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

A complete copy of the statute is available here and should be studied by all Florida licensed public adjusters because several new sections were added to the previous statute. But please note, many of the changes only apply to residential and condo unit owner policies, and the distinctions should be carefully noted.

With respect to advertising, public adjuster advertisements now must include a specific bold and capitalized disclaimer. The Legislature also clarified the prior statute by giving more explanation on what it considers to be an untrue, deceptive or misleading advertisement for the services of a public adjuster. Many other changes related to advertisements should not be dismissed.

Check out section 11 of the statute -- it includes changes to public adjusting fees for reopened or supplemental claims for certain types of insureds.

Section 14 of the statute includes important additions that can impact a claim as a whole. Now, when an insurance company representative needs access to the property, the carrier or representative must give at least 48 hours notice to the insured before scheduling a meeting or an onsite inspection. The insured may deny access if the insurance company or their investigator just shows up onsite without the proper notice. But compare this to section 15(b), which states that a public adjuster may not restrict or prevent an insurer or its representative from reasonable access at reasonable times to an insured or the insured property. Section 15(c) further provides that if the unavailability of a public adjuster otherwise delays the insurer’s timely inspection of the claim, the policyholder must allow the insurer to access the property without the public adjuster.

It will be interesting to see how this section of the statute will play out in actual claims. One of the issues that often occurs in a claim, especially if the damage was caused by a catastrophe, is that the insured has a difficult time getting anyone from the insurance company to actually come to the property and inspect the loss. I have represented many clients, both with and without public adjuster representation, who would have been thrilled if their insurance company would have come to their property promptly after being notified of the loss. This addition to the statute may cause more insurers to place the blame for the delay on pubic adjusters or the insured and claim a violation of statute. But now, many of the claims inspections are coordinated via email between the two sides and a written record may help courts decide if inspection timing was reasonable or delayed and who caused the delay.

Now, Florida Statute 626.860 provides that a public adjuster cannot otherwise be excluded from an in-person meeting with the insurer and insured, and that the insurer must meet or communicate with a retained public adjuster regarding the scope of the covered loss.

Finally, Section 16 prohibits a licensed contractor from adjusting a claim on behalf of an insured unless that person is also a licensed and compliant public adjuster. A person who holds both licenses should not be wearing both hats and contractors can’t engage in public adjusting under the guise that it is contracting.

Remember to download or print a copy of the statute for easy reference and note that sections 5-16 of §626.854 are specific to condominium unit owners and residential claims.

Claims Magazine recently highlighted this conference in the January issue. The 13th Annual Conference will kick-off on Sunday, January 29, 2012, and offer a week of presentations and classes on the current and hot topics concerning insurance claims. More classes are being offered than in years past and a plethora of advanced courses have been added to the agenda.

Merlin Law Group's own Chip Merlin, the outgoing president of WIND^®, will welcome the attendees to the conference, but he won't be the only Merlin Law Group attorney who will be addressing the crowds. Merlin Law Group's Jean Niven, David Pettinato, Donna DeVaney, Javier Delgado, and Douglas Grose will be panel members presenting lectures dealing with everything from sinkholes to insurance fraud, and various topics in between.

To become more familiar with Merlin Law Group, we encourage public adjusters to visit our attorneys at the expo center, booths 38 and 39. Stop by to learn more about our firm and discuss with our attorneys the current trends in insurance claims adjusting. As a public adjuster, sharing your stories and thoughts can help your policyholders and the state of insurance claims in general. I want to hear from you so I can introduce you and your stories on my weekly post. If you are a public adjuster who has a story to tell, just stop by to meet me or simply fill out the feedback form with information about your public adjusting story.

Be sure to check the WIND^® website for the conference schedule and course downloads in order to get the most out of the classes.

I have written several blogs about safety, Remembering Katie Froeschle, Safety Instructions for Public Adjusters, and Mark Everest Addresses Public Adjuster Safety and Risk Management, after I was educated about safety issues facing property adjusters.

Yesterday, I received a copy of the newly released safety manual- Safety in the Field for Public Adjusters, created and commissioned by the American Association of Public Insurance Adjusters and written by Mark A. Everest, Lori Everest, and Leah Class.

This is the first publication of its kind and offers excellent information about safety specific challenges this profession faces on a regular basis. Many professionals spend a great deal of time performing property inspections, but as a public adjuster, you , view damaged properties to determine the extent of damages. And as Chip Merlin pointed out in his acknowledgment, “adjusters are often the first experts to evaluate the true extent of the damage following a catastrophe, leaving them exposed to physical harm resulting from structural instability, proximity to hazardous waste, and even increased criminal activity."

This new field guide provides a great reference for public adjusters to help address many of the dangers and reduce exposure to unsafe conditions. The guide explains post-fire safety, injury prevention, mold and asbestos exposure, ladder safety, and many more important topics.

To get your copy of Safety in the Field For Public Adjusters, you can visit the AAPIA site or visit AAPIA’s booth next week at the 13th Annual Windstorm Insurance Conference^®.

The Birmingham News posted an article last week reporting that:

State insurance officials and others are working on legislation that would let Alabamians with insurance claims hire their own adjusters, clarifying what has been a gray area of the law. If passed, there'd be no question Alabamians could hire so-called public adjusters to help establish the scope of their losses and probably get more money from their insurance companies.

Not surprisingly, the insurance industry likes that insureds cannot hire public adjusters. It often makes the claims process a one sided game if the insured is without representation. The horrendous treatment some homeowners and business owners received from their insurance companies after the tornado damage claims last year, may prompt the Alabama legislature to recognize the need for public insurance adjusters.

Legislation was proposed last year to license and regulate public adjusters in Alabama, but it was dropped because of objections from the Alabama State Bar. Now, the Bar is working with state insurance regulators and industry groups on a compromise measure for the legislative session starting in February.

Since the April 27, 2011, tornado struck, Alabama has not received any complaints of actions by public adjusters, but in the past, there were complaints about roofers who improperly negotiated insurance claims. Contractors who act as insurance negotiators are a problem in many areas of the country. Licensing of the profession may make a difference.

Brian Goodman, of the National Association of Public Insurance Adjusters, provided the Birmingham News perspective on how passing a licensing law in Alabama will benefit the state because it will give the state the ability to regulate how these professional assist insureds and protect consumers.

Check back for updates on whether Alabama makes a change this legislative session.

Matthew Guy, the Communications Coordinator for the Florida Department of Financial Services, Division of Agent and Agency Services, sent the following information as a summary of the changes

Appointment Renewals When a Licensee Has an Invalid Address

Starting after 5 p.m. EST on January 18, 2012, if a licensee/appointee has an invalid address on file with the Department, then no appointing entity will be able to renew the licensee's appointment. This process is already in place for initiating original appointments and will now be incorporated into the appointment renewal process. When the licensee updates their address(es) in their MyProfile account, then the licensee will be able to have their appointment(s) renewed. The addresses included in this process are email, home, business and mailing.

Late Fees for Late Original and Late Renewal Appointments

Starting after 5 p.m. EST on January 18, 2012, we will begin assessing appointing entities the statutory $250 late fee in addition to the statutory $60 appointment fee for each initial/original appointment submitted late. A late original appointment is any initial/original appointment that has a requested effective date more than 45 days before the submittal date.

For example, if on March 1, 2012, an appointing entity submits an initial/original appointment with an effective date of January 2, 2012 (more than 45 days from the submittal date) for a licensee, the appointing entity will be required to pay the $60 original appointment fee and the statutory $250 late fee. On the other hand, if on March 1, 2012, an appointing entity submits an initial/original appointment with an effective date of February 1, 2012 (less than 45 days from the submittal date), the appointing entity will pay only the $60 original appointment fee.

Additionally, we will begin assessing appointing entities the statutory $25 late fee in addition to the statutory $60 appointment fee for each appointment renewed late. A late renewal appointment is one that is paid after the renewal month.

The late fees must be paid by the appointing entity and cannot be charged back to the appointee.

[See sections 624.501, 626.371, and 626.381, Florida Statutes]

Appointment Renewal Timeline and Notification Changes

Starting after 5 p.m. EST on January 18, 2012, we will begin sending an email notification to an appointing entity 90 days before an appointment is up for renewal, in addition to posting the renewal invoice in their eAppoint account, which will indicate any appointee with an invalid address. An insurance agency that has appointed a customer representative will receive a similar email notification at the same time. This serves as a reminder and provides the appointing entity time to make modifications to the list of appointments they will be renewing such as reminding any appointee with an invalid address to update it with the Department.

