richmond News Leader), specializing in environmental & construction inspection, diagnosis, & repair, & forensic investigations. His technical and other writing have appeared in various publications since 1953, including the The ASHI Technical Journal (where he served as publisher and editor), and contributions to Progressive Builder and New Shelter, the Journal of Light Construction, New England Builder, Fine Homebuilding, Smart Homeowner, the Old House Journal, and in various newspapers including the New York Times, Richmond Times Dispatch, Richmond News Leader, the Poughkeepsie Journal, the Mensa Journal, as well as in various U.S. EPA, CPSC, and other Government publications. He is the editor and lead author of the building and environmental problem diagnosis and repair online encyclopedia InspectAPedia.com.

• Forensic Microscopy, since 1985, specializing in particle identification for diagnostic purposes, including buildings, indoor environment, and works of art. Works with art & building conservationists on contaminant identification & paint failure analysis, performing particle, mold, debris, & stain identification by microscopy and microchemistry for museums (Museo de Arte de Puerto Rico) and galleries and with U.S. National & State Park Services & historic societies to assist in art works & building conservation.

• Environmental, Indoor Air Quality & mold field investigations and laboratory services, since 1985, specializing in particle identification, IAQ and mold, pollen, allergen, and other indoor air particle investigations. Microscopy Lab Analysis for sick Buildings or in the course of art conservation, including on-site and mail-in sample lab services;

• Construction Evaluation & Diagnosis since 1978 as American Home Service Company: residential and commercial real estate Building inspections, home inspections Construction problem diagnosis, research, & solutions; also, construction arbitration, Building defect investigation, expert witness, photo, video, and written documentation of Building conditions and defects. Special consulting & research in electrical systems and hazards, water supply, onsite waste disposal (septic systems), materials failures, structural failures, paint, roofing, and siding failures, water and moisture-related damage, Building-related illness, bioaerosols, site & environmental hazards and concerns.

One of the primary aspects of property adjusting is the thorough investigation of a structure for damage. Adjusters are often under significant time pressure and do not adequately look at the important parts of a building structure following a loss. I thought Friedman’s description of the detail required to properly conduct a thorough inspection was a critical lesson.

Friedman’s article, “Asphalt Roof Shingle Wind Damage Causes & Evaluation,” has an excellent discussion on aspects of roof damage and its causes following a windstorm event. For instance, he indicated in part:

Roof Installation Workmanship: Fasteners/Nailing Problems, Wind Damage appeared to have led wind blow-off of these Atlas shingles, though an investigation of whether or not the shingles had self-sealed was also needed.

Weather: Wind damage can happen to any asphalt shingle roof in severe weather conditions. However if shingles are not properly nailed, shingles are far more likely to blow off of the roof in even a modest windstorm.

Proper roof shingle nailing: Roofing product manufacturers are careful to specify where shingle nails should be placed in each shingle and the number of nails required. These specifications may vary by shingle type and building location, with more nails specified for high-wind areas such as asphalt shingle roofs applied in coastal areas.

Components of roof shingle wind damage resistance: Asphalt shingle wind resistance combines several factors including the effectiveness of the glue strips on the shingle backs which adhere the shingle courses against wind-uplift, roof pitch, roof orientation with respect to prevailing winds, and importantly, proper shingle nailing patterns.

Not only must nails be properly placed and spaced, improper nailing itself, such as driving a nail through the shingle, leaving a nail sticking up to cut a shingle above, or using a roofing stapler improperly leaving cocked staples or shingle-cutting staples will all encourage shingles to fly away with the wind.

If a new roof has the bad luck to encounter a severe wind storm shortly after asphalt shingles have been installed, it is possible that the shingles will blow off of the roof because their self-sealing tabs have simply not had time (or warm enough weather or enough sun) to adhere.” (emphasis added)

While reading his article, I kept imagining how the insurance company may try to use a more thorough investigation to find causes leading to the loss other than just windstorm and then raise the anti-concurrent clause exclusion as a means to escape liability. But, that is another topic.

He also had an example of a TWIA (Texas Windstorm Insurance Association) inspection involving damage following windstorm in his article, “Mechanical Damage to Asphalt Shingles - cuts, punctures, tears, granule loss.” His case analysis did not appear favorable to finding windstorm related damage but instead indicated the following in part:

1. Primarily, questionable or perhaps even poor workmanship, use of staples, mis-located, staples askew, high raised-corner staples, mis-stapled on top of shingles, foot traffic, mechanical damage, possibly excessive bending in cold weather at the hip/ridge appear to be the problems on this roof. We also saw some minor mis-nailing or inadequate nailing leading to a single blow off at the roof hip.

2. Secondarily: a few of the cuts and damage could be defective product - see CRACKS in FIBERGLASS SHINGLES. At least one cut was made by a tool or implement.

3. Weather does not appear to be a root cause of this roof damage, though once a shingle has been worn by walking or mechanical damage the exposure of the shingle substrate accelerates wear and granule loss.

4. We would not characterize the prime problem of this roof as "granule loss" which was the original owner's concern. GRANULE LOSS from SHINGLES provides more details.

For readers with structural loss questions, I suggest that Friedman’s site can provide some valuable general information.

I referenced this conference in a previous post. And, being a student of human nature, I expect most delayed making a decision about attending. So this is your reminder.

A number of commentators and I have made remarks about the need for adjusters to better themselves through education. Unless you are a "know it all," I believe that every professional involved in first party property insurance claims can learn something from the panel of experts assembled for this conference.

I look forward to seeing you in Providence for this special event.

Another comment also finished with a question for me:

If the argument is that aesthetics is part of the function of the item then it would be just as true for composition shingle roofs as for the copper roof panel example. The base color of shingles is always the same, black asphalt, the color comes from the granules; therefore granule loss is equal to color loss.

If color loss is equal to aesthetic loss then granule loss and the resulting color loss is a loss of function.

Or, am I reading this all wrong?

First, I applaud everybody that sends in a comment or asks a question. I encourage it. Sometimes, I respond privately and nothing gets posted. Still, it is important that comments to what we post are made so we can reflect and have dialogue.

Second, I want to encourage everybody to use the “SEARCH” function of our Blog. You will find it very useful to all kinds of coverage or insurance questions. Let me show you an example from the two questions above.

“Matching” is the topic of both questions. If I were to put the word “match” into our search function, the following 10 Posts would be the result:

1. Matching Coverage Disputes and Disagreements are Routine and Not Going Away--Don't Miss Our September 11 Seminar in Houston Which Covers This Topic
2. Provide the Right Proof so Your Insurer Will Pay Costs to Repair or Replace to Match Texture, Color and Likeness
3. Matching of Property Damage is Statutory in Florida
4. Causation Issues to Note in Texas Property Insurance Coverage Disputes-Part II
5. The Proposed Federal Charter Legislation Should be Named: "The Anti-Consumer Insurance Act of 2009"
6. "It's an Ill Wind that Blows No Good"
7. The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions
8. "Texas Hold 'Em": Merlin Law Group's Seminar for Texas Public Insurance Adjusters
9. Is The Saffir-Simpson Scale Still Relevant
10. New Insurance Companies Founded in Florida

Of those results, five posts seem to provide most of the answers to the two questions. Indeed, I invite anybody to ask me questions about roofs, matching, and indemnity in Texas after they have read the following posts:

• Matching Coverage Disputes and Disagreements are Routine and Not Going Away--Don't Miss Our September 11 Seminar in Houston Which Covers This Topic,
• Provide the Right Proof so Your Insurer Will Pay Costs to Repair or Replace to Match Texture, Color and Likeness,
• Matching of Property Damage is Statutory in Florida,
• Causation Issues to Note in Texas Property Insurance Coverage Disputes-Part II,
• The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions

I want readers to benefit from the work I have already done for them by using the search function and reading what I have previously written, so I don't have to do all the work twice. This seems fair.

I also need to warn to everybody. Unless you are an attorney, you are breaking a number of laws by advocating legal positions of coverage in letters or phone conversations with insurance adjusters or claims managers. You are practicing law. Do not do it. If you get turned into the Bar or the Department of Insurance, you are warned. And, insurance adjusters and insurance companies have an ethical obligation to turn you in if you practice law without a license. BEWARE.

I get questions all day long from people, public adjusters, contractors, and potential clients regarding insurance coverage questions that pertain to actual controversies. I can understand the need to ask me questions and obtain a better understanding of coverage issues. If you attend my seminars or others where I speak, I will teach you how to use what I write without practicing law. Go to our seminars.

If you are an adjuster, independent adjuster, or insurance claims managers, you do not have to put up with public adjusters, and especially contractors, practicing law. I have no patience with unlicensed people practicing law and acting as legal advocates. All professional public adjusters agree. I cannot speak for many of the insurance contractors and insurance restoration contractors because many seem to violate many laws regarding public adjusting and practicing law without regard to anything because nobody does anything about it.

If you are a policyholder trying to do this yourself, I remind you of the old saying that “he who represents himself has a fool for a client.”

And please understand that my advice as to what to advocate applies only when I get retained. If you attempt to do anything as a legal advocate or by giving advice of a legal nature with an insurer, you may be violating the law and harming the public, your client, or yourself. I am providing general legal principals so readers and others do not get harmed by insurance companies and so policyholders can get paid in full.

Ginger Loeffler, the Texas Department of Insurance attorney who attended the seminar, and Steve Augustine, of the Texas Department of Insurance, need the help of TWIA customers, independent adjusters, public adjusters, experts, contractors, and anybody with information regarding TWIA claims handling and conduct to contact them as soon as possible.

Their contact info is:

Texas Department of Insurance
333 Guadalupe, P.O. Box 149104
Mail Code 110-1A
Austin, TX 78701-9104
Phone: (512) 322-3428
Fax: (512) 4751772
Steven.Augustine@tdi.state.tx.us

I urge consumers and others with complaints and information about adjusters and experts in the field saying one thing and TWIA claims managers saying another to contact the TDI attorneys as soon as possible.

I also urge those who are contacted or who anticipate being contacted to tell the truth and not do anything to destroy evidence. Advising others not to provide information, to destroy internal information, or to lie can be a criminal act. I suspect that some claims managers are subtly suggesting that those involved with claims provide a "sanitized" version of reality. This is not an insignificant investigation or a civil lawsuit where all kinds of "gamesmanship" seems to be allowed and encouraged to protect the company. Doing anything in a conspiracy to avoid the truth when authorities are investigating matters could result in criminal prosecution.

If you are a licensed public adjuster, I encourage you to attend. I think it will provide you a unique opportunity to explain improper conduct to a regulator actively investigating important claims matters.

Many claims issues will be explored during the seminar, and I will also explain why I think some appraisals are being lost in Texas and what can be done about it.

I hope that Jim Oliver or others from TWIA can attend the seminar and engage in a civil discussion of the concerns many have over the handling of Hurricane Ike claims. I truly believe an honest and open dialogue would be helpful for all involved.

Click on the image below to read the letter:

I reported on this last January in my post, Citizens And TWIA Bad Faith Exposed. I further documented it last February in my post, Views From Hurricane Ike TWIA Insurance Adjusters. I made a sarcastic report of it in The Parable of Hurricane Ike Insurance Claims. Then, I suggested that my current client and Ike protest leader, Brenda Cannon Henley, had a valid reason to protest against TWIA in, Texas Windstorm "Slabbers" and Policyholders March on Austin. Indeed, we ran over three separate posts regarding how TWIA was wrongfully adjusting roofing claims. If you simply type “TWIA” in my keyword search to this Blog, TWIA shows up 37 times in 2009. Virtually all of my posts are negative regarding the reports of TWIA claims handling. TWIA makes State Farm and Allstate look like angels regarding claims ethics and satisfaction.

It finally seems as if the local media and Texas regulators are learning what all of us in the claims administration business believe--TWIA claims executives are out of control and its claims management needs to be replaced. Purva Patel of the Houston Chronicle recently reported in, HURRICANE IKE: State Looking into Roof Damage Policy, that Texas regulators started an investigation of TWIA roofing claims:

State regulators are investigating how the Texas Windstorm Insurance Association handles certain roof claims related to Hurricane Ike.

At issue is whether unsealed asphalt shingles are considered damaged, and if so, whether Ike was the cause.

The windstorm association doesn't always think so. But some homeowners say they have valid claims because Hurricane Ike lifted the shingles on their roofs, breaking the seal that binds shingles to each other.

The Texas Department of Insurance notes that although the association claims such shingles are not necessarily damaged, unsealed shingles would not pass a home inspection that's required to obtain coverage from the association and to keep coverage if a home is repaired after a storm.

“Because we see that discrepancy, and we think that when a homeowner's shingles have been adhered, that does constitute damage, we're pursing an investigation,” said Catherine Reyer, an associate commissioner of enforcement at the department.

The insurance department began investigating in late July and has received 23 complaints against TWIA on the issue.

Yesterday, reporter Mark Greenblatt, of station KHOU published an excellent article regarding an investigation by Texas authorities into TWIA’s unfair and deceptive claims handling:

The Texas Department of Insurance has filed a formal complaint against the Texas Windstorm Insurance Association , accusing it of “unfair or deceptive” handling of claims.

In a letter to the State Office of Administrative Hearings, the Department of Insurance says the insurance company could be subject to disciplinary action if the complaint is upheld.

Texas Windstorm is the only insurance option against windstorm damage or hail from hurricanes for consumers who live along coastal sections of the state.

 The complaint specifically criticizes how the company handles claims related to wind-lifted roof shingles.