Another email notification will be sent to the appointing entity on the first day of the renewal month informing them that they can now access the appointment(s) that need to be renewed and make payment via eAppoint. Licensees that self-appoint will be sent a similar email notification at the same time. The renewal invoice will become available for payment on the first day of the renewal month and can be paid through the last day of the renewal month without late fees being assessed.

On the first day of the month following the expiration date of an appointment, an email notification will be sent to the appointing entity advising payment was not received, late fees have been assessed, and the invoice will continue to be available for 45 more days for payment, including late fees, otherwise the appointment will be cancelled. If the appointment is not renewed after this 45-day period, the appointment will be cancelled for non-renewal and an email notification will be sent to the appointing entity and the licensee notifying them of the appointment cancellation along with information on the process for reappointment and the late fee.

For example, if an appointment expiration date were March 31, 2012, the invoice would become available for payment on March 1, 2012, without late fees being assessed. On April 1, 2012, late fees are assessed at $25 per appointment and the invoice remains available for payment until May 15, 2012. On May 16, 2012, if payment has not been received, the appointment is cancelled.

If the appointing entity wishes to reinstate an appointment after it has been cancelled for non-renewal, and no lapse in appointment coverage is desired, the appointing entity will be required to process an initial/original appointment submission and enter the requested effective date. If the initial/original appointment's requested effective date is more than 45 days from the submittal date, then the statutory $250 late fee described above will be assessed.

Public Adjusters holding a license in Florida should note these changes and make sure they have a proper address on file with the DFS and be alert for emails notifications.

Richard Schwartz has quite the resume:

I worked 15 years in the Fire Department as a Fire Fighter/Paramedic and eventually became shift commander. I worked combat as well as investigation and inspection duties. In January of 1986, I opted out of public sector employment and started by career as a private Fire Origin and Cause Investigator working mostly for the insurance and legal community. The job caused me to travel throughout the Southern United States, Caribbean and Central and South America. I also worked for a forensic engineering company and eventually opened my own forensic engineering company from June of 1994 through October 2005.

Richard’s experience working with insurance companies on various fire investigations gave him an insider’s view of how many insurance carriers rely on special investigative units (SIU) in connection with claims.

SIU in the beginning:

Schwartz remembers how SIU assisted insurance companies decades ago.

SIU worked collectively at reducing the large increase in fraudulent auto claims. Back then, police departments were undermanned and concentrated on the drug crimes and cocaine cowboys. They would not perform follow up investigation on the suspicious accidents. Many claims included a crash with a car always carrying 4 people that would smash into a fixed object like a concrete pole, but they would claim that a mystery vehicle hit and ran from the scene, leaving 2 to 4 victims with back injuries. SIU, working in conjunction with DFS Department of Insurance Fraud and DOI staff, put the cases together.

SIU became larger and now plays a role in all facets of the insurance claims process, from investigating information provided on applications, first report of claims, field recorded statements, EUOs and so on. SIU now gets involved on any claim at any time, depending on who requests their involvement.

Prior to the SIU, insurance adjusters and private investigators would conduct the investigations. This would entail adjusters performing some work and also obtaining approval to spend carrier dollars which would not be freely authorized.

The evolution of SIU

With respect to property damage claims, Richard explains what has evolved:

Nowadays, SIU can be brought in at any stage of the claim process. For instance, when an insured reports a simple water loss, if the field adjuster arrives and finds anything suspicious or even something as little as PA involvement, some carriers  assign SIU to gather details and give protected information to law enforcement. Most SIU personnel are former law enforcement and their files ARE NOT PART OF THE INSURANCE ADJUSTER’S FILES. In some cases, they may even be an outside company, so there is separation between the adjuster file and the SIU file.

Sometimes, SIU can be assigned because a particular contractor or PA who has done battle with the carrier is involved. Sometimes, a simple kitchen fire brings about a full investigation. In part because years ago, there was a series of suspicious kitchen fires. 

.... intentional damage escalation is fraud, and that is what the carrier is looking for. Carriers use SIU investigations to delay the claim process. Remember, as long as law enforcement is investigating or not issuing a report, the SIU investigation is still open and the claim investigation is considered to be open. Neat how that works!

Investigation length and extent was usually a business decision. For instance on marine claims, especially with Lloyds, hoursor weeks could be spent, depending on the information developed and whether that information was favorable to the carrier. However, if information was developed that indicated the carrier would have to pay, investigations were shut down, and in most cases, left unfinished. Dollars controlled what was being spent. The only real exception to the rule was State Farm. If they had a small loss but felt that it was fraud, the sky was the limit.

Why Richard no longer works as a fire investigator for insurance companies:

In the spring of 2005, I felt the need to change careers. I never figured out which specific case it was, but in general it was a definite “AH HA Moment.” After undergoing a series of depositions, I learned how certain carriers would take a portion or excerpt from my report and represent it to the insured as the findings of the report. This resulted in certain disclaimers being added to my reports, and like a magic wind blowing in, certain clients who used my services for years, stopped. I realized it was time to move on, as I would not be a part of this new demand to issue reports that were other than the truth.

In the spring of 2005, I embarked on my newest career as a Public Insurance Adjuster with The BCH Group, Inc. This allowed me to use my Fire Department experience and my 19 ½ years of private investigation, fire and explosion analysis and forensic engineering work to assist policyholders with their insurance claims.

To learn more about The BCH Group, visit the website here.

For 2012, the Legislature is requiring me…to send my contract to the carrier within 30 days after it is signed.

For 2012, the Legislature is requiring me… to state the type of claim on the dotted line.

For 2012, the Legislature is requiring me to…tell the carrier if this is a claim occurred during a state of emergency.

For 2012, the Legislature is requiring me to…make sure all named insured sign, sign, sign.

For 2012, the Legislature is requiring me to… send an affidavit signed by the available insureds if not all named insureds are available to bind.

For 2012, the Legislature is requiring me to…send a copy of the contract that includes the percentage of my fee.

For 2012, the Legislature is requiring me to…list if this is a supplemental damage claim, this is key.

For 2012, the Legislature wants me to continue…include on the agreement my address and firm name.

For 2012, the Legislature wants me to continue… reminding the insureds of the timely right to cancel same.

For 2012, the Legislature wants me to continue…including the anti-fraud language on each contract.

For 2012, the Legislature wants me to continue…to disclose that in a state of emergency (and one year following) the insureds have 5 business days after the date signed to cancel after the fact.

For 2012, the Legislature wants me to continue…to list my business address and license number on the contract.

Many other changes are going to impact public adjusters with respect other areas of the profession, including claim involvement and advertising. Additional blog posts will be posted in the next few days that provide information on the changes effective January 1, 2011. Stay tuned!

In a recent article, Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers, readers are alerted to some of ways carriers are benefiting and insureds are suffering. Anita Taff, a Georgia based public insurance adjuster, was interviewed regarding the treatment her elderly client received from Allstate Insurance Company in connection with a fire loss from 2010.

Here is the story of Madeline Burdett’s fire loss:

Madeleine Burdette, a retiree, is an Allstate customer. . . .When her Georgia home burned in November 2010, Burdette was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down. "The entire middle of the house was gone," Burdette said. "It took out everything. Just the outside walls were left untouched."

The next day, she said, Burdette's Allstate adjuster told her the house could be repaired. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told Burdette, Allstate would not pay for any damages. According to former employees, such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly.

* * *

"I believe [delaying claims] is an effort to put the squeeze on policyholders," Taff told HuffPost. She explained that while a claim is being held up, the insurance company may stop paying the policyholder's additional living expenses, forcing the policyholder to cover mortgage and rent entirely out of pocket. "That's something that many people cannot afford to do, so they're forced to take a lower settlement," Taff said.

Allstate’s response to Burdett’s decision to hire a public insurance adjuster is not uncommon but it is improper.

She received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. "He said, 'If you hire a public adjuster, I'm going to deny and delay this claim for as long as possible,'" Burdette told HuffPost. Taken aback, she then asked if it wasn't in his best interest to settle the claim. "Not really," he replied, according to Burdette.

Burdette did hire Taff and continued to pursue her claim. Allstate’s claim tactics were designed to encourage Burdette to give up or give in, but Burdette held on and is still fighting to be properly paid for this claim.

As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers' lobby, the strategy was to make claims “so expensive and so time-consuming that lawyers would start refusing to help clients.”

* * *

Those who took the low-ball offers received prompt service, while those who didn't had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits.

* * *

The strategy was dubbed ‘Good Hands or Boxing Gloves’ by the consultants, riffing on Allstate's advertising slogan.

To understand more about Allstate’s actions, check out David Berardinelli’s book, From Good Hands to Boxing Gloves - The Dark Side of Insurance and Delay, Deny, Defend by Reuter’s professor, Jay Fienman.

In an effort to gain more perspective from the carrier’s side, Michael Boyer has written about examinations under oath in the text, Property Investigation Checklists: Uncovering Insurance Fraud, Tenth Edition.

Boyer tells readers that the demand for an examination under oath is not a new phenomenon. It was first included in the 1943 standard fire policy's cooperation clause. The 165 line policy required an examination under oath on lines 113 -122. Boyer recalls the early 1970s, when examinations were almost routine on a claim, but the scope of the examinations were more similar to today’s recorded statement.

In Florida, day long examinations under oath are on the rise. Carriers have demanded examinations from persons who not covered by the policy and on claims that could be investigated without the an EUO.

Boyer, who has been a licensed independent adjuster and licensed private investigator in California for decades, says examinations under oath have three purposes:

1. To permit the company to investigate all matters relevant and material to the insurance and loss, which are frequently within the sole knowledge of the insured;
2. To determine its liability, if any, under the policy; and
3. To protect itself against false claim.

Boyer cautions that insurance companies should limit the scope to matters relevant and material to the insurance and claim, and that insurers should not use the EUO to harass the insured or to “put him through the mill.”

As a practical matter, an examination is required only when:

1. There are serious questions regarding the claim or the application for insurance;
2. The insured has been vague and uncooperative during the initial investigation; or
3. The company wants to complete its investigation, or solidify its position prior to any action, such as denying the claim, filing for declaratory relief, or making an offer to settle the claim.

If only it always worked that way in real life… check out the Chip Merlin’s post, The Games Insurance Companies Play, to read the examination under oath transcript of Jose De Leon. As Chip explained,

The insurance defense counsel’s improper questions and the threatening conduct were not unusual. As many policyholders have experienced, this behavior during examinations under oath is standard operating procedure for many insurance defense lawyers.

Policyholders should prepare themselves and hire counsel to attend the examination if they have concerns. Only a few of the letters we see demanding examinations under oath tell insureds they can bring their own attorney (kudos to Sandy Burnette’s office) to attend the examination. Policyholders should know they have this right. The insurance company has a lawyer and so should you.

Unfortunately, this scenario is similar to what other policyholders in Florida have experienced with their Citizens claims. The Sheldons are making their dissatisfaction with Citizens well know.

Maryellen and Jonathan Sheldon and their public insurance adjuster, Rick Tutwiler, spoke to Tampa’s Channel 10 News about the claim in this interview.

The Sheldons hired Tutwiler and Associates as their public insurance adjusters to help them with this fire loss. Rick Tutwiler has assisted with presenting their claim to Citizens, but Tutwiler explained that Citizens is still missing the mark by tens of thousands of dollars. The Sheldons have now filed a breach of contract lawsuit against Citizens.

The complaint includes a demand for attorneys’ fees. Under Florida Statute 627.428, if the Sheldons prevail in their action, Citizens will owe damages and reasonable attorneys’ fees and costs.

Have you experienced a similar problem? Post a comment below and I will forward it to Channel 10.

February is usually beautiful in central Florida, and the 2012 Conference is also a perfect opportunity for a family vacation. The Buena Vista Palace Hotel is an official hotel of the Walt Disney World Resort, and offers conference attendees:

• Discounted tickets for all Disney parks for WIND conference registrants
• Complimentary transportation throughout the resort as well as to and from theme parks
• Complimentary transportation to and from the Walt Disney World Theme parks
• Character Sunday brunch with Disney characters at the Buena Vista Palace Hotel

Register now to take advantage of the educational and networking opportunities.

But the average residential homeowner or small business owner may have only one or two claims in lifetime, how can they know that public adjusters are available to present and adjust claims for them? And do they know what a public adjuster can do to level the playing field?

The National Association of Public Adjusters gives a great overview of the role of a public adjuster.

A Public Adjuster works for the property owner, not the insurance company. The highly stressful period following a loss is a difficult time for individuals and businesses. A Public Adjuster can take those major headaches away and let you get back to your home or business. A typical fire or flood policy contains hundreds of provisions and stipulations, constantly changing forms and endorsements, and many complex details such as inventory appraisals and real estate evaluations that are required in case of a loss. Most policyholders do not know that the burden of proof is theirs. Public Adjusters know the insurance business and are familiar with all procedures so they can work quickly to expedite payments.

Goggle search “public adjuster,” and within the top few results is a public adjuster directory for the U.S., which allows you to click on your state and find public adjusters for your region. The directory also provides a direct link to every state’s department of insurance webpage, and provides other valuable resource links that can assist an insured dealing with a property damage claim.

Insure.com has also posted information about the good work of public insurance adjusters. In Amy Danise’s article, “Secrets of public insurance adjusters: What they know about insurance companies that you don't,” Ron Reitz was interviewed. A couple of Ron’s secrets: Don't let your insurance company replace your Pottery Barn stuff with Walmart stuff; and If you're evacuated, don't sleep at a shelter!

As Dainse explained,

Hiring a public adjuster can put you on an even playing field with your insurance company. Your insurer may assign three different adjusters to work on your claim: one for "additional living expenses," one for your personal property and one for the building portion of your claim. A public adjuster will be able to explain the process and work on your behalf handling the countless meetings, e-mails, phone calls and paper documents that flow for a large claim.

Need a simple way to raise awareness about the role of public adjusters? Share this link on your social media pages.

The American Association of Public Insurance Adjusters "AAPIA" would like to announce its support for the Katie Froeschle Foundation.

Katie, a 2002 graduate of Florida State University, loved scuba diving, snow skiing, basketball, softball, and cooking. She played powder puff football, enjoyed deep sea fishing, and loved to spend time on the beach. Katie loved animals, particularly her pets, and had cats and loved dogs. After graduation, Katie was employed first by State Farm Insurance as an agent trainee, then by Travelers' Insurance in an administrative position, and finally by Florida Farm Bureau Insurance Company as a claims adjuster. On November 12, 2004, Katie was murdered while adjusting a hurricane claim at a rental property in Tampa, Florida for her employer. The Katie Froeschle Foundation was started in her memory to provide strong and unwavering support throughout the community. The Katie Froeschle Foundation gives hope to many by awarding scholarships to deserving students at Florida State University, funding innovative programs that distinguish Florida State as an exceptional institution, and providing grants to organizations that offer support and counseling to families coping with the traumatic loss of a loved one. Donations can be made to the Katie Froeschle Foundation by visiting www.katiefoundation.org or by mailing them to:

The Katie Froeschle Foundation, Inc.
343 2nd Ave. N.
St. Petersburg, FL 33715

We sincerely thank you for your time and continued support of this cause and urge all AAPIA Members to honor Katie tomorrow with a silent prayer in remembrance of Katrina "Katie" Froeschle.

The American Association of Public Insurance Adjusters has dedicated a special site on our web site asking our members and policyholders to remember Katie with a check that will help her Foundation continue to help others who are in need of compassion and understanding.

AAPIA will honor Katie in an upcoming Safety Manual due out December 2011.
 

Best in life,

Gene G. Veno
President, AAPIA
1050 Connecticut Avenue, N.W.
10th Floor
Washington DC 20036
202.640.2014 Office
202.403.3806 FAX
www.aapia.org

Stephen has a passion for helping policyholders and is a devoted Insurance Claim Software Developer who has developed iScope™ Damage Estimating Software, Contents King©, MacroNote©, Claim Doc Labeler©, PicPal©, One-Button Desktop Cleanup© and One-Button Screenshot©. These programs are all available at www.InsuranceClaimSoftware.net.