The department’s action comes as KHOU continues its ongoing, two-month investigation of Texas Windstorm’s claims handling practices, and one week after we asked the State why no enforcement action had been taken against the company. At that time, KHOU cited the 724 consumer complaints we found that the Department of Insurance upheld against the company since Hurricane Ike.

You can watch the video broadcast of Mark Greenblatt’s news story by clicking here.

Next Friday, September 11, 2009, our firm will host a seminar for licensed public adjusters in Texas. This event is titled “Hurricane Ike-What a Difference A Year Makes?” and Texas Department of Insurance representative Jack Evans will be a featured speaker at lunch. I will introduce Brenda Henley who will discuss some of the events planned for the memorial of Hurricane Ike.

While I plan to finish teaching public adjusters how to help policyholders prove and present claims at 2 pm, I will finish early if any TWIA executives or claims managers wish to have a civil discussion with experienced and licensed claims adjusters about how they may better adjust TWIA customer claims. The planned informational meeting of the Texas Association of Public Insurance Adjusters (TAPIA) can certainly be delayed to allow for such an important exchange of information.

Everybody who knows me understands that this will not be a lynching, but a civil discussion of issues and concerns. The question is whether TWIA claims executives have the stomach to engage in civil debate with skilled and knowledgeable public adjusters as to how policyholder claims should be handled and paid and about their claims practices that are now under public scrutiny.

I have recently noted the concern that some insurance restoration contractors are acting as surrogate public adjusters and not in the best interests of the policyholder in my posts, Are Insurance Restoration Contractors Ripping Off Insurers and Policyholders? and Former Restoration Insider Comes Out Swinging Against Florida's Limitation of Public Adjuster Solicitation.

The 48 hour solicitation ban was a coup of the insurance companies and Citizens Property Insurance Corporation. I attended the Citizen’s Claims Review Task Force meetings. It was obvious that Citizens claims managers and executives blamed many of their controversial claims delays and underpayments on the involvement of public insurance adjusters. The insurance industry used the Task Force as a vehicle to place before legislators a few examples of how public adjusters solicit for business following a disaster. Door hangers and the lining up of a dozen public insurance adjusters were suggested as being “unsavory’ by many. I guess the connotation is that those that get paid for professional help following a catastrophe must be taking advantage of victims. From the insurance industry’s perspective, it was a “perfect storm” to reduce the retention of pubic adjusters.

The 48 hour solicitation ban states:

A public adjuster may not directly or indirectly though any other person or entity 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.

The lawsuit emphasizes the constitutional aspect of one’s freedom to speak and to contract.

8. By prohibiting the Plaintiffs from directly or indirectly initiating contact or engaging in face-to-face or telephonic solicitation with any insured or claimant, or entering into a contract with an insured or claimant in the first 48 hours after an event that has not been declared an emergency, subsection 626.854(6) constitutes a prior restraint on protected speech in violation of the First Amendment to the United States Constitutions and Article 1, Section 4 of the Florida Constitution.

It also points out some of the practical reasons why the laws are objectionable:

39. Subsection 626.854(6) is not narrowly tailored to further a significant government interest, and other less intrusive means are available to control or prevent any practices of public adjusters which might be needed to adequately protect the public

40. Subsection 626.854(6) is overbroad, in that it restricts the speech of all public adjusters, including Plaintiffs, who are competent, scrupulous, honest, and professional in their dealings with the public

41. Subsection 626.854(6) denies significant business opportunities for Plaintiffs and other public adjusters by denying property owners the services of a licensed public adjuster at the time they are in most distress and have the greatest need.

42. By preventing public adjusters from contacting property owners immediately following a natural disaster, subsection 626.854(6) prevents public adjusters from having any contact with the most severely damaged property owners at the only time they can be located before moving to an unknown address.

43. Section 626.854(6) amounts to an impermissible restriction on the time, place, and manner of conducting the business of public adjusting, and unduly restricts Plaintiffs' freedom of speech.

Pat Catania has done an excellent job assembling a great legal team and getting a case stated clearly. Using a Shakespearean phrase, he told me yesterday that “if they [the insurance industry] want a war, I’ll show them the war.” Pat is not a part of FAPIA or NAPIA. He is creative, bright, energetic, and I find him fun. I believe the lawsuit has a good chance of success. He asked me to let other public adjusters know that he would like to include others as plaintiffs in the lawsuit.

Catania is also a fantastic marketer and entrepreneur. He started two web sites, MySmartClaims.com and SmartClaimsPro.com which help policyholders and professionals regarding the estimating and submittal of property insurance claims. He is a passionate consumer advocate and tireless opponent. I predict he will prevail and many public adjusters will be thanking him for his efforts.

Catania also told me that his dream is to submit the final proof of loss State Farm will pay on before it leaves Florida. He considers State Farm completely unworthy to be in the insurance business because he asserts that most State Farm policyholders are not treated properly regarding claims. He has some inside information on that issue--his wife worked as a property insurance claims adjuster for State Farm.

My first thought is that readers to my blog with questions should do a “keyword” search. If you were to put “matching” into the keyword search form, a number of posts would come up on the topic. One post, Provide the Right Proof so Your Insurer Will Pay Costs to Repair or Replace to Match Texture, Color and Likeness, had particular application to the question with cases—public adjusters should not be arguing case law because it is practicing law. Another post, Texas Hold 'Em": Merlin Law Group's Seminar for Texas Public Insurance Adjusters, indicated that we covered this topic at a previous seminar. Nobody falls asleep at my seminar, so the person writing the comment must not have been there.

Since this is a frequent question and Texas insurance adjusters seem to have a “we just aren’t gonna pay for matching” attitude, I will address in detail what you can do about it at the Hurricane Ike-What a Difference A Year Makes? Seminar on September 11 for public insurance adjusters.

For what it is worth, the FC&S Bulletins also noted that the topic of “matching” is a frequent coverage dispute. A question was posed to their editorial board:

I have an insured with a homeowners (3) policy who had a wind loss that took a few strips of aluminum siding off the front of his house and few from the back side of the chimney. The siding can not be matched color or grain and the carriers solution is to take a few strips off one of the lower sides of the house put those in where the damage is, where it will not be so noticeable and put the new ones back on the lower sides. What thoughts do you have on this claim?

The answer may be helpful to many with these issues:

The solution offered by the insurer is not in keeping with the HO 00 03 (such as the standard ISO form), which promises to pay "replacement cost of that part of the building damaged with material of like kind and quality and for like use; or the necessary amount actually spent to repair or replace the damaged building." By putting on old siding to replace old siding, the insurer is effectively providing an "actual cash value" settlement, which allows depreciation.

But that is not what the insured has been paying for. The replacement cost policies have traditionally been sold to give "new for old." Yes, this violates the principle of indemnification, but that is how the policies are marketed and that is what the insured pays additional premium for.

So, in this case, the insured had matching siding prior to the loss, and is entitled to new matching siding following the loss.

I am going to have a lot more about this at the seminar, and do not ask for the materials if you cannot go. Just be there.

For policyholders that read this, I hope it is useful. You should also get the feeling that only attorneys and public adjusters that subscribe to the on-line edition of the FC&S should represent you. Those people will go the extra mile for you because they know the value of investment in knowledge regarding a very specialized area of insurance.

For insurance company claims managers and their attorneys reading this, pay my clients while you have the chance!

A recent comment to If Insurers Fail to Timely Pay Actual Cash Value Benefits, Policyholders Should Demand Full Replacement Cost Benefits Even if Replacement Has Not Occurred, asked the following:

My contractor has submitted a certificate of completion for my interior work done. My claim stems from Hurricane Ike.

In this certificate, he requested that the recoverable depreciation be released. I have given written consent to my contractor which is on file at my insurance company

The adjuster is giving my contractor a hard time about releasing it. He has stated that he will not release the recoverable depreciation unless I ask for it.

Does my adjuster have the right to not honor the document of consent?

My response was the following:

Your insurance adjuster should deal with you--not a contractor. It is illegal for a contractor to represent you on an insurance claim. You can assign benefits to him. But only attorneys and public adjusters can legally be retained by you to adjust or settle a claim with an insurance company adjuster and only with your permission.

Having said that, it is very appropriate for contractors to discuss what they are doing, why, and the cost with the insurance adjusters. This goes on all the time and is expected.

However, there is a distinction between explaining these issues and representing the policyholder. Indeed, many states limit public adjusters from “negotiating” or “representing” policyholders and limit the public adjuster to claim valuation and presentation. Contractors are specifically prohibited from “representing” policyholders in some states. Virtually all states prohibit contractors from this practice because it is either the unauthorized practice of law, public adjusting, or both.

In a previous post, Former Restoration Insider Comes Out Swinging Against Florida's Limitation of Public Adjuster Solicitation, I highlighted a number of conflicts of interest contractors have acting in the role as the entity doing the work and having relationships of claims settlement with the insurer. One comment indicated what often happens when contractors are hired by an otherwise ignorant policyholder to do the insurance restoration work for the “amount paid” by the insurance company:

Thank you for writing on this hot topic, and for sharing some great information. Secondly, I appreciated reading Laura James' testimony on this customary practice by various insurance restoration contractors in our daily business. In fact, I just sent you a copy of the L.A. Times front page article from July 5th, 2009 which mentions restoration contractors interpreting insurance policy and acting as PA's. With the efforts of FAPIA and NAPIA, I strongly believe we will get this 48 hour solicitation law overturned. I will share the LA Times article on the FAPIA website.

The Los Angeles Times article, “Chasing a disaster chaser” stated in part:

The story of Paramount and its founder sheds light on the world of "storm chasers," traveling contractors and insurance adjusters who descend on natural catastrophes, offering to help victims maximize their claims and rebuild. Regulators, fraud investigators and victims' advocates allege that many inflate damage estimates, do unnecessary repair work and take exorbitant cuts from insurance settlements -- or skip town with all of the money.

"Every disaster has them," said Dave Stuart, president of a nonprofit that helps wildfire victims. "They're literally like vultures circling."

Chasing the storm chasers through court can prove a costly, time-consuming and often fruitless exercise.
…
In some cases, homeowners make out well and the victims are insurance companies, which often pay inflated claims rather than spend money on litigation, industry experts say. Policy holders ultimately pay the price in rising premiums.

The cost of post-disaster insurance fraud is hard to measure. The Insurance Information Institute, a trade group, estimates that fraud accounts for 10% of all property damage claims, suggesting that the toll from a disaster the size of Katrina could reach billions of dollars.

If you think that article may be unfair, how about this advertisement on the internet at Assured Contractors Expediting Services which claims:

The first step need be done only once with each insurance adjuster. On your first contact you will want to discuss your knowledge of the special procedures unique to structural damage restoration work, specifically those pertinent to fire, water, wind and impact damage. Once you have impressed an adjuster with your knowledge you will be eligible for your first 'trial' job. After that first job, during which you must demonstrate your skills at steps two through six, you will become one of the 'insider' contractors.

At that point, maintaining your relationship with the adjuster will be a simple matter of consistent delivery of quality workmanship and a persistent adherence to reliability and honesty. Caution: it is best that you prepare yourself before approaching any adjuster. An unprepared initial approach is one of the three fatal mistakes made by most contractors who try to break into this line of work. Adjusters, with few exceptions, are exceedingly busy people and are keenly aware that they cannot afford to work with contractors who have no knowledge of this specialized field. Your first opportunity to talk to them may be your last one.

Step two, participation in damage analysis, will occur when you are asked to meet an adjuster at the site of an insured loss. At that time you will want to demonstrate your ability to test appropriate parts of the structure for integrity using non-destructive methods appropriate for the type of damage. Together with the adjuster you will determine what needs repairing or replacement. While on the site, you will want to take extensive notes, listing each item in each room separately, noting the volume of each type of work that needs to be done. This is the first step to developing the detail description of work known in the industry as a scope of work or a 'sheet'. To gain your highest chances of success you will want to write your sheet using the structure and format that is indigenous to the industry (more on this later).

Step three, compiling the repair cost analysis, is merely a matter of assigning a cost to each item on the sheet. Use the pre-approved rates commonly accepted within the industry (see subsequent information on this topic).

Steps 2-5 are unique to each job but, once the formats and formulae are learned, these steps are quite simple to accomplish and only slightly more complex than a normal bidding and contracting process would be. The rewards for the added complexity are a significantly higher profit margin on insurance restoration jobs and a job acquisition rate that is truly phenomenal.

The result is that you work less and make much more money.
…
The standard bidding procedure for most contractors is to calculate the materials, labor, tool rental and sub contractor costs, add a markup to labor to cover the contractor's own salary, add 10% to cover contractor overhead (office, phone, utilities, equipment, etc.) then add 10% for profit. If nothing goes wrong the 10% profit will go into the bank. Usually, however, the profit ends up being more like 6% to 8%. Let's face it, it happens!

When a contractor works within the insured damages restoration industry the bidding is done in an entirely different way. There is, within the industry, a set of pre-agreed 'values' for each type of work on a job. The dollar amount that the insurance company is willing to award to a contractor for performance of that type of work is based on a pre-approved rate applied to the volume of work that is needed. The estimating process for insurance work is more detailed than the process used in other types of work. However, once a familiarity with the process has been gained, it becomes much quicker and much simpler to compile an insurance type estimate than to produce a comparable bid using traditional methods. (emphasis added)

While I know many qualified and professional insurance contractors, the insurance contractor field is largely out of control. Many are not only doing construction, but are in the business of adjusting claims and practicing law. How about this advertised service by a North Carolina insurance restoration contractor:

For most North Carolina homeowners, filing homeowner's insurance claims is a rare event. Unfortunately, because individuals don't need to do so often, it's easy to find yourself getting the short end of the deal. After all, if you had to file frequent insurance claims, you'd know what to expect and have the benefit of experience.