Recently, Stephen shared his insight into documenting vandalism damage of commercial properties. The extent of damage to commercial property by vandals is something Stephen says needs more recognition and understanding. In this short 3 minute video, Stephen shows the breadth of problems that can be missed if the claim is not assessed with great detail and care. Stephen explains why some graffiti vandalism claims require more evaluation, “[y]ou might think a simple paint job would be sufficient, right? However, if the tagging affected the coil, you could be in for an extensive – and costly – repair. Vandals often tag the soft metal coil by carving their tags into the metal, requiring a complete replacement. What's worse is when the coil is part of an older A/C system. If a replacement coil is not available, the entire A/C system must be replaced.” Click here to take a look at the scope of damage at various commercial properties.

At Victors, the vandals spray painted the exterior of the building, and the electrical conduit and gutters were damaged during their climb to the roof. Smashed glass from beer bottles was embedded in the plaza’s roof and caused widespread damage that might not have been noted with a cursory inspection of this loss. Copper wires were stripped from the wiring and air conditioning units, and tiles and other roof sections were also damaged by the vandals. The ability to recognize these areas of damage was crucial. All of these damages needed to be documented and presented in the insurance claim.

Stephen also provides suggestions on how to prevent vandalism claims.

The best way to deter vandals is to make sure that your building isn't an easy target by making it as unappealing to vandals as possible. Spend a few hours thinking like a vandal and assessing your property from a vandal's perspective…

Lighting – Because most vandalism occurs under the cover of darkness, dark areas may attract vandals, thieves, juveniles, transients, and others who don't want to be seen. Which areas of your building are well-lit? Which areas are not?

Location – Where your building is located could also be a problem. Highly visible locations are attractive to taggers who want recognition while secluded areas may attract juveniles and drug users. While it may not be practical to change your location, you can beef up its security. Monitored surveillance systems with speakers that allow security personnel to warn intruders that they've been spotted and that law enforcement is on the way could be an effective deterrent.

Design – Complexes with parapet roofing, hidden courtyards, and other areas where vandals can easily hide are attractive to vandals. After all, vandals don't want to be caught doing their deeds, so locations that offer the best concealment are often selected. Tearing down parapet walls may not be practical, but you could make your building less attractive to vandals by removing access routes, adding razor wire along the perimeter, and beefing up security with floodlights and surveillance systems.

Stephen Hadhazi helps policyholders who suffer various types of losses and wants policyholders to understand that the details of a claim make the difference in getting back to normal after any kind of a loss.

The TAPIA Board of Directors has done an extraordinary job of keeping the price of admission affordable so everybody can attend. Since admission is only $95, every public adjuster involved in a fire insurance claim should attend for practical tips and advice. The presentation will demonstrate the subtle aspects of fire damage that are often overlooked by insurance adjusters and result in significant underpayments to policyholders. Heck, if insurers want to make certain they are accurately and thoroughly adjusting claims, they should call TAPIA and get a special session and rate for their adjusters.

Public adjusters play an important role in protecting insurance consumers in Texas. Attorneys from Merlin Law Group are proud to host a cocktail reception on November 16 at 6:30. I hope all public adjusters who can attend, will. The practice of public adjusting involves the public trust. These educational events are important aspects of the right to practice public adjusting and fulfilling the profession’s obligation to the policyholders we serve.

The Conference will be at the Hilton Dallas Lincoln Centre. Here is a link for registration.

The state has argued that the “48 hour rule” protects policyholders at a time when they are vulnerable after a loss. Julie Patel has reported on the 48 hour rule in her series with the Sun-Sentinel. In her article last week, Patel asked her readers to weigh in on how they felt about being contacted by a public adjuster after a loss. At the time of this posting, and after more than a week of collecting data, eighty one percent of those who responded said they were in favor of being contacted right after the loss. Twelve percent of the voters preferred not to be contacted, while six percent preferred written information about the services offered by public adjusters and preferred not to be called or visited right away.

Click here to weigh in on the debate and see the instant polling results.

Based on the data collected so far, it appears that the Legislature’s alleged reasoning for protecting insureds with a solicitation ban was off-base. It also appears the public wants to know more about the services a public adjuster can offer when in comes to presenting a claim to an insurance company.

As soon as the ruling is made in Jeffery H. Atwater v. Frederick W. Kortum, we will update our readers.

Greg Raab, Manager of Integrated Services at Adjusters International, recently explained to the Associated Press the value a public adjuster brings to a property insurance claim dispute process. In the resulting article published by MSNCB and CBS Money Watch, Clause in Home policies can help resolve disputes, Raab explains that he has never worked on a claim that he did not think he could ultimately resolve with the insurance company. Raab is very familiar with the claim bumps that policyholders hit after a disaster, and he explained that the policy is the roadmap to recovery for the policyholder.

Policyholders should review their policies to see what types of alternative dispute resolution options may be available to resolve a claim. Appraisal and mediation are popular options. As reported by Eileen AJ Connelly, “[a]t least 24 states have statutes that refer to a formal arbitration or mediation process for homeowners insurance. Many states, including New York, require that policies include a provision for an appraisal process. This allows the homeowner and the insurer to choose neutral appraisers, who evaluate the loss, and an umpire who settles any disagreement about the value.” Many times, public adjusters are hired by policyholders to represent them as their insurance claim appraiser. Even if a state does not mandate an alternative dispute provision, it may still be in a policy.

Raab points out that before the dispute snowballs, a policyholder can hire a public adjuster to resolve the dispute because the public adjusters can explain is covered by the policy covers and do an independent assessment of the damages.

Last month, Greg Raab also had his own article published in the University Business Magazine. In Navigating Insurance Claims in a Higher Education Facility, Raab gives colleges and universities tips on how to handle a major loss Other businesses, churches, and condominium associations can benefit from Raab’s tips.

After contacting the agent or broker and reviewing the policy, Raab suggests:

• Assemble a Claims Management Team – Comprised of senior campus leadership and members of Risk Management, Health & Safety, Legal, Campus Security, Facilities Management, and Information Technology, all information should flow through one designated leader and the team should meet routinely to ensure a consistent, coordinated approach. A mismanaged insurance claim could negatively impact college funding sources, future enrollment, and key faculty and staff retention.

• Initiate a Public Relations Program – Communicate to students, faculty, staff, parents, alumni, banks, donors, vendors, suppliers, funding sources, news outlets, and local community contacts appropriate developments regarding the claim.

• Identify ownership or responsibility for damaged property – In a campus setting, there is property owned, leased, or controlled by the institution, students, faculty, staff, vendors, research partners, and others, with potentially overlapping policies to navigate.

• Mitigate Damages – Take reasonable actions to preserve and protect all insured property, with a focus on campus safety and continuity of regular campus business. Mitigation may include water and mold remediation, emergency board-up, demolition, or shoring up of damaged structures, and protecting hazardous areas with signage and security personnel.

• Initiate an Emergency Plan – If the event is widespread, you may be required to address temporary student housing, classrooms, and essential services such as medical and dining. The insurance policy may contain extra expense and business interruption provisions; both are funding sources that expedite the recovery and mitigate financial loss, albeit with specific requirements and limitations. Work closely with the insurance company and broker to ensure the proper allocation of funds.

Raab writes that claim navigation can get more difficult as time passes, and the assessment of a claim begins. “The waters may get choppy and obstacles may begin to multiply. This is the result of the institution having to balance ongoing day-to-day business with issues such as damage assessment, asset valuation, cash flow management, student and faculty service interruptions, oversight from governing bodies, bids, permits, debris removal, and other post-disaster issues.“ His navigational tools to consider include:

• Properly value campus assets – Colleges tend to abound with specialized buildings and equipment, antiques, and high-tech science and computer laboratories, and have unique valuation challenges such as non-reproducible research, intellectual property, branded items, and libraries with rare books, microfilm, and microfiche requiring environmental preservation. Negotiations regarding replacement cost and depreciation (money the insurance company will withhold) will profoundly impact the recovery. Obtain your own expert opinions. The insurance company will often hire outside experts such as engineers, equipment specialists, architects and accountants; the institution should engage consultants and valuation experts who can independently offer opinions from the institution’s perspective.

• Document everything – We cannot stress enough how vital proactively assembling, organizing, and presenting all necessary claim support documentation is, as the responsibility of proving damages solely rests with the institution. Put everything in writing and take numerous photographs: a picture says a thousand words, therefore hundreds of labeled, organized, and sourced pictures both pre- and post-event will speak volumes.

• Give special consideration to IT – Recovering electronic information, hardware, and software is essential to campus business, and may require restoration of back-up data.

• Manage claim finances – Create a separate general ledger account to track all claim-related costs. Work within your policy provisions to account for continuation of ordinary payroll and related continuing expenses if business is disrupted. Closely monitor all subcontractors to ensure the work being completed is aligned with the scope of damages and repair amounts agreed upon.

• Be aware of applicable building codes and other standards – Historic campus buildings may be picturesque, but if damaged, these same buildings may have to be brought up to current building codes, which can be an expensive proposition. Additionally, governing bodies such as OSHA, ADA, NIH, DEC, and USDA may implement standards and reporting or inspection criteria concerning asbestos, lead paint, accessibility, debris disposal, etc. Coverage may be available, but often contains restrictions and requires negotiation and planning.

• Research non-insurance funding sources – Depending on the type and severity of damage, there may be alternate funding sources for recovery for any under- or unfunded portions of your claim. Grants, low-interest loan programs, and FEMA funding (if damages result from a declared disaster) may be available. Coordinating the insurance claim with other funding sources requires careful attention and specialized programmatic knowledge.

To learn more about Adjusters International or Greg Raab, visit www.AdjustersInternational.com

Insureds who have just suffered a large property loss are often not in a financial position to hire public adjusters on an hourly fee, or even flat fee basis. For this reason, public adjusters often have contingency fee contracts with insureds, where the public adjuster receives a percentage of the insurance proceeds as payment for adjustment services after the insured finally receives payment from the insurance company. It follows that, the larger the insurance proceeds recovery, the larger the payment to the public adjuster. This arrangement creates problems if the public adjuster is needed in litigation to offer an expert opinion.

Courts in many state and federal jurisdictions have held that contingency fee arrangements for expert witnesses are against public policy. See Accrued Fin. Servs. Inc. v. Prime Retail, Inc., 298 F.3d 291, 300 (4th Cir. 2002). Consequently, many courts have rendered decisions excluding the testimony of such experts. See City & County of Denver, Colo. v. Bd. of Assessment Appeals of State of Colo., 947 P.2d 1373, 1374 (Colo. 1997) (person may not act as appraiser or expert witness and present expert testimony under contingent fee agreements); Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 73 (2d Cir. 1990) (excluding an expert's testimony as a result of the fact that he had been retained by the plaintiff on a contingency fee basis); Farmer v. Ramsay, 159 F.Supp. 2d 873 (D. Md. 2001) (excluding an expert's report and testimony as a result of his improper contingency fee arrangement with the plaintiff).

Courts reason that such expert opinion must be excluded because the contingent fee arrangement gives the expert a pecuniary interest in the outcome of the proceedings, and to allow the testimony would be against public policy. Belfonte v. Miller, 243 A.2d 150 (Pa. Super. 1968). Courts note the “long established rule of law” that “a special contract to pay more than the regular witness fees in ordinary cases is void for want of consideration and as being against public policy.” Id. at 152 (emphasis in original). Section 552 of the Restatement of Contracts also provides, in subsection (2):

[a] bargain to pay an expert witness for testifying to his opinion a larger sum than the legal fees provided for other witnesses is illegal only if the agreed compensation is contingent on the outcome of the controversy.

Id. at 153 (emphasis in original).

In Everett Cash Mutual Ins. Co. v. Bonnie Sue Gibble et al, No. 01-01,640, 2004 WL 5149339, (Pa. Com. Pl.) (May 14, 2004), the insured sought the assistance of a public adjuster prior to any litigation and signed a “Public Adjustor Contract,” retaining the public adjuster “to advise and assist in the adjustment of the insurance claim,” agreeing to pay a contingent fee comprising a certain percentage “of the amount paid by the insurance companies in settlement of [the] loss and necessary expenses.” During litigation, the insured’s counsel sought to have the public adjuster offer an expert opinion that the insurer “did not follow proper claims practice.” Judge Dudley Anderson issued a trial court order specifically precluding the public adjuster from giving expert opinion because,

In the instant matter, the Court finds Defendants' attempt to segregate [public adjuster’s] work as an expert witness from his work as a public adjustor “merely one of form”. It is also of no consequence that the public adjustor contract was entered into prior to the commencement of litigation. What does matter is that [public adjuster’s] preparation of the expert report followed the commencement of litigation and, as Defendants admit, [public adjuster] will be entitled under the contingent fee agreement to a percentage of any damages awarded for their loss. The Court cannot help but conclude, therefore, that the opinion rendered in the report is “so undermined as to be deprived of any substantial value”. While he may testify as a fact witness with respect to his adjustor role, [public adjuster] must be precluded from giving any opinion as an expert witness.

Clearly, public adjusters, expert opinions and contingency fee agreements don’t always mix. In coverage and bad faith litigation, lawyers and public adjusters must communicate and be aware of lay opinion and expert opinion issues. Lawyers unaware of a public adjuster’s contingency fee contract may be unprepared for motions to strike a public adjuster’s opinions after discovery of a contingency fee contract between the policyholder and the public adjuster. If the public adjuster does not have a contingency fee contract, then the public adjuster may be able to give expert opinion. If the contract is a contingency fee agreement, then the public adjuster is probably limited to giving only lay opinion or fact witness testimony. Proper planning and communication will help ensure the lawyer has designated the proper and necessary experts and disclosed any necessary public adjuster opinions, while taking care to protect those opinions from exclusion.

Recently, Gene Veno, the President of the American Association of Public Insurance Adjusters, was interviewed about the role of a public adjuster and the value a claims professional can add to a property damage claim when that professional is working on behalf of the policyholder.

It is still not uncommon for me to hear from policyholders that they only became aware of the services a public adjuster can provide after they had a negative experience during an insurance claim and turned to a public adjuster for help. But the work of public adjusters is most valuable if people are aware of them early in the claims process. Individuals, families, condominium associations and businesses that suffer losses need to know that in most states they have the ability to hire their own adjuster to help navigate the claim process. As Veno explains in the interview, 44 states now have licensed public adjusters available to policyholders.

One of the ways AAPIA is spreading the word is by doing radio and podcast interviews to educate the public. You may recognize Merlin Law Group’s very own Sean Shaw in the blogtalk radio show Legislative Wrap up with AAPIA's Gene Veno. AAPIA also interviewed Florida public adjuster, Dick Tutwiler, of Tutwiler & Associates.

The AAPIA website provides many great resources for those who want to stay informed on issues relating to public adjusting.

In prior posts, Chip Merlin has detailed some of the work AAPIA has been involved in during the last year.

• New Jersey Revises Public Adjuster Solicitation and Continuing Education Law
• After Discussions, Pennsylvania House Bill Does Not Criminalize Adjuster Neglect and Incompetence
• AAPIA Defends Rights of Public Insurance Adjusters in Pennsylvania Legislature

Take a listen to AAPIA’s The Value of Hiring a Public Adjuster:

A public adjuster’s experience and expertise is certainly an asset in assisting the insured and in building the insured’s case against an insurer that has unreasonably delayed or denied payment of covered benefits. Therefore, a public adjuster’s expertise must be thoroughly considered by a lawyer when it comes time for designation of experts. If a public adjuster or the public adjuster’s company was involved in appraisal, accounting, calculation of business interruption, calculation of actual cash value or replacement cost value, or valuation of personal property, a lawyer may want or need the public adjuster to give an opinion during deposition or at trial. Lawyers must determine whether an adjuster’s opinions are lay or expert opinion testimony, and this determination is crucial at the time the insured is required to designate experts.

Federal Rule of Evidence 701 provides that a witness who is not testifying as an expert may offer opinions or inferences that are: (a) rationally based on the perception of the witness, (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702. Lay opinion testimony often takes the form of a summary of first-hand sensory observations. Asplundh Mfg. Div., a Div. of Asplundh Tree Expert Co. v. Benton Harbor Eng., 57 F.3d 1190, 1200 (3d Cir. 1995).

Rule 701 was amended in 2000 "to ensure [ ] that a party will not evade the expert witness disclosure requirements set forth in Federal Rules of Civil Procedure 26 and Federal Rules of Criminal Procedure 16 by simply calling an expert witness in the guise of a layperson." Advisory Committee Notes, 2000 Amendments to Rule 701. Rule 701 prevents lay witnesses from giving opinions regarding scientific, technical or other specialized knowledge within the scope of Federal Rule of Evidence 702. Lay opinion testimony is not to provide specialized explanations or interpretations that an untrained layman could not make if perceiving the same acts or events. U.S. v. Conn, 297 F.3d 548, 554 (7th Cir. 2002); Liquid Dynamics Com. v. Vaughan Co., Inc., 2004 WL 2260626, *3 (N.D. Ill. 2004).