At The Roof Maker, we can help handle your insurance claims to help make your storm damaged home like new again. We will work to get the most out of your insurance claim from your insurance company. (emphasis added)

Shouldn’t the contractor be interested in doing the best job for the least amount of cost?

The insurance industry should not be getting “ripped off” by inflated estimates and for construction invoices that are manipulated. While most of my cases have significant disagreements of scope and price, I often wonder how many are caused as a result of adjusters having a siege mentality and underestimating construction scopes and estimates to prepare for the inevitable negotiation often caused by intentionally inflated estimates by insurance contractors. Neither activity is proper.
We are now routinely receiving questions from clients regarding the workmanship and billing by insurance restoration contractors. In the past, our practice has been limited to insurance coverage and claim disputes with the insurance companies and an occasional errors and omission situation with an agent. In the future, it appears we will be getting into insurance restoration practices and construction litigation. Interestingly, I expect counsel for the insurance companies to be doing the same. Both parties to the insurance contract lose when insurance restoration contractors attempt to “game” the system or act as claims and legal representatives of the policyholder.

This post follows three previous ones:

1. A Chronology of Public Adjuster Regulations Regarding What Florida Public Adjusters Can Charge
2. Public Adjusters Sued in Class Action for Wrongful Conduct--Are Unauthorized Practice of Law Class Action Suits Next?
3. Public Adjusters Targeted by Lawyers for Overcharging Policyholders

We have now tracked how this matter started and its current status. As I explained at our ethics seminar yesterday afternoon, the class action lawsuit may have strong merit unless an appeal in the Florida Third District Court of Appeal overturns an administrative ruling in favor of a policyholder and against the public adjuster. The attorneys advertising for other policyholders may soon have competitors because unless the Department of Financial Services (“DFS”) ruling is found incorrect, many public adjusting firms were charging similar fees which the DFS has ruled as being illegal and other class action attorneys may jump into the fray.

The four source documents relevant to this analysis are:

1. The DFS notice of an Order disposing of Clyde Lightbourn’s petition on January 23, 2009.
2. The Initial Brief of Ameriloss Public Adjusting filed May 18, 2009.
3. Lightbourn v. Ameriloss Class Action filed May 15, 2009.
4. DFS Answer Brief filed August 10, 2009.

The significant legal matters started with a petition to the DFS filed by Lightbourn which stated:

A Petition for Declaratory Statement to the Florida Department of Financial Services was filed by Mr. Lightbourn on August 20, 2008 (R. 15-16), stating the following:

STATEMENT OF FACTS

Petitioner is the owner of the property which was damaged on or about August 25, 2005 by hurricane Katrina. That hurricane prompted the Governor of the State of Florida to declare the existence of a state of emergency in the State of Florida.

Responding to numerous public adjuster consumer complaints, in September 2006, the Division of Agent and Agency Services of Florida's Department of Financial Services (the "Department") made several changes to the Florida Administrative Code with regard to ethical requirements for public adjusters. The new rules were designed to regulate the behavior of public adjusters following a disaster-created state of emergency, and to address concerns that some public adjusters might exploit disaster victims by charging excessive fees or by purposefully delaying claims in order to outwit a state-imposed cap on fees.

After having received what Petitioner believed to be an inadequate settlement payment from his homeowner's insurance company, on January 4, 2007 Petitioner entered into an agreement with the public adjusting firm of AmeriLoss Public Adjusting, Corp. ("AmeriLoss"), a copy of which is attached as Exhibit 1 (the "Agreement"). The Agreement provides for AmeriLoss to receive a fee of 33 1/3 % of any supplemental claim.

Rule 69B-220.201(5) (b) of the Florida Administrative Code provides, in pertinent part, that no public adjuster shall charge any fee equal to more than ten percent of the amount of any insurance claim payment. Rule 69B-220.201 (5) (d) of the Florida Administrative Code provides that "[t]his subsection applies to all claims that arise out of the events that created the State of Emergency, whether or not the adjusting contract was entered into while the State of Emergency was in effect and whether or not a claim is settled while the State of Emergency is in effect." Both rule subsections seem unambiguous, and were in effect at the time of the execution of the Agreement.

QUESTIONS PRESENTED

1. Is an agreement entered into by a licensed Florida Public Adjuster, which violates the Florida Administrative Code Rule 69B-220.20 Ethical Requirements regulating the behavior of public adjusters, a legally binding and enforceable agreement

2. Is AmeriLoss entitled to receive 33 1/3 % fee pursuant to the Agreement

In the Ameriloss Initial Brief, we find other facts indicating that the matter is rather routine and fairly small:

On January 4, 2007, Mr. Clyde Lightbourn retained AmeriLoss Public Adjusting, Corp. to represent him on a supplemental claim for Hurricane Katrina damages sustained to his property…

…

…AmeriLoss' fee of 33 1/3 % for new money, above and beyond what he was previously paid…

…

In summary, Mr. Lightbourn only received $12,285.47 prior to retaining AmeriLoss' services approximately a year and five months after Hurricane Katrina affected his property. AmeriLoss [sic] fee is based upon new money and has nothing to do with what he previously received from his Insurance Company. He was aware of the contingency contract of "no recovery, no fee." AmeriLoss went to work and it was instrumental in recovering him $22,062.27 on June 21, 2007, five months after he elected to engage in the services. There was no argument by Mr. Lightbourn at that time to pay AmeriLoss the fee of $7,354.09, which was $14,708.18 net to him.

Mr. Lightbourn was still not satisfied with the amount recovered so he decided to invoke his appraisal rights under the policy by hiring legal counsel. AmeriLoss Public Adjuster David DelVecchio was the assigned appraiser representing him in the appraisal process and as a result, Tower Hill Insurance issued another check for $20,903.55, which AmeriLoss [sic] fee still due is $6,967.29…

The DFS ruled for Lightbourn and against Ameriloss, finding in part:

Based on the specific facts presented in the Petition, Rule 69B-220.201(5)(b), Florida Administrative Code is indeed applicable to the issues presented. The above-referenced rule that is at issue in this petition became effective on September 3, 2006. (emphasis in original). As previously stated, the parties entered into the fee agreement at issue on January 4, 2007, approximately four months after the rule was promulgated,(emphasis in original). Thus, under the facts presented, although the Governor of the State of Florida issued an Executive Order declaring a state of emergency as a result of the anticipated landfall of Hurricane Katrina prior to the execution of the fee agreement, the operative rule was in effect well before that date.

…

12. It should also be noted that subsection (d) of 69B-220.201(5), F.A.C., by its own language, applies to all claims that arise out of the events that created the State of Emergency, "whether or not the adjusting contract was entered into while the State of Emergency is in effect." Thus, this provision was obviously intended to apply to situations whether or not a declared state of emergency was in effect during the claim settlement process. Therefore, this rule language buttresses the view that the event that triggers the rule in this instance is the execution of the fee agreement. Consequently, the ethical constraints of Rule 69B-220.201, which limits public adjusters to a 10% fee under such exigent circumstances, are properly applied to this factual situation.

So, the DFS has ruled that charging more than 10% of settlements on supplemental claims from Hurricane Katrina is illegal. Obviously, Wilma has many more re-opened claims and there is no reason to think this rule will not apply to Wilma and possibly the 2004 hurricanes.

The DFS has filed its brief and its summary position is pretty simple to understand:

At the time Department lawyer Terry Butler stated that
there was no legal limit on fees which could be charged by a
public adjuster when no emergency rule was in effect, there was
no such limit (February 10, 2006). However, the Department
concluded that Florida property owners, having suffered from
catastrophic windstorms, should not be victimized a second time
by rapacious public adjusters following the State of Emergency.
The Department thus proposed remedial language to Florida
Administrative Code Rule 69B-220.201 ("Ethical Considerations").
If Ameriloss failed to participate during the lengthy rule
adoption process, it wasn't due to a lack of notice which the
Department published a week after Mr. Butler's letter. See vol.
32, no. 7 Fla. Admin. Weekly (2/17/06) at p. 698.
Ameriloss would have this Court believe that the Department
acted without authority, thereby denying Ameriloss due process.
However, the Florida Legislature made sure the regulatory agency
charged with overseeing insurance adjusters' conduct had
sufficient rule authority to address their dealings with those
suffering from insured losses. Section 626.878, Florida
Statutes (2008) provides:

Rules; code of ethics. - An adjuster shall subscribe
to the code of ethics specified in the rules of the
department [of Financial Services]. The rules shall
implement the provisions of this part and specify the
terms and conditions of contracts, including a right
to cancel, and require practices necessary to ensure
fair dealing, prohibit conflicts of interest, and
ensure preservation of the rights of the claimant to
participate in the adjustment of claims. (Emphasis
added.)

Although the statute cited above is not mentioned in
Ameriloss' brief, it is the primary authority for the rule and
the concomitant declaratory statement of which Ameriloss
complains.

Although not a party to the proceeding, the six-page
Declaratory Statement resulting from the petition, specifically
addressed Ameriloss' complaint that it had somehow suffered from
retroactive application of rule language adopted months before
its contract with Mr. Lightbourn:

[I]t is clear that AmeriLoss had prior notice that
only a ten percent fee for such services rendered in
connection with hurricane damage was deemed to be
appropriate, because the rule at issue was already in
effect at the time the parties entered into the fee
agreement. When weighing the criteria enumerated by
the controlling case law, the most supportable view
is that the application of the rule in this specific
instance would not constitute an impermissible
retroactive operation. (R-6; emphasis in original.)
contrary to Ameriloss' conclusion (IB-28), Florida
Administrative Code Rule 69B-220.201 does apply to the
Lightbourn contract and therefore the Declaratory Statement
should be affirmed.

Ameriloss claims that it had a letter from the DFS stating that the fee in excess of ten per cent was permissible. Unfortunately for Ameriloss, that letter was issued eight months before the new rule came into effect. The DFS simply says the letter does not apply.

I am not certain what the appellate court will do. Generally, appellants lose. If so, the filing of the class action and the advertising for new clients as noted in my posts may be a method for some class action attorneys to “cash in” on an unfavorable ruling against Ameriloss. Obviously, this contract scenario has been entered into thousands of times with thousands of dollars in fees. The amounts charged and relevant to this situation will be conservatively in the eight figures. Many public adjusting firms are in the same boat with Ameriloss. This is not an insignificant matter if the appellate court upholds the administrative ruling.

As I noted in the beginning of this post, small disputes can quickly get out of hand if not resolved. At this point, the disputed $6,967.29 fee seems pretty insignificant.

One of the topics will be the contractual caps on fees public adjusters can charge in Florida.

To help everybody researching this issue, here is a chronology of the Florida Regulations and Statutes:

Florida Statutes:

626.854 - Public Adjuster Defined - Prohibitions

• May 27, 2009 - Current
• Effective October 1, 2008 - May 26, 2009
• Effective 1995 - September 30, 2008

Administrative Code:

69B-229.051 - Conduct of Public Adjusters.

• September 3, 2006 - Current
• March 27, 2005 - September 2, 2006
• December 18, 2001 - March 26, 2005

69B-220.201 - Ethical Requirements.

• September 3, 2006 - Current
• March 27, 2005 - September 2, 2006
• December 18, 2001 - March 26, 2005

Emergency Rules:

• Effective February 7, 2007 - (Unnamed Storm on February 1, 2007)
• Effective February 1, 2006 - (Hurricane Wilma fees and contracts)
• Press Release on Hurricane Wilma Emergency Rule
• Press Release on Hurricanes Frances and Charley Emergency Rules

The ad stated:

"If You Hired A Public Insurance Adjuster, You May Have Been Overcharged

Have you or someone you know retained a public insurance adjuster to bring or settle an insurance claim and were charged more than 10% commission from 2005 to the present?

...

...If you have retained an insurance adjuster to bring or settle an insurance claim you may have been overcharged. The adjusters are required to limit the percentage they can charge consumers to 10% if your damage occurred during a disaster-related state of emergency, such as a Hurricane, Flood or Fire.

If you have paid more than 10% commission to an insurance adjuster and the claim arose from the disaster-related state of emergency, please contact our offices for a free consultation."

If public adjusters were overcharging, policyholders should be reimbursed. However, I am not privy to these allegations, so I cannot make a specific comment.

I noted in a previous post that a class action lawsuit against a public adjusting firm had been filed on this issue. I anticipate more, given this advertisement.

I plan to analyze what public adjusters can ethically charge based on the fee regulations since 2005 in my free ethics seminar for public adjusters this Thursday in Coral Gables. It is not too late to register; follow the link here or call Kendra Kenney at 813-229-1000.

I noted in the introduction that:

“It is incredibly important for a public adjuster to understand ethical issues that can arise in presenting claims. In order to ethically represent policyholders when they are at their most vulnerable it is important for a public adjuster to appreciate and abide by the ethical rules and obligations under Florida Law. The ethical representation of policyholders is the foundation upon which the system of insurance is designed to operate. Without the system's ethical foundation it cannot achieve its purpose to protect the policyholder.”

One of the most difficult ethical aspects of public adjusting is to not practice law. Many non-lawyers do this everyday. When representing an individual as a public adjuster, it is easy to overstep adjusting duties and provide advice or take an advocate position on legal rights. This is clearly practicing law. Regarding the the unauthorized practice of law in Florida, the Florida Supreme Court has explained:

 

In determining whether the giving of advice and counsel and the performance of services in legal matters for compensation constitute the practice of law, it is safe to follow the rule that if the giving of such advice and performance of such services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the persons giving such advice possess legal skill and a knowledge of the law greater that that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct constitutes the practice of law.

Florida Bar v. Sperry, 140 So. 2d 587, 591 (Fla. 1962). Additionally:

The preparation of legal documents by a nonlawyer, beyond taking down and filling in information to complete a form approved by the Florida Supreme Court, is the unauthorized practice of law. Florida Bar v. Smania, 702 So. 2d 184 (Fla. 1997); Florida Bar v. American Senior Citizens Alliance, Inc., 689 So. 2d 255 (Fla. 1997); Florida Bar v. Schramek, 616 So. 2d 979 (Fla. 1993).

The rendering of services, which could reasonably cause members of the public to rely upon those services to properly prepare legal documents, is the unauthorized practice of law. Florida Bar v. Miravalle, 761 So. 2d 1049 (Fla. 2000).

The use of a business name that may mislead the public and give the expectation that the company has expertise in the field of law is the unlicensed practice of law. Florida Bar v. Davide, 702 So. 2d 184 (Fla. 1997).“

Frankly, many public adjusters know far more law and practical suggestions involving legal aspects of property insurance policies than most attorneys. I find it humorous that a Houston personal injury firm that just started doing property insurance coverage cases is going to provide a seminar to public insurance adjusters. Most public adjusters we deal with have years of experience and could give seminars to attorneys in this field of work. You do not become really good in this field without experience. I have been doing this for twenty-five years, and I learn from some of the most brilliant minds in the insurance claims recovery business everyday—public insurance adjusters.

Everybody has certain obligations to the public. Agents, adjusters and attorneys all play important and distinct roles. I think that many outside the industry do not appreciate how complicated being a property insurance adjuster can be, especially when the public adjuster is trying to accomplish the best result for the policyholder. If you want to be one of those public adjusters, I look forward to seeing you on August 13 and at other NAPIA and FAPIA events in the future.

By electing Frank Artiles, a Florida public adjuster, for the Florida House of Representatives in South Florida, I don't see those kinds of things happening. My law firm is dedicated to helping this become a reality, and we need your help.

On Thursday, August 13, we are co-hosting a fundraiser for Frank Artiles with Miami-Dade County Commissioner Jose “Pepe” Diaz in our Coral Gables office from 6 pm to 7:30pm. Frank is a wonderful person and will make a devoted public servant. We need more bright individuals like Frank Artiles in our legislature who are willing to stand up for the average insurance consumer as Senator Mike Fasano does.

The Merlin Law Group is also presenting a continuing education seminar for public adjusters earlier the same day. At 4:00, I will make an hour-long presentation, Ethical Issues in Presenting Claims. I expect this class to be very interactive, as they usually are when a roomful of public adjusters come together to learn and share with fellow professionals. I have applied for 1 ethics credit for public adjusting continuing education for this class. The following topics are on the agenda:

• Unauthorized/Unlicensed Practice of Law: How to recognize it and to ensure you do not do it

• Unauthorized/Unlicensed Public Adjusting: The legal ramifications of contractors and others associated with the building trade who are not licensed public adjusters and who negotiate insurance recoveries with insurance adjusters

• Code of Ethics: Discussion of the public adjuster's ethical requirement to "put the duty for fair and honest treatment of the claimant above the adjusters own interests in every instance."

• Public Adjusting Contracts: Discussion of waiting periods, signing proofs of loss, appearing for EUOs, excessive fees, and all questions you may have on these topics.

The seminar is in the Westin Colonnade Hotel immediately adjacent to our Coral Gables office. We will host a cocktail party/fundraiser thereafter in our Coral Gables office at 6.

Everybody is welcome to attend the fundraiser. All public adjusters along Florida's east coast should make their way down that afternoon for education, political support, and fun.

You never know what can happen in life until you try. We need your help on this endeavor for Frank.

Public Adjusters can register for the Ethics Seminar by clicking here.

I made a point in Unethical Conduct by Public Insurance Adjusters and Policyholders Cannot be Tolerated that:

“Policyholders need these skilled professionals immediately following a loss so that evidence can be collected and assistance provided to help soften the financial blow of a catastrophe. I have found that if retained within hours of a loss, skilled public adjusters make the insurance product work far better for the insured and there are far fewer re-opened claims because the claim is adjusted right the first time. But this only happens if the public adjuster is trained, skilled, motivated and has sufficient resources to get the job done right.”

I caught flack from some public adjusters for suggesting in the post that any public adjusters act unethically. Maybe they did not read the paragraph above. I was also criticized for my view that binding appraisal is unconstitutional when conducted as an “informal” process in Citizens May Eliminate Appraisal :

“Still, appraisal is not a “right” for policyholders. Citizens management and in-house attorneys made an excellent point that appraisal has no written rules and is subject to abuse. I am surprised that the Florida Supreme Court has allowed appraisal, an informal process, to bind parties. I have long felt that an informal process of binding resolution violates due process. At one time, Florida Courts ruled that the appraisal process was subject to the Arbitration Code. This is no longer the case, and Citizens correctly pointed to the deficiencies of appraisal in its report to the Board of Governors.”

I view issues from the standpoint of my client, the policyholder. In the vast majority of cases, the interests of public adjusters and policyholders are aligned. In the case of the 48 hour rule, public adjusters will love me. One of them, Laura James, who used to work in the insurance restoration field and whose husband worked as a property claims adjuster for Nationwide, wrote two comments in response to Unethical Conduct by Public Insurance Adjusters and Policyholders Cannot be Tolerated. The first stated:

“Chip - Interesting points as always. Like Shirley, I am curious about how to raise public awareness about the existence of Public Adjusters and the fact that we are here to help them through the claims process?

Thanks for all your work on the blog!”

The second is much more in-depth and deserves to be fully quoted. Laura and her husband have extensive field experience. She makes an excellent argument against this ill-conceived law:

 “You make such a good point about the benefit of Public Adjusters being retained right away to represent the policyholder. Two of the biggest challenges Public Adjuster’s must deal with today are the appalling lack of public awareness about our industry and value of services we provide as well as the “no solicitation for 48 hours” law recently enacted in Florida. Both of these problems harm not only Public Adjusters, but also the people they serve---policyholders.

I do not think the Florida Office of Insurance Regulation and those in the Florida legislature realize what actually happens in the first 24 hours of a property loss and subsequent claim and why the “48 hours rule” needs to be changed immediately for the benefit of policyholders as a result of that important time frame. From personal experience previously working from the insurance repair and restoration contractor side of the insurance claim business and now as a Public Adjuster – it is best for the policyholder to immediately retain a public adjuster to ensure that their policy benefits are protected and the evidence of their claim is preserved.

Generally, an insurance restoration contractor who immediately comes to a loss, often at the request of the insurance company's adjuster, starts making suggestions and decisions that dramatically effect coverages and the benefits available following a loss. A typical example of this issue is a water intrusion loss. The insurance repair contractor comes to the loss, sees one small area of what is believed to be mold, and without proper testing, throws on a Ty-Vek suit and then calls the company adjuster to report the entire claim is a "mold claim." This action by the contractor severely limits the coverage available for the policyholder to whatever the mold limitation of the policy happens to be- assuming it is not totally excluded.

In this water loss example, the insurance restoration contractor is, by their actions in the field, “adjusting” the loss without a license. They take these actions often without proper training or even looking at the policy coverages. At the same time, the insurance company, who often sent the contractor to the loss in the first place, now has to pay only a limited loss and one which may be partially or totally excluded. The policyholder ends up with a partially repaired structure, and according to their insurer, limited or no more coverage.

However, IF the policyholder knows there is such an insurance professional as a Public Adjuster that can be retained immediately, a Public Adjuster can be initially consulted and a huge battle over coverage and otherwise lost benefits can be avoided merely from the manner that the loss is linguistically reported and benefits provided for full repair. Public Adjusters are trained to help provide the policyholder with facts and preserve evidence that supports coverage rather than leading to proof and evidence leading to denial or limitation of otherwise available benefits through ignorance.

Some may argue that the policyholder must take responsibility for their claim. Let’s try to remember that these various types of policyholders are dealing with a crisis. The "48 hours rule" generally limits the only advice these policyholders receive as being from the insurance company’s adjuster or the insurance restoration contractor that normally has a longstanding relationship with the insurance company. It is a situation where a policyholder, not trained in the fine technicalities of the policy and not usually being experienced in practical insurance claim decisions, is forced to rely upon the insurance company for guidance. The rule acts so there is no independent advice whether, and under what terms, the policyholder sign the work authorization for the insurance contractor.

The irony is that while all these significant decisions are being made with the help of only the insurance industry representatives immediately following the loss, the "48 hours rules" implies that these policyholders are "too fragile" to be approached by Public Adjusters – who are solely licensed and trained to look out for their rights. Meanwhile, an unlimited number of insurance restoration contractors can approach, solicit, and discuss significant aspects of the loss that will impact the policyholders claim and there is no concern in the law for that. Further, though the policyholder signs the work authorization with the insurance restoration contractor, everybody recognizes who signs the claim checks and who the insurance contractors depend on for repeat business – the insurance companies. The unknown truth to many is that the insurance restoration contract business is a referral industry with insurers and based upon good relations with the insurance companies whom they have repeated and longstanding relations.

There are some very hardworking, ethical restoration contractors who really are trying to do the best thing by the policyholder. I just think that some adjusters rely too heavily on contractor input and "control" the claim benefits through contractors with whom they have longstanding relationships. You cannot serve two masters.

Coverage issues should be handled by adjusters on both sides, and policyholders should be afforded public adjusters at the most crucial stage of the claim--right after it occurs. I believe the "48 hours" law and the insurance industry taint the perception the public has of Public Adjusters. The insurance industry has every financial motive to change the reality of public adjusters as being professional helpers and advisors to consumers of insurance to being portrayed as opportunistic vultures. Checks and balances need to be in place for both sides, and the policyholder should be protected from anyone who could stand in the way of them being fully indemnified after a loss.”

After yesterday's post, I received a number of private questions as well as a public comment from Eric Hyman, an experienced public adjuster. I replied to his comment:

Eric,

I really have no idea how they go about classifying what you have stated. I have no idea how much Citizens pays in attorney’s fees to defend its cases nor how much it pays policyholders for attorney’s fees when it loses. Do you have any evidence to support your allegations? Send it to me, and I would be more than happy to share it.

I appreciate that you are upset that the manner in which you resolve cases with Citizens may no longer be available. You have told me that most of your cases go to appraisal because Citizens never comes close to agreeing with amounts you provide. And, you get significantly more money back for the policyholder.

Indeed, I predict there will be considerable "push back" because a cottage industry of appraisers for each side and umpires may no longer be making fees from the number one source of appraisal--Citizens.

Still, the process is inherently flawed. There is no due process. I have said that since there are no rules, the only rule is to be honest, but do everything you can to win.

In Florida, when the appraisal result is unfair, there is little either party can do about it. Unfairness may occur in arbitration or litigation, but I can assure everyone that they will be able to present their case, subject the opposing view to critical review, and submit the matter to a somewhat independent panel or jury. All of this guaranteed by the due process clauses of the United States and Florida Constitutions.

The other truth is that Citizens management may feel that the appraisal process results in unjust awards favoring policyholders. If so, they should explain why and how the appraisal process favors policyholders over insurers.

My impression is that the cases going to appraisal now have a policyholder who knows to get evidence and make a presentation to show the validity of the claim amount. In the past, insurers would run over policyholders, thinking their appraiser would do all this work. The appraisal process is no longer a "winning" proposition for insurers as it was in the past, and now some insurers are seeking other ways to game the system to lower claims payments to customers.

Citizens makes several valid points in its report, although I disagree with its publicly stated motive for requesting eliminating the appraisal clause.

Given that public adjusters are obtaining more money for policyholders through appraisal and that so many others, such as appraisers and umpires, have made careers in the appraisal process, you can bet those individuals with such significant financial interests oppose Citizens’ move. This is a normal reaction to the possibility significant change.

My opinion of appraisal has not changed much over the past fifteen years since I chaired a sub-committee of the American Bar Association's Property Loss Insurance Committee involving a study of the fairness and procedures of the appraisal clause. The procedures vary by state. Many states have noted the due process concerns and have required the process to be more of an arbitration. Florida's procedure for appraisal is what I call the wild west method. There are no rules. Shoot 'em out, and you better be standing when the smoke clears because there are no second chances for the dead.

I essentially said this when I was asked to be on a Keynote Panel regarding the appraisal process at the Windstorm Conference. While various attorneys, umpires, appraisers, and insurers have tried to set rules through a "Memorandum of Appraisal," that is not required under the terms in insurance policies, statute, or common law.

As an attorney, I always point out that the United States has long held many informal methods unconstitutional. One of the great protections to individuals is a right to have a jury decide controversies. This is a fundamental right with a longstanding history. Alternative methods to resolve controversies must satisfy due process safeguards. I have questioned how a system with no rules does this. Some States, like Florida, allow the informality without addressing constitutional concerns.

Dan Luby, of Precision Adivisors, sent me a private follow-up. It is pertinent to this issue:

"I read your blog today concerning the changes to the Citizens Appraisal clause. I appreciate the attribution.