If a public adjuster will be giving expert opinion testimony (i.e., opinions based on scientific, technical, or other specialized knowledge), Federal Rule of Evidence 702 applies, and the public adjuster must be properly designated as an expert. Federal Rule of Civil Procedure 26(a)(2) requires that, "a party shall disclose to other parties the identity of any person who may be used at trial to present evidence under Rules 702, 703, or 705" of the Federal Rules of Evidence.

PRACTICE POINTER:

Cover your bases-- If it is difficult to determine whether opinion testimony is lay or expert opinion, designate the individual as an expert and indicate in the disclosures that the witness may provide both lay opinion and expert opinion testimony. By disclosing all opinions at the time of expert witness designation and disclosure, opposing parties are prevented from objecting to admissibility of the opinion testimony based on Rules 701 or 702.

Public adjusters must always be aware that their files and communications are discoverable and will be examined in litigation to determine if the file contains sufficient basis for any opinions (lay or expert) given at depositions or trial. Public adjusters with numerous areas of expertise will likely want to keep an up-to-date resume and list of certifications, continuing education, and licensures in the event litigation requires expert opinion testimony.

Based out of Santa Rosa Beach, Florida, Buz Livingston is all too familiar with the devastation and trauma that can be caused by catastrophic losses. Many of his clients had devastating losses after Hurricane Ivan. As a financial planner, Livingston helps his clients manage their assets and wealth, and that includes assisting clients with financial decisions concerning insurance.

Livingstone explains that the finances of a policyholder can be substantially impacted after a loss. Often, a policyholder uses his or her own funds for at least some portion of the claim. Livingston also explained how important it is for his clients to buy the proper insurance that will meet their needs. Livingston works to educate his clients that a bargain premium is not a way to save money if the policy does not provide the needed or desired coverage. He urges policyholders to be proactive and take more time to learn about the coverage they buy for their homes and businesses.

In a recent article, BUZ LIVINGSTON: Trying to Reason With Hurricane Season, Livingston provides some practical information based on his experiences with clients who have suffered losses. Livingston recognizes the shift insurance companies have made in connection with how business is done. He explained that insurance companies are in business to make money, so following through on the promises of coverage often takes a back seat to profits.

When it comes to hiring a public adjuster, Livingston justifies the expense for his clients. When dealing with a claim adjustment or payout, Livingston points out “Any loss is subject to a great deal of subjectivity. There is a maximum legitimate loss, a minimum legitimate loss and the difference can be dramatic. ”

Livingston provides other financial perspectives on insurance issues.

• Expect the cost of actual construction to increase greatly over the amount of the insurance company’s adjuster’s estimate.
• Instead of paying the claim—a claim is resolved with an insurer through the art of negotiation. Public adjusters in Florida can negotiate property damage claims and bring claims’ adjustment experience into the negotiations.
• Huge disasters overwhelm the system. Insurance companies don’t have enough experienced adjusters on staff so new and inexperienced ones are thrown in the breach.
• Adjusters are more generous with folks they like. Avoid settling a claim on a Monday, Friday or any rainy day (they always get you down).
• Just like buying a car, settle a claim during the last few days of the month.

Buz Livingston publishes weekly articles on financial issues for The Walton Sun. His pertinent choice of topics and great story telling style make financial issues interesting.

Patel points out that since 2006, eight property insurance companies in Florida have gone insolvent and insureds with more than 55,000 claims have been forced to deal with the Florida Insurance Guaranty Association (FIGA) for their insurance claims.

We have posted about FIGA in several other posts including, When Insurance Companies Go Under - The Fallacy of FIGA and FIGA is the New Slow Paying and Litigation Threatening "Insurer" in the Florida Property Insurance Claims Game.

The Florida Insurance Guaranty Association was created by legislation in 1970 as a non-profit organization that has a duty to settle claims in accordance with the FIGA Act, the policy, and Florida insurance laws, in a timely manner.

The husband/wife team at Public Adjusters Incorporated, led by President Daniel L. Guilfoyle, III and Vice President Rosemary Guilfoyle, has extensive knowledge of the insurance industry’s ever changing landscape. Dan Guilfoyle was contacted by Julie Patel about his experience as a public adjuster handling claims that had been turned over to FIGA.

Dan mentioned to a policyholder who lost $25,000.00 after his claim was turned over to FIGA. Dan told me the story. Dan’s company was hired as the public adjuster for two separate clients. Both insureds had purchased insurance policies from Northern Capital, and both suffered covered water damage losses. Before Northern Capitol was declared insolvent, both policyholders participated in the policy’s appraisal process to determine the amount of the loss Northern Capital would pay.

Northern Capitol named its appraiser and happened to use the same appraiser on both claims. Likewise, the same umpire was appointed on the two water claims. Both policyholders received signed appraisal awards of damages owed by Northern Capital. But Northern Capital didn’t pay, and FIGA was ordered to step in because Northern Capital was insolvent.

Dan recounted what happened next but said it was unexplainable… FIGA paid one award in full (minus the FIGA deductible), but FIGA determined that the $69,000.00 award for the other insured was not going to be honored. FIGA required that loss be adjusted from scratch by a FIGA adjuster. This policyholder was first delayed by FIGA’s rejection of payment on the signed appraisal award and then further delayed as FIGA began its own evaluation of the damages. FIGA then determined the damages for the loss only totaled some $24,000.00. Dan said that explaining FIGA’s response and actions to his 80-year-old client was beyond difficult. To make matters worse, the policyholder had listed his home for sale and a pending sale fell through because of the water damage claim that had not been resolved. Dan and the team at Public Adjusters Inc. were able to increase the claim amount further, but FIGA ultimately paid $25,000.00 less than the original appraisal award signed on the claim.

Julie Patel interviewed the former vice-president of Northern Capital. He did not understand why FIGA started over on many of the claims. “It wasn't particularly cost-effective for them to start over, especially [because the contractors estimating damage for Northern Capital] in many cases charged significantly less than the FIGA" estimators said Alex Blain-Cruz.

Florida policyholders who are dealing with insurance claims with an insurance company on the brink of insolvency or in court-ordered receivership may have all the more reason to hire a professional public insurance adjuster. The delay of the claim process, potential new claim deadlines, and claims adjustment red-tape require the dedication, determination, and experience that many public adjusters can provide.

Here is a link to the Florida Department of Financial Services that shows the Florida insurance companies that are officially in financial trouble.

Attorney Michael Davidson represented Florida's CFO, Jeff Atwater, who now stands in the shoes of Alex Sink in this case. Public Adjuster Kortum was represented by Wilbur Brewton.

When the video of the oral arguments becomes available, we will update the post, but until then, here are some interesting quotes from the proceedings provided by Janet Zink of the St. Petersburg Times Tallahassee Bureau.

"The problem you have here is 'initiate contact' seems to be rather broad. I don't understand your argument, that it doesn't encompass these written communications," said Chief Justice Charles Canady. "I'm missing your point."

When Davidson tried to explain the intent of the statute, Justice Canady and Justice Pariente expressed frustration with the way the law was written.

"That's great you didn't mean it, but we've got to deal with what's said," Pariente said. "It's the 'initiate contact.' That's to me the problem."

She questioned the motivation for the legislation, noting that some people who hired adjusters to help with their hurricane claims received 750 percent more on claims than those who didn't.

"It seems to me it's the insurance industry saying we don't want adjusters there because we want to do our thing," Pariente said.

Wilbur Brewton, the attorney for Kortum, seized on Pariente's remark.

"It's insurance companies that are the issue," he said.

The first 48 hours after a disaster, such as a fire or hurricane, are critical because cleanup attempts can affect claims.

"It's hard to understand the rules," he said. "Those are the most important times for a policyholder to have the service of a public adjuster. We're not bad guys."

Commercial speech, whether it's face to face, on the phone or through a written document, is protected by the First Amendment, he argued.

Davidson countered that laws limiting solicitation by attorneys, who are schooled in the art of persuasion, have stood up to constitutional questions.