As a follow up, attached is an excerpt from a recent Citizens filing with the OIR that details the proposed changes to the Appraisal clause in the ‘Homeowners 4 Contents Wind Only Form.’

Appraisal will now be an option available to either party provided that both parties agree to the “terms of a written agreement” to be determined at a later date.

I read this to mean a negotiated ‘Memorandum of Appraisal’ detailing what would be submitted to appraisal, how the appraisal would be conducted and the form of the award. Either party is not obligated to accept a “request” for appraisal.

Scroll down to page 10 of 12 in the policy form. While this filing deals with only one policy form, I would speculate that all of the Citizens policies will be similarly amended.

The complete filing (No. 09-11984) is available at http://www.floir.com/edms/temp1/SessionsPDFs/OnlyOrig09-11984.PDF

Additionally, this new form would require that “any one you hire in connection with your claim” must submit to an EUO if requested. I assume this is targeted towards public adjusters."

This is an important issue and will likely significantly change the way many claims are handled and resolved. I will try to keep everyone informed of these changes.

Most insurance company and independent adjusters log far more hours in training, classes, and supervised situations than most public insurance adjusters. This needs to change.

Policyholders deserve superior adjustment work by trained and skilled public insurance adjusters. FAPIA's leadership discussed mandating standards far higher than those imposed by the State of Florida for membership as well as encouraging the Legislature and Department of Financial Services to go even further regarding testing of new public adjusters.

One of the chief complaints from adjusters and claims managers in the insurance industry is the sloppy estimating and measurement practices by some public insurance adjusters. They imply that the sloppiness is fraudulent rather than accidental. To the extent that is true, it should not be tolerated.

Insurance company and independent adjusters should be able to bring this type of conduct, whether sloppy or fraudulent, to the Office of Insurance Regulation. It is about time that public insurance adjusters are subject to market conduct examinations the same way insurance companies are subject to such examinations. This one regulatory action may help the many professional and honest public adjusters rid the industry of problem public adjusters. I am certain insurers would support public adjusters having the same minimum training requirements their adjusters have. From the policyholder’s perspective, there is no downside.

Over the next several months, I am going to encourage ideas and support for higher standards of professionalism and ethical conduct for public adjusters in Florida.

Policyholders need these skilled professionals immediately following a loss so that evidence can be collected and assistance provided to help soften the financial blow of a catastrophe. I have found that if retained within hours of a loss, skilled public adjusters make the insurance product work far better for the insured and there are far fewer re-opened claims because the claim is adjusted right the first time. But this only happens if the public adjuster is trained, skilled, motivated and has sufficient resources to get the job done right.

Insurance companies do not want to be held accountable for wrongful conduct. "Cheat and get away with it"-- is the mantra of many insurers. This is wrong and it has to stop.

Honest insurers should push for consumer protection laws that hold dishonest insurers accountable. Do they? Not that I have seen. Only crooks and cheats oppose laws that punish cheating--where is the property and casualty insurance industry?

I know most independent adjusters would support these laws. Company adjusters publicly would as well if they were not subject to termination. The property and casualty industry needs to clean itself up. Honest insurers and adjusters should support penalties when others break rules. As Alex Sink suggested yesterday, there needs to be accountability for those that do not honor insuring promises. Who is against that? I suggest that the answer is only those that break those rules.

Yesterday, I tried to teach public adjusters how to prevent otherwise innocent policyholders from wrongfully inflating claims because they believe the insurer will always try to reduce what is rightfully owed. Two wrongs never equal a right. However, many policyholders lack faith in insurance company claims practices and believe they can’t be straight forward and get paid a fair amount. This must stop. Nobody benefits.

A current problem regarding the disclosure of such activities is that catastrophe firms and insurers usually make the individual catastrophe adjusters sign confidentiality and non-disclosure agreements preventing whistle blowing from ever taking place. These agreements should be illegal. Can you imagine any reason society should tolerate contracts that prevent employees from disclosing improper claims conduct? What if the mafia could enforce such agreements? Yet, that is largely why Renfroe sued the Rigsby sisters--to shut them up about State Farm’s multiple engineering reports indicating excluded flood rather than covered wind caused damage to State Farm's customers.

Last night, a former Liberty Mutual adjuster, who is now a public adjuster, told me that while he was reviewing estimates from Pilot Catastrophe Services regarding damage to structures in Texas following Hurricane Ike, he noticed the amounts always seemed low. He took a Pilot adjuster to estimate a structure using the same Means software and the same measurements. He said the estimates were made on computers next to each other. He used the Means database and the other adjuster used the Pilot Means database provided by Pilot. The Pilot estimates were 30 percent lower than the unchanged Means database. I do not know why, but I will call Rodney Pilot to see if he knows. I will report on what I find. Maybe there is a good reason for this and the experienced, insurance industry trained public adjuster is mistaken.

Until then, the lesson policyholders should learn from this:

Get your own estimates and professional help anytime you have a significant loss.

I first met Alex Sink in Tallahassee shortly after she became CFO. In our initial meeting, she seemed very concerned with the ability of Florida's Catastrophe Fund to raise money quickly if needed. Several months later, she reached a deal with Warren Buffett and bought an option for Florida to receive funds from Buffett's Berkshire Hathaway in the event of a catastrophe. This was long before the financial collapse last year, and I felt she was a genius to have figured out the oncoming credit collapse months before anyone else. Maybe all her years as a banker gave her a much better appreciation for the upcoming financial mess we have been going through.

Sink applauded FAPIA for raising the standards of Florida public insurance adjusters. Indeed, Sink noted that FAPIA has called for higher testing and educational requirements for those obtaining a license, has requested stronger ethics requirements, and made experience a requirement through an apprentice program. She urged the group to promote more professionalism in the trade and to always look for ways to protect insurance policyholders from those that are unscrupulous.

She said that she supported the gradual rate increases for Citizens property insurance because it was not fair that others had to subsidize Citizens so that it could offer rates that are far from actuarially sound. She was happy the Catastrophe Fund exposure was lessened, although she is still concerned about Florida’s financial exposure should a major hurricane strike southeastern Florida.

In the future, she felt Florida's government needs far greater transparency in operations so people know how our government runs and how laws are made. She felt that Shawn Shaw as the Insurance Consumer Advocate was a great appointment because many in Tallahassee forget that the people, not insurance companies, vote them into office. She indicated Shaw was a strong advocate for consumers. Most, including me, agree.

My impression was that she knows insurance consumers need professional help. She clearly suggested that FAPIA continue its longstanding position with an eye towards serving insurance consumers through higher and stronger professional requirements. She is right on that point. Florida deserves highly educated, trained, professional, and ethical public insurance adjusters.

Fifteen years ago, there were few construction firms dedicated to property insurance recovery, repair and restoration. Today, it is a huge industry, with many firms actively involved in the business on a national basis. The types of construction related vendors vary from small board-up companies, to water dry-out companies, to well-known vendors such as Servicemaster. Major construction companies such as Belfor USA work almost exclusively in major catastrophe insurance construction. The growth is largely due to the bottom line margins, which typically vary from thirty-five to forty-five percent of the total repair. Catastrophe reconstruction can be very lucrative, and the secret is out in the construction industry.

The National Association of Public Insurance Adjusters (NAPIA) has a longstanding ethical rule that its members not act as repairmen and contractors on losses they adjust. The reasons are obvious: the many conflicts of interest. Adjusters determine a theoretical amount of value of damage. The policy wording, benefits, timing of the benefits, laws and regulations affecting the policy all go to determine the amount the policyholder may take as money, repair as it was, repair differently or replace at another location. There are an infinite number of calculations which can be considered regarding the value of a loss such as scope of loss, values of materials, labor, skill of labor needed, time needed, and material quality. Adjusters determine the measures and make estimates to arrive quickly at a full and fair amount of value.

The people and entities doing the repair work have another mission, a defined repair determined by the policyholder at a profit. The policyholder obviously wants it done as inexpensively as possible, and the repairmen want that defined work done for the maximum willing to be paid by the policyholder. So, what happens when the party paying the repairman is the insurance company and not the policyholder? It does not take long for most to figure out that the policyholder may not be getting the full benefit of the insurance product. Even the insurer may subject itself to a bargaining party primarily interested in increasing profit. And this is the simple concern.

Contractors cannot practice law. They cannot practice public adjusting. Indeed, Texas recognizes the conflict: contractors cannot hold a license as a public adjuster, public adjusters cannot hold a license as a contractor. However, many restoration contractors are doing both. It is often illegal as well as unethical, but there is little regulation because few seem to be raising the issue.

In the field, I am finding many insurance recovery contractors that get construction jobs with one page contracts that ambiguously indicate they will fix the repair for the amount paid by the insurance company. To get the business, many promise they will do the job and "absorb" the policyholder's deductible. The work is started, and the contractor then "negotiates" the insurance claim with the insurance company adjuster. Whether the insurance policy is paying all benefits for the quality of the work anticipated or not, the contractor determines the quality of repair based on the amount of money the insurance company agrees to pay. Does anybody ever consider that the insurer could benefit by having a lesser scope of repair or lesser quality of repair and choose not to question unusually high construction costs? Would the insurance company question the construction costs if the bottom line was less than the full amount it owed? This happens frequently. The policy becomes a repair contract rather than one of indemnity.

Some insurers are realizing that the restoration companies are overcharging the entire job as well. Many insurers and contractors have close relationships; contractors have often introduced insurance adjusters to the policyholder. More than ever before, our firm is called by policyholders when the relationship between the insurer and contractor has broken down.

This issue deserves more discussion by everyone in the industry. It is clear though that only attorneys practice law, public adjusters adjust for policyholders, and contractors should do neither--they build and construct. Contractors have the education and licenses required to build; they do not have the education or licenses required to give legal opinions and interpret insurance policies.

At the Massachusetts Association of Public Insurance Adjusters and National Association of Public Insurance Adjusters Fall Educational seminar last year, I started a heated floor debate regarding the topic of public adjusters appearing for examinations under oath. Participants offered the following options when an insurer demanded that a public adjuster appear for an examination under oath and the policy did not clearly mandate it:

1. An insured should write and demand for the public adjuster to do so.

2. File a Declaratory lawsuit determining what to do.

3. Appear for the examination.

4. Appear on a case by case basis.

5. "Hell, no! We won't go!"

I try to work it out on a case by case basis. My client is the policyholder--not the public adjuster. If it is at this stage of a proceeding, my client, the public adjuster, and I all want the same thing--getting paid what is due under the policy as quickly as possible. I try to remind everybody on my side of this concern while they are pounding on tables in frustration and getting upset at the insurance company because it could generally find out the same information by meeting, talking in person or a phone call.

The frustration is understandable. From the policyholder's perspective, many examinations under oath are taken months following the loss and are scheduled by the insurer's attorneys unilaterally and without a good faith attempt to coordinate time and documents requested. Once a request is made to change the time, the insurer's attorney often gives alternative times, months away, despite delay which should be avoided as a part of the insurer’s good faith obligations to the customer. Some insurance companies select defense attorneys who are argumentative and treat policyholders without respect. If the insurer applied the Golden Rule, they know they would fail miserably.

Given this scenario, my mission is to move the matter along while protecting my client and preserving claims for extracontractual damages caused by delay, lack of insurer good faith during the examination and document review process, and poor initial insurer adjustment. I have filed lawsuits when the examinations take too long, lead to a game of 101 questions, and where people the insurer demands to be examined are not required to be examined under the policy. Still, most clients would rather get to the purpose of the claim--getting paid and moving on with business and life. Most public adjusters have the same interest as well.

Sometimes, the public adjuster is a far better witness than my client. The public adjuster may appear more truthful, professional, provide quicker and better answers, explain the loss, the values, why the money is owed, and simply provide a better appearance of truthful, honest knowledgeable information than the policyholder. Often, this is all the insurance company needs in the first place and there are times when I pose no objection to the public adjuster appearing for the policyholder in an examination under oath. The problem is talking the policyholder or public adjuster into it because either may want to legally object. Again, I am focused on getting my client paid as soon as possible. If that practical concern is best served by not objecting to the possible illegal request by the insurer, I may not object and even strongly encourage the public adjuster to appear for the examination under oath.

Many times, I suggest that the insurer cannot legally take an examination under oath, but will suggest that the public adjuster meet with the insurance company's attorney, answer questions and even give a sworn statement, so that information can be exchanged in a framework that is quicker and will likely get the claim adjusted and paid. This practical alternative seems to avoid the legal questions surrounding an examination under oath and possible declaratory lawsuits regarding the process.

I treat the request for a public adjuster's examination under oath on a case by case basis. Whether a public adjuster’s testimony is binding on a policyholder is questionable. Accordingly, it is always important to note that the claim is the policyholder's claim and not that of a person hired to assist in determining the amount owed under the policy. However, the public adjuster is usually an independent contractor who does not make binding contracts, agreements, or is authorized to give legally binding testimony. Most state licensing authorities do not allow public adjusters to do so.

Are there other significantly different views than mine? Absolutely. Some policyholder attorneys file suit right away. Even in my law firm, there are differences of opinion as to the proper methodology in a given case--but I emphasize to the other attorneys that most policyholders want money sooner rather than later and without lawsuits. Still, some clients are best served by such lawsuits and even I have departed from my general course and filed a lawsuit when it served my client’s best interests.