"The only difference between a lawyer and adjuster is the lawyer has no fee cap. The public adjuster does," he said.

Pariente responded: "Then we ought to encourage them. I'm going to get one next time. It does sound like they are doing a very important service."

And yes, you read that right, the Honorable Justice Pariente gave kudos to public adjusters and said she would hire a public adjuster the next time she has a claim.

The data referenced in the case about the 750% increase in claim payments originates from the OPPAGA report. To learn more about OPPAGA report, check out my post, Public Adjusters and Sinkhole Claims, or read the report in its entirety here.

Rest assured, as soon as a decision is issued in this case, we will provide the opinion.

In Expect Delays With Claims, the Journal warned:

If you are filing a claim under your homeowners policy because of Hurricane Irene or another loss, brace yourself: On major claims, it could take months to get through the whole process.

The article even suggested that businesses consider hiring a public insurance adjuster:

If you have a small business, consider hiring a public insurance adjuster to assess the damage and organize your claim, which might include inventory and repair costs. The public adjuster negotiates with your insurance company and typically takes about 10% of the claim as payment.

When the Wall Street Journal, a bastion of pro-business rhetoric, admits that the insurance industry takes months to pay claims and that policyholders will benefit from hiring public insurance adjusters, people should take notice and act accordingly.

All this reporting of slow paying insurance companies can be disheartening to policyholders. There are certainly more enjoyable slow rides than the claims process:

In the article, Next Time I Will Do It Differently: Insurance Regrets After Disasters, public adjuster Ron Reitz, CPPA, provides valuable information for both those who have suffered a loss and those who want to educate themselves to be prepared for the future.

The Eight Regrets:

1. I never bought flood insurance
2. I didn’t tell my insurance company about my home addition
3. I didn’t buy earthquake insurance
4. I didn’t buy insurance because I am a renter
5. I didn’t have the correct replacement costs in my home insurance policy
6. I lost my policy
7. I didn’t take photographs of the damage to my home
8. I never took inventory of my possessions

Ron Reitz, the current first vice president of the National Association of Public Adjusters, says “it often takes a tragedy for homeowners to recognize how important insurance can be.” But following the advice Ron and others provide in this article may alleviate some of the stress, headaches, and potential regret for insureds.

Before opening Quality Claims, Ron pioneered the National Hazard Insurance Claims business at GMAC-RFC. He is the past President of the California Association of Public Insurance Adjusters (CAPIA) and will be the president of the National Association in 2012.

Quality Claims Management Corporation, based out of San Diego, California, provides hazard claim recovery services to investors, mortgage servicers, homeowners and businesses. “All claims are adjusted by licensed insurance professionals for an equitable settlement and accelerated resolution timelines. Ron’s team follows the mission statement to “provide premier insurance recovery services to our clients through unrivaled diligence, expertise, integrity and passion for excellence.”

To find out more about the National Association of Public Insurance Adjusters click here.

To find out more about Ron Reitz and Quality Claims Management Corporation click here.

To demonstrate the importance of reviewing insurance coverage, I want to revisit a North Carolina case that considered claim preparation expenses. If you have been following Michelle Claverol’s posts on understanding business interruption claims, you will remember Fountain Powerboat v. Reliance Ins. Co., 119 F. Supp. 2d 552 (E.D. N.C. 2000) was discussed in The Value of Ingress/Egress Coverage - Understanding Business Interruption Claims, Part 33. Michelle's post discussed the Court’s interpretation of the policy coverage for loss caused by lack of access to a facility. I am writing about another aspect of the case -- coverage for claim preparation expenses.

Hurricane Floyd struck North Carolina on September 15, 1999. At that time, in Washington, North Carolina, Fountain Powerboat Industries’ manufacturing facility and corporate headquarters were affected by the hurricane. Fountain Powerboats made a claim for flood damage, business interruption and reduction losses. The location of Fountain Powerboats was a critical factor impacting their business after the hurricane. The only way to reach Fountain Powerboats’ required travel on US Highway 17 to Whichard’s Beach Road. When Hurricane Floyd struck North Carolina, it caused devastating flood damage and record-setting rainfall in many of the eastern counties. According to the North Carolina Department of Transportation, the only roads that lead to Fountain Powerboats were flooded for several days, and Whichard’s Beach Road was closed from September 16 to September 25, 1999.

Fountain Powerboats tried to keep operations going, but, due to the poor road conditions, they were forced to used large trucks to shuttle workers from “pick-up points” and transport them to the facility. As a result of Hurricane Floyd, Fountain’s production fell to 33% of full capacity and production did not return to normal until October 25, 1999.

At the time of Hurricane Floyd, Fountain Powerboats was insured with Reliance Insurance Company. Reliance issued nearly $1,000,000.00 for the flood damages to the building, but failed to pay for the business interruption and reduction losses.

In The Value of Ingress/Egress Coverage - Understanding Business Interruption Claims, Part 33, you can learn more about how the court treated the policyholder’s appraisal demand and the interpretation of the ingress/egress coverage.

Another issue in the case was Fountain’s claim for preparation expenses incurred in connection with the loss.

Section VII, part O of the Fountain Policy provided:

VII: Extension of Coverage

This policy covers:
…

O. Claim Preparation Expenses

Expenses incurred by the Insured or by the Insured’s representative including Auditors, Accountants, Appraisers, Lawyers, Consultants, Architects, Engineers or other such professionals in order to arrive at the loss payable under this policy in the event of a claim. This provision does not cover expenses incurred for the services of any public adjuster.

In order to present the claim to Reliance, Fountain hired Allan Klotsche as its risk manager for the loss. While Klotsche held adjusting licenses in other states, he was not acting as or licensed in North Carolina as a public adjuster. Reliance argued it did not have to pay for claim preparation services provided by Klotsche because his work resembled claims presentation work by a public insurance adjuster.

At the time of the loss, Klotsche was working as the VP and CEO of T.E. Brennan Company, a risk management and employee benefits consulting firm in Wisconsin. Klotsche first started helping Fountain ten years prior to the hurricane when he developed an insurance program for Fountain.

According to the deposition testimony, Klotsche provided “input regarding Fountain’s claim for its destroyed yacht mold, the extended period of indemnity and loss of ingress and egress.” However, Klotsche did not prepare any of the documents presented to Reliance in support of Fountain’s claim. Klotsche attended a meeting with Reliance about the yacht mold, explained coverage to Fountain, and collected and organized data on the business loss that he used to negotiate on Fountain’s behalf.

The Court ultimately determined that the claim preparation performed by Klotsche was done as a consultant and not as a public adjuster, and that this work was covered under the policy.

The Court reasoned:

Klotsche clearly assisted Fountain in the preparation of its claim and reported to Fountain. The main point of difference is whether Klotsche investigated the claim…The evidence supports a conclusion that Klotsche’s actions are more in line with a consultant than a public adjuster. There is no evidence that Klotsche independently tracked down information through inquiry. Rather, Klotsche took information given to him by Fountain and gave Fountain his professional advice and services. Therefore the fees… are covered….

This case shows that expert assistance in claim preparation can be covered under certain insurance policies, but that insurers will often argue for the most narrow and restrictive interpretation of the policy language. It is critical for an insured to understand exactly what is covered before incurring expenses.

After more than 30 years in the industry, Klotsche retired from the insurance industry and moved to Florida with his wife, Judith. Klotsche now devotes his time to helping the Big Brothers/Big Sisters. He serves as Advisory Board Chairman Emeritus, and in 2007, was awarded the Volunteer of the Year Award for his services.

In Contractors Cannot Legally Negotiate Insurance Claims, I noted the following:

People who act as contractors for policyholders can negotiate insurance claims only if they are licensed attorneys or licensed public insurance adjusters. If properly licensed, they can negotiate only if they are retained by the policyholders. In jurisdictions that allow a contractor to work on and act as a public insurance adjuster on a single claim, I imagine some contractors are retained as both. A conflict of interest seems inherent in the dual roles, and virtually every Bar Association in America would prohibit an attorney from representing a client as a contractor and legal counsel at the same time.

As I noted in Failure to Communicate with the Insured's Contractor is Bad Faith, this does not mean that once a policyholder has retained a contractor or roofing contractor insurance adjusters should not seek out and consider their opinions. However, it is illegal for an insurance adjuster and roofing contractor to negotiate or adjust a policyholder's claim together.