This debate is highlighted by a recent article in the American Bar Association's Tort and Insurance Practice Section's publication, The Brief. The article, “The Power To Compel Submission Of "Others": Are Public Adjusters Subject to Examination under Oath Provisions?” written by insurance defense attorney, Keala C. Ede, suggests that public adjusters may be compelled to appear for examinations under oath. Her conclusion was stated early in the article:

"Notwithstanding the opinions expressed by Goodman and Hammond, the following survey of relevant jurisprudence indicates no prevailing view as to the applicability of EUOs to public adjusters, although cases suggest that such examinations can and should apply in the right factual circumstances."

She explains and argues for this in her final conclusion:

"Applying all of the foregoing cases, an EUO provision applying to "others" in addition to the insured, in conjunction with a factual showing that a public adjuster is within the insured's control, would likely apply to that public adjuster. It is nevertheless arguable that, given the detailed and inextricable role that public adjusters play in adjusting losses for insureds, public adjusters should be subject to an EUO if policy language includes "others," even without a factual showing that a public adjuster is subject to the insured's control.

Cases such as Gipps, where the public adjuster prepared and submitted two exhibits and was held subject to examination thereon, and Jacobs, in which the insured had so relied upon its public adjuster that it was unable to answer questions about the accuracy of the estimate prepared by the public adjuster, support the argument that public adjusters that "handle every detail of the claim" and "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 [insured]" should be subject to an EUO without requiring any showing by the insurer that such an adjuster is within the insured's control. Indeed, in rebutting Goodman's argument, Hammond referred to the unpublished opinion of Active Fire Sprinkler Corp. v. American Home Assurance Co., which Hammond characterized as holding that the misrepresentations of a public adjuster are attributable to the insured. Like Gipps and Jacobs, Hammond's characterization of Active Fire Sprinkler Corp. would suggest that a public adjuster retained by an insured is by its very nature under the insured's control.

Based on the conflicting views of cases such as Gipps, Payne, and Florida Gaming Corp., however, if either the policy does not extend to "others" or the facts do not indicate that the insured has the power to compel submission of its public adjuster to examination, there can be no clear prediction of whether such an EUO provision would necessarily apply to a public adjuster."

So the debate continues without a clear answer. I am certain all insurers will say they can compel public adjusters to examinations under oath and use them, as they do policyholder examinations, argue defenses such as material misrepresentation possibly voiding the policy. Policyholders should fight this position.

I will look at each situation and policy on a case by case basis. I will try to do my best to help my client to cooperate with the insurer and get the claim paid as soon as possible while protecting my client and preserving my client's rights.

Significantly, it should be noted that "cooperation" is not defined as the slavish obedience to the demands of the insurance company. It is a joint process where both the insured and insurer act in good faith and for common purpose--getting full policy benefits owed to the policyholder as soon as possible.

Sometimes, insurance company attorneys and their client adjusters fail to remember that the policyholder is as much the customer after the loss as when the insurer sold the policy before the loss.

In my firm, there are some competing views on this topic. In my view, "better safe than sorry." Answer questions honestly and get it over as soon as possible. I generally require my clients to turn over all requested documents in their possession, including tax returns, when there is even a slight chance of relevance.

A question would have to be outrageous before I told a client not to answer because there is little upside and a significant potential downside--denial of an otherwise valid claim. In most cases, I ask a very simple question which usually points to what my client should do- "Why risk not slogging through the questions?"

As indicated in Goldman v. State Farm Fire Gen. Ins. Co., 660 So. 2d 300, 305 (Fla. Dist. Ct. App. 4th Dist. 1995):

"A provision... requiring the insured to submit to examination under oath must be complied with, and, if breached, the insurer will be deprived of a valuable right for which it had contracted... American Reliance Ins. Co. v. Riggins, 604 So. 2d 535, 535-36 (Fla. 3d DCA 1992)(insured is absolutely required to submit to an examination under oath when requested by an insurer). The purpose of the examination under oath provision was set forth by the United States Supreme Court in Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S. Ct, 507, 28 L. Ed. 76 (1884), in which the court stated that the object of the policy provision is to enable the insurer to possess itself of all knowledge and all information as to other sources and means of knowledge, in regards to the facts, material to its rights, to enable it to decide upon its obligations and to protect it against false claims."

So what happens if you do not fully comply with answers and requests for documents? Haiman v. Federal Insurance Company, 798 So. 2d 811, 812 (Fla. Dist. Ct. App. 4th Dist. 2001) answered that question in this manner:

"total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law. If, however, the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury."

Again, why risk it? In the vast majority of situations the wiser course is to go through the examination under oath and then get paid.

Most Courts take a broad view of relevance and materiality when dealing with examination under oaths of insurance claims. Fine v. Bellefonte Underwriters Ins. Co., 725 F.2d 179, 184 (2d Cir. N.Y. 1984) provides an example of the logic:

"It thus appears that materiality of false statements is not determined by whether or not the false answers deal with a subject later determined to be unimportant because the fire and loss were caused by factors other than those with which the statements dealt. False sworn answers are material if they might have affected the attitude and action of the insurer. They are equally material if they may be said to have been calculated either to discourage, mislead or deflect the company's investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate."

So, I get my clients ready for the same boring questions, background and otherwise, that are asked by the insurance counsel. I have even written out answers in advance and give them to the insurance company as we start. That usually upsets the opposing counsel. I don't know why, since we get through it all faster. I want to get to my favorite topic of claims--how much is getting paid and when.

For public adjusters, never represent the policyholder at an examination under oath. Do not object, interfere, or tell the policyholder what to do or say. Such conduct would be the unauthorized practice of law in most states. Policyholders going into examinations under oath should hire counsel. It is a serious proceeding with significant legal consequences.

During a break in my presentation at the NAPIA annual conference, Depreciation Should Not Be Taken for Partial Losses That Are To Be Repaired, Dick Tutwiler, a very experienced public adjuster, approached me regarding an ethical obligation he felt I overlooked in the discussion of ethical adjustment of glass door and window claims. He explained:

Public Adjusters have an ethical obligation to submit claims only after conducting a reasonable and honest investigation. Many older glass doors and windows have normal wear and tear and pre-existing loss issues which require the public adjuster to investigate the pre-existing nature of the items rather than to simply submit a claim for all damage seen.

His point is well taken. Adjustment requires investigation and evaluation of damage as well as coverage. Adjusters, whether for the public or the insurance company, are ethically obligated to complete these two primary duties of adjustment. Public adjusters should not place their policyholder clients in the position of having to explain or answer for fraudulently appearing claims without merit because of poor or non-existent investigation into the prior nature of items before a loss occurred.

I neglected to mention this very important point. There is a concern from many leaders in the public adjustment field that the poor work of some creates a public perception that public adjusters care about one thing--how big the claim can be made. A public adjuster’s job is to accurately determine the full amount of the insured's loss. Ethical public adjusting is not a wrongly evaluated claim amount following a cursory investigation. I am certain most professional public adjusters feel the same way and expect their colleagues to perform to this standard or get out of the business in order to maintain the integrity of the profession.

Most public adjusters active in NAPIA and FAPIA have expressed Tutwiler’s concern in a number of different ways. I should have addressed it better in my recent speeches in Florida, Texas and California.

On another note, Sandy Burnette correctly made a comment where I went too far. In response to my post, Is the State Farm Policy Really Worth Anything?, Sandy Burnette made the following observation:

"While I try to resist responding to all your posts, and it sometimes takes quite a bit of restraint to hold myself back, once again I find you have crossed the proverbial line.

Your opening sentence questioning "what is the value of insurance if it doesn't cover an insured loss" is beyond misleading, it is simply untrue. By definition, an "insured loss" is covered.

Suggesting that "insured losses" are not covered by insurance companies is an oxymoron. (Yes, claims are often wrongfully denied. But we have courtrooms to make sure that is corrected.)

It makes for sensational reading when you write those things and it creates a platform for you to once again rail at insurance companies, but unfortunately it just isn't true. This post is nothing more than an expression of the belief that anything bad that happens to somebody "ought" to be covered by their insurance policy."

His comment went on far beyond this quote, but that point is well taken. I wrongly wrote the following line in the context of that post:

"What is the value of insurance if it does not pay for insured losses?"

That is a great and accurate line I have often used in bad faith cases, but not accurate where there is no coverage. I should have written:

"What is the value of insurance if the policyholder is not informed that it will cover only a few losses? How would the public perceive the value of State Farm's product if it fully advertised its positions of what is not covered under the product?"

I think the point is obvious--the value is far less. The security advertised by State Farm in no way reflects how State Farm writes exclusions into its product. Some may say that the ads are disingenuous because they do not adequately warn State Farm policyholders about the common accidental risks of loss that State Farm excludes in its product form. That was my point.  

Policyholders and the public should be made aware of this in advance rather than after purchasing the product or after the loss when it is too late to do anything about it.

I do not want State Farm to be run out of business. As the industry leader, I would hope that somebody in its very able and bright management would critically review these issues. If State Farm changes, many other carriers will do the same. If not, I hope that others with me will raise the issue and make State Farm change through public policy or by purchasing from insurance companies that do not provide false promises of security.

There are other responses to Burnette's comment that need a reply in a later post. I will try to do better in expressing my opinions and not forgetting information. Thanks to all who comment.

I find that the best public adjusters show up for this meeting. Those who say they do not need to be here or that they are better than those who are here are wrong. We all can learn and get better at what we do for a living. At NAPIA’s annual meeting, a bunch of smart and motivated colleagues get together to debate and share experiences or views on how to do insurance adjustment better. There is no better place to learn.

While I know everyone is busy and training is expensive, all public adjusters should join NAPIA, go through the educational offerings, obtain certifications, and attend these meetings. Little tips and learned perspectives lead to better and quicker recoveries for the policyholder. I will catch some grief from public adjusters who are not here, however they should be here.

When considering which public adjuster to hire, policyholders should determine how dedicated the public adjuster is to the profession of adjusting as well as that person’s knowledge and skill. Credentials matter. The training and education required to obtain certifications may reflect how dedicated the public adjuster is to your claim. Talk of success is cheap; policyholders should carefully check the background, training and experience of the person they select to represent them in an insurance claim.

The article suggests that a public adjusting firm violated specific fee rules which are mandated by the Florida Office of Insurance Regulation:

"The complaint in the lawsuit seeks class action status and alleges Ameriloss
overcharged some clients. Specifically, the suit alleges Ameriloss sought fees of 33.5 percent for adjusting a claim by Clyde Lightbourn related to Hurricane Katrina in 2005, when state law limited fees to 10 percent.

Lightbourn attorney Lance Harke, of Harke & Clasby in Miami, said his client
argued with Ameriloss about the fee, but the company insisted a third was the “standard” amount, and Lightbourn was desperate to get additional money for needed repairs.

“It got us pretty angry to think someone in that situation could be taken
advantage of in this way. It’s price-gouging,” said Adam Moskowitz, an
attorney with Kozyak Tropin & Throckmorton in Coral Gables, who is handling
the lawsuit with Harke.

Lightbourn received a favorable declaratory statement from the Florida
Department of Financial Services dated Jan. 13 that said “the public
adjusting firm [Ameriloss] could not properly charge a fee in excess of 10
percent under the specific facts of this case.”

Most public adjusters charge fees no more than ten percent. In the vast majority of the claims I review, public adjuster services result in a recovery far greater than the ten percent fee and everybody is very happy, except the insurance company.

My primary concern is a longstanding one addressed repeatedly by most leaders in the public adjuster field--public adjusters must not practice law. Doing so is illegal and will subject public adjusters to fines, loss of their licenses and jail. It will certainly lead to calls by insurers to prohibit public adjusting. The public adjusting industry must remain vigilant to prevent errant public adjusters from committing acts that endanger the profession and service for all: providing legal advice, giving legal opinions, and arguing law.

It is very easy to overstep the bounds of public adjusting and engage in the practice of law. For example, when a public adjuster advises a client to not file a lawsuit and go to appraisal or administrative appeal, that is practicing law. Whenever a person tells another what type of legal procedure should be taken to resolve a dispute where competing legal benefits and rights are at issue and need analysis, that is the practice of law. People who are not lawyers do this everyday.

This example, and hundreds of others like it, were a primary concern of the late Paul Cordish, the General Counsel for the National Association of Public Insurance Adjusters. Virtually every annual address Cordish presented to public adjusters had remarks and warnings about not practicing law. In my discussions with him, it was obvious he was concerned that some in the audience listened, but failed to behave accordingly. We both recognized how legal analysis aids adjustment disputes and why public adjusters so often fall into the trap of acting like lawyers and practicing law. The problem is that it is illegal--criminal in most states.

Public adjusters help policyholders in a number of different ways. There are many bright and dedicated people who spend their life helping policyholders obtain the full benefits owed following a disaster. I am humbled to be acknowledged as a past National Association of Public Insurance Adjusters Co-Person of the Year. I suggest that all public adjusters realize the significance of Paul Cordish’s warnings. If a class action over a fee amount has been filed, how many public insurance firms could be sued for routinely practicing law?

In this case, my instruction to public adjusters is simple: Just Don't Do It!

In the post, The TWIA Roof Damage Memo: Checking Basic References to Resolve Adjustment Questions, I showed that the TWIA claims memo is wrong based upon the most basic insurance training available to rookie adjusters. Then, in the post preceding this, Roof Repair Methods Prove TWIA is Wrongly Denying Roof Claims, it was shown how roofers and the manufacturer's of shingle roofs appreciate the need to repair shingles that have seals which are broken from a hurricane's high winds and how to fix them. Maybe the TWIA claims executives sitting behind desks in Austin do not know that adhesive seals are a tangible substance or their purpose on roofing shingles. Or, maybe they have been going to HAAG Roofing Seminars and learned a new trick on how to avoid paying for roof shingle damage. HAAG Engineering is good for my business, but not good for policyholders with an insurance claim.

What about the insurance coverage caselaw regarding "direct physical loss?" The case discussions I like best to help those understand "direct physical loss" are Ward Gen. Ins. Services, Inc. v. The Employers Fire Ins. Co., 114 Cal. App. 4th 548, 7 Cal. Rptr. 3d 844 (2003) and Meridian Textiles, Inc. v. Indemnity Insurance Co. of North America, 2008 U.S. Dist. LEXIS 91371, 2008 AMC 1411 (C.D. Cal. 2008).

The facts of Ward involved loss of the insured's computer data which was mistakenly deleted. The insured filed a claim to recover the cost of recovering the data and the business loss incurred from temporary loss of data. The insurers denied the claim on the ground that the policy required a direct physical loss before there would be coverage. The court held computer data was not a tangible or physical item and a physical loss, which did not happen, was required in order to trigger coverage.

The Court first provided a definition for direct physical loss:

"Neither party submitted any evidence suggesting that the phrase "direct physical loss" has some technical meaning or special meaning given by usage. Accordingly, we interpret these words in their ordinary and popular sense to determine whether they impart a clear and explicit meaning in the context of the losses claimed against the insurance policy. We conclude they do.

The word "physical" is defined, inter alia, as "having material existence" and "perceptible esp. through the senses and subject to the laws of nature." (Merriam-Webster's Collegiate Dict. (10th ed. 1993) p. 875.) "MATERIAL implies formation out of tangible matter." (Id. at p. 715.) "Tangible" means, inter alia, "capable of being perceived esp. by the sense of touch." (Id. at p. 1200.) Thus, relying on the ordinary and popular sense of the words, we say with confidence that the loss of plaintiff's database does not qualify as a "direct physical loss," unless the database has a material existence, formed out of tangible matter, and is perceptible to the sense of touch."

The Court then ruled against the policyholder under reasoning that other courts, including one in Texas, disagree:

"...the loss of a database is the loss of organized information, in this case, the loss of client names, addresses, policy renewal dates, etc.

We fail to see how information, qua information, can be said to have a material existence, be formed out of tangible matter, or be perceptible to the sense of touch. To be sure, information is stored in a physical medium, such as a magnetic disc or tape, or even as papers in three-ring binders or a file cabinet, but the information itself remains intangible. Here, the loss suffered by plaintiff was a loss of information, i.e., the sequence of ones and zeroes stored by aligning small domains of magnetic material on the computer's hard drive in a machine readable manner. Plaintiff did not lose the tangible material of the storage medium. Rather, plaintiff lost the stored information. The sequence of ones and zeros can be altered, rearranged, or erased, without losing or damaging the tangible material of the storage medium."

However, the Court also noted a number of examples of "direct physical loss" that provide coverage:

"...in Hughes v. Potomac Ins. Co. (1962) 199 Cal. App. 2d 239 [18 Cal. Rptr. 650], heavy rains caused the backyard of plaintiff's insured dwelling to slide into a creek, but the structure of the building itself was not damaged. The court held the first party insurance policy covering physical loss and damage to the "dwelling" covered plaintiff's loss. This decision does not stand for the proposition that loss of or damage to intangible property can constitute a physical loss. Quite clearly, the loss of the backyard was a physical loss of tangible property. The essential question decided by the Hughes court was whether the insured "dwelling" included the ground under the building.

...in Western Fire Ins. Co. v. First Presbyterian Church (1968) 165 Colo. 34 [437 P.2d 52], gasoline had accumulated in the soil around the insured building, infiltrating and saturating the foundation and making the structure uninhabitable. The court found the loss of use was covered by an insurance policy insuring against the consequential results of a direct physical loss. ( Id. at pp. 38-39.) Again, this case does not stand for the proposition that loss of intangible property can constitute a physical loss. A physical loss occurred when the foundations became saturated with gasoline. The essential question decided by the First Presbyterian court was whether the resultant loss of use could be recovered under the policy.

...in Azalea, Ltd. v. American States Ins. Co. (Fla.Dist.Ct.App. 1995) 656 So. 2d 600, a sewage treatment plant was vandalized by the dumping of an unknown chemical into the system. Inter alia, the chemical destroyed a bacteria colony, which was an integral part of the sewage treatment facility. ( Id. at p. 602.) The court found the loss was covered by a policy insuring against direct physical loss....

...in Retail Systems v. CNA Ins. Companies (Minn.Ct.App. 1991) 469 N.W.2d 735, a third party liability policy covering "physical injury or destruction of tangible property" was held to cover damages for the loss of a computer tape containing the results of a voter survey conducted by a political party. The computer tape, together with the data it contained, was found to be "tangible property," and the measure of recoverable damages was enhanced by the value of the lost data stored on the tape. But the condition of coverage, the loss of tangible property, was plainly satisfied by the loss of the tape.... "

In Meridian Textiles, the Court's discussion is even more helpful to our roofing situation:

"[t]he requirement that the loss be "physical," given the ordinary definition of that term is widely held to exclude alleged losses that are intangible or incorporeal, and, thereby, to preclude any claim against the property insurer when the insured merely suffers a detrimental impact unaccompanied by a distinct, demonstrable, physical alteration of the property.

10A Couch on Ins. § 148.46 (3d ed. 2005) (citing Commercial Union Ins. Co. v. Sponholz, 866 F.2d 1162 (9th Cir. 1989) (finding that marine insurance policy did not cover defect in title, which did not constitute physical injury)....see e.g., Farmers Ins. Co. v. Trutanich, 123 Ore. App. 6, 8, 858 P.2d 1332 (Or. Ct. App. 1993) (concluding that under Oregon law odor from methamphetamine "cooking" "was 'physical' because it damaged the house"); Yale Univ. v. CIGNA Ins. Co., 224 F. Supp. 2d 402, 412-13 (D. Conn. 2002) (concluding that while plaintiff could not seek coverage under an all-risk policy for "mere presence of asbestos-and lead-containing materials in its buildings," it could seek coverage for the "contamination of its buildings by the presence of friable asbestos and non-intact lead-based paint").

For example, in Glens Falls Ins. Co. v. Covert, 526 S.W.2d 222 (1975), the insurance policy provided coverage against "ALL RISKS OF PHYSICAL LOSS OR DAMAGE" to certain vehicle safety stabilizers owned and sold by the insured. Id. The stabilizers fell from a storage area to the floor. Id. However, because the stabilizers were sealed units, they could not be inspected for damage. Id. Thus, it was not known if the stabilizers suffered any physical or internal damage. Id. The manufacturer of the stabilizers withdrew its warranty, and the insured decided not to sell the units, concluding that the units lost their merchantability. Id. In affirming the trial court, the Court of Appeals held that although the insured decided that the units could not be sold without their warranties, "under the clear language of the policy of insurance . . . , that was a type of loss not covered." Id. The court concluded that because "there was no physical loss or damage," the insured could not recover...

Similarly, in Columbiaknit, Inc. v. Affiliated FM Insurance Co., 1999 U.S. Dist. LEXIS 11873 (D. Or. 1999), relied upon by defendant, the court held that under an all-risk insurance policy providing coverage for physical loss or damage, the plaintiff must "show that a physical loss occurred to covered property."....

The court noted that "if an article of retail clothing has an odor strong enough that it must be washed to remove it, (and the garment therefore cannot be sold as new) it has sustained physical damage and would be covered under an 'all-risk' property insurance policy."... The court reasoned that on the other hand, a retailer's "decision not to sell the garment as new, in the absence of distinct and demonstrable physical change to the garment necessitating some remedial action that would preclude honestly marketing as first quality goods, is not a covered loss."... The mere "alteration of property at the microscopic level does not obviate the requirement that physical damage need be distinct and demonstrable." Id. The court thus held that to recover, the plaintiff had to demonstrate that its garments and fabric had been water-soaked, that they had developed an odor, mold, or mildew, or that the goods had been physically changed in such a way that the goods would develop an odor, mold, or mildew." 

From this legal perspective, the substance which makes up the adhesive material on or applied to roofing shingles is tangible. It can be felt, measured, and seen. Roofers tell me that the adhesive property of the "seal" can even be measured. Policyholders will need to prove that the winds and debris carried in the winds from Hurricane Ike caused an alteration to the adhesives which formed seals to the roofing shingles. I suspect that many newer and better maintained roofs suffered less of this damage than older and less maintained roofs and shingles.

Adjusters and policyholders need to understand that finding shingle damage is not done from the ground--unless you do not want to find any damage. You have to closely inspect the shingles. Roofers tell me that one does pull up the shingles with your hand to see if the seal is broken, unlike the directions in the TWIA memo. But, be careful. Inspections can damage the roof; and, possibly damage you, if you fall.

One last warning to all who are not attorneys: do not take this post, or copy it, and start practicing law by arguing what cases mean to the insurance company or TWIA. This warning is especially applicable to public adjusters.

I am off to Rome celebrating my fiftieth birthday. Guest Bloggers will take over for the next two weeks

Ciao. 

Mary Fortson and I were asked by the policyholder's counsel if we could file such a brief. After looking at the issues, we started laughing because our library had an insurance industry manual about this topic. It clearly indicated that coverage existed for the type of "earth movement" that damaged the policyholder's property. Why would the insurance industry publish an adjustment manual on something that was not covered?

If you have the time and want to learn how to better interpret insurance policies, read the Amicus Brief we filed. The portion involving the reference materials is quoted below:

"The construction applied by the Third District suggests that coverage for “blasting” damage will never be covered. Yet the American Insurance Services Group publishes a pamphlet entitled Blasting Damage and Other Structural Cracking, a Guide for Adjusters and Engineers (3d ed. 1990) that teaches first party property adjusters how to adjust for the type of damages appellant’s are claiming. It states, in part:

If possible, inspection of the damage should be made jointly by adjusters representing the liability carriers and property insurers. The adjusters should always make a point of telling the property-owner who the company representatives are, what companies they represent, and what the purpose of the visit is.

If the casualty interests agree that liability exists, they may be willing to take over the adjustment. But if the direct property adjuster is convinced that the blasting did not cause the damage, his company may wish to consult and cooperate in the investigation and defense of the claim with the blaster and his insurance carrier, if any.

In those cases where the adjustment is concluded by property insurance carriers, the company may wish to ascertain from counsel whether the blasting took place in an absolute liability state, or whether it is necessary to prove negligence before the blaster can be held liable….

Blasting Damage and other Structural Cracking at 4-5. Thus, it is obvious the insurance industry recognizes that blasting type damages are covered under their standard policy terms or they would not make a specialized booklet for their property adjusters and engineers dealing with the nuances of such losses, including subrogation recoveries after paying their policyholders.

In this case, the all-risk homeowners policy should have been construed so that the exclusion would be found ambiguous, as it reasonably could be construed. Thus, the exclusion will apply to only naturally-occurring, widespread disasters, which is the construction found to apply in a multitude of instances in other jurisdictions, as set forth in the Petitioners’ Initial Brief. In this manner, the public (and insurers) are protected from insurers becoming insolvent when widespread damages from earthquakes, volcanoes and the like occur. Yet, the small number of isolated “blasting” claims can be paid, eliminating devastating financial damage to isolated policyholders.

Further, as to the named peril personal property portion of the policy relating to “explosion”, rather than finding the inconsistencies to favor non-coverage, the court should have, again, construed the policy in favor of the policyholder.

Significantly, in a treatise published by the National Underwriter company, when discussing homeowners policy coverage interpretation, the author notes that, in the ISO policy form, the term “explosion” is: “neither defined in the policy, nor is there any modifying language following the word so that a broad range of ‘explosions’ may be covered.” Diane W. Richardson, Homeowners Coverage Guide Interpretation and Analysis 48 (National Underwriter Co. 1999). Again, the interpretation adopted by the Third District in its opinion is incorrect. Even the insurance industry recognizes a different interpretation of “explosion” than that interpreted by the Third District."

I credit New York attorney Eugene Anderson and claims consultant, Gary Fye, for encouraging me to build a law library with insurance industry reference materials. Every good policyholder attorney needs to make this type of investment if he or she is serious about doing this line of legal work at the highest level.

We have books about the history of various insurance companies, advertisements, claims manuals, treatises, and current and ancient industry magazines. We even have a record with advertising songs State Farm has used to sell its insurance. Those songs come in handy when we show State Farm’s promises at the point of sale.

The bottom line is that courts and insurance defense attorneys have little to say when the insurance industry publishes materials which demonstrate that an insurance policy covers a loss.

Representing policyholders in the presentation and adjustment of a claim is very demanding. Public adjusters have to be experts at coverage interpretation, construction methodologies, construction pricing, contents pricing, understand how statutes and case law effect recovery, negotiation, and hundreds of other technical fields. A person could spend a lifetime on just one aspect. It takes dedication and experience to do the job right.

A number of the public adjusters in the audience were former insurance company adjusters. The experience of working for, and being trained by, an insurance company is invaluable to a public adjuster. I paid former State Farm adjusters who switched to the "side of angels" a compliment by remarking that I believe State Farm has more thorough training available for its first party property adjusters than any other personal lines insurer. States need to make certain Public Adjusters have rigorous requirements for continuing education. As in any trade dealing with the public where serious issues are at stake, the consumer can be harmed by those who ineffectively perform their job. Public adjusters need more education--especially those with minimal experience in the insurance industry.

Ethics was the first topic of the seminar. Public adjusters have a tendency to practice law without realizing they do it. It is hard to prevent because insurance contract interpretation requires an understanding of statutes and cases interpreting insurance regulations and policies. Public Adjusters must understand insurance contracts. Knowing how they effect an adjustment can be used to provide greater benefits to the policyholder, and is the public adjuster’s job. However, the interpretation and providing legal advice to consumers is not adjustment, but the practice of law.

Many insurance adjustment issues involve overlapping practical and legal coverage issues. Here are some of the other topics we covered in Friday’s seminar:
 

• Flood Insurance Claims and Regulations
• Proofs of Loss
• Replacement Cost
• Replacement at Another Location
• Overhead and Profit Calculations
• Increased Cost of Construction Calculations
• Roof Losses
• Getting Coverage for Matching of Damaged Structural Parts
• Depreciation
• Actual Cash Value Determinations
• Sales Tax of Labor
• Building Codes
• The Use of Engineers and Architects in Claim Submittal
• Appraisal
• Selection of the Best Appraiser for a Claim
• Appraisal Process, Procedures and Forms
• Question and Answer on Adjustment

Based on past experience and seeing the misinformation regarding wind speeds from Hurricane Ike, we thought a presentation by a meteorologist would be interesting and relevant. We are finding that some insurance companies are providing engineers with low estimates of wind and gusts in the Houston area. The insurance company engineers seem to rely upon these outcome-biased reports of wind speed to come up with improper findings that damages were not caused by Hurricane Ike . We wanted to show the public adjusters the value of having an experienced meteorologist who can dispel those reports.

Texas has some unique issues regarding construction, building codes, and building regulations. An engineer with experience in certified wind inspections gave a presentation on these issues. Retaining engineers, meteorologists, architects, estimators, and other experts should be common place in claim presentation of serious loss cases. Frankly, the insurance companies should be doing this as well, if they truly want to fulfill their obligation to conduct a full investigation.

Most policyholders hope their company insurance adjusters have the motivation of public adjusters to fully investigate a loss to find every penny that should be paid under the policy. Our seminar was intended to help public adjusters with the tools to use that motivation. While the listed topics may seem strange and boring to most, they must be fully understood if policyholders are to receive full coverage benefits. I believe that most policyholders have no business trying to learn these issues by themselves when so much is at stake.

The next wind insurance event for insurance adjusters and vendors of all types will be hosted on April 2nd in Houston by the Windstorm Network. I strongly urge those in the industry handling Hurricane Ike claims to register for this symposium of experts analyzing many of the day to day issues adjusters face in the field.

This post came about as a result of Mary Kestenbaum Fortson and me being invited to Baltimore for a meeting to organize an education conference for property insurance claims. Most of the organizers in attendance were public adjusters. They asked me why other insurance industry groups "shunned" their overtures to create a fall property insurance claims conference.

Mary and I were smiling because it seemed they simply did not get it---insurance company personnel are trained that public adjusters interfere with the claims process and have to be treated almost as if they are the enemy during an adjustment. The enemy stigma, once placed into the adjuster's head, does not seem to go away.

Need proof? Go to the Property Loss Research Bureau website (PLRB). The PLRB is the one property insurance conference professional claims adjusters for the insurance industry do not miss. It involves the "who's who" of the property insurance world. Property insurance vendors like HAAG, Rimkus and SEA show up to court possible business with claims managers. Property insurance company attorneys are there as well. They take their clients to dinner and pontificate about claims issues and how well they have beaten down customer claims through litigation.

I only know these things through hearsay. I actually have close friends who go, share their materials with me, and talk about the events at the PLRB. The PLRB written materials are excellent and the speakers are renowned for their experience. I wish I could attend because many of the topics are my passion. However, I am not invited.

On the PLRB web site, guidelines for the attendance and other rules are posted. Believe it or not--a section exists for rules regarding public adjusters. It states:

PUBLIC ADJUSTERS, AGENTS AND BROKERS
The Claims Conference is open only to those employed by the insurance industry and those who, as their primary business, provide goods and services directly to insurers. Others, such as public adjusters, brokers, and agents, are not invited and may not register nor attend. Any such uninvited person found attending the Conference will be asked to leave and will not receive a refund.

I guess the old saying that if you are not for us, you must be against us is alive and well in the insurance company claims industry. I wonder what kind of information and secrets insurance company claims departments and their attorneys, and vendors want to keep from people who help the insurance company customers? I have always felt it hypocritical that insurance company claims executives and their attorneys say they must be honest with their policyholders, but keep claims procedures secret. How can you be honest when you are withholding the truth?

In the agenda, there is even a seminar: "How to Deal with Public Adjusters." That seminar's details indicate:

** Locate local governing authority websites regulating the licensing and conduct of Public Adjusters
** Employ policy provisions to protect the rights of the insurer relative to coverage and policy conditions
** Resolve claims with PAs by skillful negotiation of the scoping and estimating process
** Document the claim file for effective resolution or success in appraisal

It is sad that there was not one insurance claim seminar at the PLRB devoted to the policyholder's main concern--how to get paid fully and fast. Even skeptical readers probably get the point of what the PLRB is about---but I still wish I could go.

The organizers of the new public adjuster claims conference will not have as a spectacular event as the PLRB. Indeed, they may be in serious trouble if they are asking for my opinion about how to organize it. Yet, I can assure there will not be claims practice secrets and everyone will be treated as equals.

For example, on October 23, 2008, a criminal complaint was filed against a group of public adjusters and their clients for arson related offenses.  An affidavit indicated that Carlos Stewart, a public insurance adjuster from Florida Claims Experts, agreed to burn down a house insured by State Farm. According to the affidavit, everything was agreed to and captured on an audio recording. It appears this was not the first time, and, if the allegations prove to be true, you can bet there will be some discussion about giving up others for leniency at the time of sentencing.

The insurance industry claims billions of dollars are lost as a result of insurance fraud. They insinuate that their otherwise honest customers become crooks at the time a loss occurs. If that were true, insurance would be the most socially defective product ever imagined and marketed.

It has been our experience that insurance fraud by customers occurs, but in a very limited instances. Yet, when it does, the insurance companies, police, and departments of insurance act in concert with publicists to show they are doing their anti-fraud jobs and make an impression on the public that some are engaged in wrongful behavior. 

When a public adjuster is involved, it reinforces the perception by those acting on behalf of the insurance industry that 'public adjusters just cannot be trusted.' The old adage, "a few bad apples can destroy an entire basket," comes to mind when I hear or read stories like the one cited above. Public adjusters must beware that if this perception persists, they could be in danger of having licensing statutes disappear or severely limited in the states that allow public adjusting.

From the surveys, I know virtually everyone in attendance felt the same way.  I believe it was the result of the audience's knowledge and experience.  Our firm did a survey earlier in the year to determine what adjusters enjoyed about seminars, what they did not like, and what they wanted to get out of the seminar.  We found, not surprisingly, that they hated to listen to lawyers "preach" about what the law is regarding a topic of insurance law.  Instead, they wanted to know practical tips regarding their business, how to address certain difficult issues that come up during claims, and how to quickly get full claims benefits to their clients. 

In response to the survey, we decided to do the entire seminar in a different manner.  The topics were chosen from the survey we conducted.  We provided an encyclopedia of insurance law and regulations on the topics the adjusters told us they wanted to understand.  The materials helped the various Departments of Insurance approve continuing education requirements, while analyzing the topics our audience wanted.  The panelists talked about their experiences as tips rather than "war stories."  Smaller losses which everybody handles were discussed as well as how clauses in policies can be used to provide better and quicker indemnity to policyholders. 

We discussed subtle and interpersonal aspects about how to handle situational aspects of claims with the insurance company.  Questions and differing viewpoints were encouraged.  For those with a passion for helping policyholders get what is deserved, there was only one place to be on Friday, and I felt honored to be there learning while helping lead the seminar.  Many from the insurance industry perspective often talk poorly about public adjusters. Sometimes the criticism is justified.  Often, it is out of professional jealousy or envy because the public adjusters can make significantly more money than company adjusters.  However, how many insurance company adjusters have law or accounting degrees?  About ten percent of those in my Friday audience had those credentials. 

Marvin Milton, a public adjuster from Boston, went to Stanford undergraduate and then Harvard law school. Of the tens of thousands of insurance company field adjusters hired by insurance companies, I know of none with such qualifications.  At one point, a person in the audience asked me if it would be "bad faith" for a commercial property insurance adjuster to fail to remind or inform a policyholder of extra expense benefits.  My answer was that the vast, vast majority of insurance company adjusters are not even trained to understand the nuances of extra expense benefits and how those coverages may help policyholders. 

The sad truth is that most insurance companies fail to provide such information to their customers because the insurance company claim personnel do not understand the benefits available under the product they sell.  Most insurance companies simply hire accounting firms to figure out what may be payable without truly assisting their customers by explaining how valuable and helpful those benefits can be.  When policyholders are deciding whether and which public adjuster they should hire, I suggest that they look for somebody they can trust and who has the credentials and experience of NAPIA membership.  Often, the benefits obtained by public adjusting firms are far in excess of the minimal fees charged.

In 2004, there were several hundred licensed public adjusters in Florida before Hurricane Charley set off a wave of storms, culminating with Hurricane Wilma in 2005.  The number of licensed public adjusters swelled to over three thousand in Florida.  While there was and is a need for policyholders to have experienced professionals assist them to establish the proper value of any significant claim, many of the new public adjusters had little experience, understanding, or training. 

All one had to do to obtain a license was pass an open-book online test. I have met preachers, car salesmen, fitness trainers, and salespeople who became licensed public adjusters after the first storm of 2004.  The public suffers when inexperienced and inadequately trained people represent themselves as "professionals licensed by the state" to help consumers.  I do not begrudge anybody the opportunity to make a living in this field, but good adjusters have a tremendous amount of training gained over years of practice.  A thorough understanding of policy language, rules, laws, industry practices, construction estimating, building code knowledge, theories of coverage, financial issues, and adjustment techniques are learned through years of practice and diligent study. Adjusting claims is serious business with serious consequences if not done right. 

Could you imagine letting doctors practice brain surgery the day after they graduate from medical school?  This is essentially what Florida allowed, with some consumers unknowingly hiring "first time" adjusters. Accordingly, except for a minority of public adjusters that did not want any fee caps, the Florida public adjuster legislation was supported by FAPIA, NAPIA, the insurance industry, and the Citizens Property Insurance Claims Task Force.  (Of special note, the Citizens Task Force, which was formed to suggest legislation regarding Citizens' handling of claims, did not make one such suggestion, but was instead used by the insurance industry to make laws regarding other aspects of insurance.) My suggestion for those seeking to hire public adjusters is to look for the following:

1. Reputation
2. Membership in FAPIA and NAPIA
3. Experience with the policyholder's type of claim
4. Sufficient manpower
5. Price

I include price because you usually get what you pay for.  Public adjusters typically charge ten percent (10%).  Many will charge less, but they may not work the claim as diligently and make up the lost value of one claim by settling in volume.  Ask for references.  The lowest priced adjuster is often not the best.  The highest may not be the best either.  Look for experience, reputation, and past results so you have a good sense of trust with the person you select as your representative.

Motivated and trained claims professionals are needed to help policyholders obtain benefits the insurers are trying not to pay.  Some of my insurer colleagues may dispute this, but I have yet to read an internal insurer claims goal which increases the amounts paid to its policyholders.  The goals are just the opposite, and the pressure to reduce claims payments is often confirmed by adjusters who leave the insurance industry to become public adjusters.

Tuesday night, I spoke with three former State Farm adjusters.  All three spoke of the pressure to handle and close more claims, to closely read the policy language, and to not pay for certain items following disasters before actually adjusting losses.  They went so far as to have role playing scenarios where they practiced negotiating techniques which dupe customers into believing the insurer position regarding adjustment is proper.  Adjusters should be looking for ways in the policy and facts of the loss to pay more. 

Does any policyholder truly have a chance when all the training is geared towards non-payment? One public adjuster talked of going to a Haag Engineering seminar regarding roof damage.  These are generally attended by the insurance company adjusters.  The Haag trainer opened the seminar claiming that adjusters would learn techniques to pay for little, or possibly nothing, on roof claims where the adjuster would otherwise pay for complete replacement.  How insurance companies can repeatedly escape accountability for procuring outcome oriented investigations still amazes me.  Most policyholders have no clue that an adjustment is being made for the appearance of good faith, when it is anything but that.

These former insurance company adjusters revealed that all these wrongful activities were culturally accepted as proper.  Some admitted they were "brainwashed", by subtle motivation and goal setting on how they paid claims, into thinking they were the guardians of the insurance company treasury.  Without exception, I have never met a public adjuster who wanted to go back to the insurance company.  They all express much greater job satisfaction as public adjusters and genuinely helping people. To be fair, I see the denials and problem cases.  I do not have policyholders calling me when an insurance company adjuster goes out of his way to provide the service required by a good faith adjustment. 

I know there are many well-meaning and professional adjusters helping the company customers.  I am certain I see mostly the unethical adjusters and not those who do their job ethically. So long as the insurance industry promotes severity control goals and motivates its field adjusters to look for ways to pay policyholders less than what is owed, the public adjuster business will be a brisk and growing industry.  In today's claims environment, every policyholder with a significant loss should consider hiring their own claims professional.