The ad by All Star Roofing seems to indicate that after an insurance claim denial, policyholders should retain All Star Roofing to guide them through the claims process with the insurance company. The ad further indicates something about a "free roof program." My impression is that the first ad encourages policyholders to engage a non-lawyer for legal advice and help with an insurance claim or to engage a contractor to act as a public adjuster. This is the exact activity which the Arizona Department of Insurance warned against in the Contractors Cannot Legally Negotiate Insurance Claims post.

I have noticed a trend at insurance fraud seminars where insurance restoration contractors and roofers are discussed. The insurance restoration industry has exploded over the last dozen years. There are many legitimate players in that industry and some unprincipled players who will do anything to make money. For example, Comments on Unauthorized Public Adjusting noted how some construction contracts are deemed illegal public adjusting contracts by the California Department of Insurance. Problems arise in the insurance restoration industry because it is not licensed by the departments of insurance, and in many venues, there is no government oversight which protects the public at a time of crisis.

I think one of the best observations about this situation was made in Greenspan Public Adjuster Interviewed About Unauthorized Public Adjusting, where lawyer turned public adjuster Masood Kahn said:

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.

Given the expected strength of Hurricane Irene, I am pretty certain that Gene Veno will make certain the South and North Carolina Departments of Insurance are aware of these important consumer protection issues.

It is important to understand that the Michigan Insurance Code reviewed by this Court requires appraisers in insurance disputes to be independent. In the White case, State Farm argued Jeff Moss could not act as both the adjuster and the appraiser because he was not “independent” since the policyholders had assigned 10% of the claim to Moss’ public adjusting firm and that agreement was in effect at the time of the appraisal. Accordingly, State Farm alleged the public adjuster had a pecuniary interest in the appraisal outcome, so he was not independent under the Michigan statute.

Since no Michigan court had published an opinion directly on point, the Court looked to Rios v. Tri-State Insurance Company, a decision from Florida’s Third District Court of Appeal.

In Rios, the policyholders suffered damages caused by Hurricane Andrew. They hired East Coast Appraisers, Inc., and filed suit to compel appraisal. The insurance policy allowed for appraisal but required that each party select a “competent, independent appraiser.” Tri-State attempted to dismiss the appraisal suit and argued that because East Coast’s compensation was based on a contingency fee agreement it was not independent. Since the insurance policy did not define the term “independent,” the Court looked to the dictionary for the definition. The 6th edition of Black’s Law Dictionary defined “independent” as “not subject to control, restriction, modification, or limitation from a given outside source.” Although the insurer argued that a contingent fee agreement gives the appraiser a direct financial interest in the award, the Court did not accept this argument. While the Court held that the existence of the contingent fee agreement must be disclosed to the opposing side, it also held an appraiser can be independent, within the meaning of the appraisal clause, while working under a contingent fee agreement.

The Michigan Court also cited another Florida Third District Court of Appeal case, Galvis v. Allstate Insurance Company. In Galvis, the policy required the appraiser to be “disinterested.” The Court held that requirement did not prevent an appraiser from receiving a contingency fee for an appraisal.

While other jurisdictions have criticized contingency fee agreements in certain contexts, this Michigan Court followed Rios. The Court reasoned, the public adjuster is “not subject to control, restriction, modification or limitation” by anyone. The Michigan Court also adopted the requirement that the opposing party be made aware of the contingency fee agreement.

During the discovery phase of this case, counsel for Mr. and Mrs. White, Michael Fabian of Fabian, Sklar & King, was able to extract useful information about the fee compensation given to State Farm’s appraiser, and this information was published in the concurring opinion written by the Honorable Judge Shapiro.

Judge Shapiro authored a separate two page concurring opinion to emphasize “the practical dislocations that would arise from adoption of defendant’s argument.”

Appraisal is a practical mechanism to resolve disputes without the necessity for lawsuits and the appraiser acts as an expert for the party that hires them. While an appraiser brings specialized knowledge to the process, all parties also expect that each appraiser will articulate and generally support his client’s position concerning the claim…

Defendant suggests that payment of an appraiser by contingent fee is corrupting, but payment by hourly fee is not. This is a distinction without a difference. The appraiser appointed by defendant in this case makes his living acting on behalf of insurance companies and it is either naïve or disingenuous to suggest that he will continue to be hired by them if they do not feel that the results he obtains are in their interest. Defendant’s appraiser testified that over the past three years alone, defendant has appointed him as its appraiser on approximately 40 claims and has paid him $114,512.03 in appraiser fees his hourly fees exceeded the policyholders’ appraisers’ fees by 42 percent. To maintain that he does not have a pecuniary interest in seeking a favorable outcome for defendant and the other insurance companies that retain him is absurd. (Emphasis added).

Kudos to Michael Fabian and appellate counsel, Don Fulkerson, for their efforts on behalf of the policyholders.

The Michigan statute requires the appraiser for each party to be independent, and the umpire to be impartial. State Farm’s policy issued to the Whites said that the appraiser had to be disinterested.

State Farm rejected Moss as an appraiser, arguing Moss was not independent because he was retained by the Whites as a public adjuster on a contingency basis. The Whites assigned 10% of their claim to Moss for his work as their public adjuster. As for the appraisal duties, Moss was to be paid on a time-and-expense basis, but the total paid to Moss would not exceed 10% of the final amount obtained from State Farm.

When State Farm refused to allow Moss to act as the both the appraiser and public adjuster on the loss, the Whites filed a declaratory action asking the court for relief. State Farm argued that the Michigan Insurance Code on appraisal was unconstitutional and was a violation of State Farm’s due-process rights. The trial court ruled that Moss was an independent appraiser and could help the Whites with this part of the claim process, and that the Code was not unconstitutional.

State Farm appealed the ruling and the three judge panel in Oakland Circuit Court upheld the trial court’s decision. Both the opinion and the concurring opinion are available here.

When it comes to determining whether a public adjuster can be independent appraiser as required in the Michigan Insurance code, the Court said yes.

We…hold a contingency-fee agreement does not prohibit an appraiser from being “independent” under MCL 500.2833. (footnote omitted) Moss is clearly “‘not subject to control, restriction, modification, or limitation’” by anyone. ..Moss testified that he makes his own determinations regarding the loss and does not listen to his clients regarding a recommended settlement amount, and defendant’s appraiser agreed. Moss is “independent,” and we affirm the trial court’s decision. (footnote omitted)

The due-process agreement raised by State Farm was also quashed by the Court.

Public adjusters and appraisers are hired to assist in presenting a claim to an insurance company and to assist in any dispute that might arise, respectively. They are more similar to attorneys than to judges and umpires….Auto-Owners, 238 Mich App at 401, allows for the likelihood of a party-appointed appraiser being biased towards the party that retained him. This does not deprive defendant of any constitutional right. The cases cited by defendant in favor of its position assume that an appraiser is directly analogous to a judge. They are not binding in this situation because Moss is not required to be quasi-judicial or impartial. (citations omitted) Moss is not a quasi-judge and there has been no denial of defendant’s due-process rights. The trial court did not err in its ruling.

Michael Fabian, of Fabian, Sklar & King, represents Mr. and Mrs. White. I contacted Fabian directly, and he provided our office with more details about the case.

This case is very significant because it expands the law that previously existed under both Linford Lounge and Allied Adjusters cases, in that it specifically held that the public adjuster did not have to rescind the public adjusting contract when he moved forward and acted as the appraiser for the insured…We are proud of this decision, which clarifies Michigan law and applies a common sense standard to appraisal proceedings. It also ends State Farm’s policy of objecting to public adjusters as appraisers because of the existence of their percentage fee agreement.

Next Saturday, I will write in more detail about the work done by Attorney Fabian to show the Court the flaws in State Farm’s arguments, review how the Florida case of Rios v. Tri-State Insurance Company guided the Michigan Court, and evaluate the well-written concurring opinion that calls out State Farm and details the potential problems that would have developed had the Court bought State Farm’s ideas.

As explained by Chip Merlin in his post, Adjusters Have Codes of Ethics: Florida's Are Significant and Need to Be Enforced,

These rules were made to protect the public and consumers of insurance:

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.

FAPIA, the Florida Association of Public Insurance Adjusters, requires it members to follow both the Adjuster Code and the FAPIA Code of Ethics. FAPIA also has a committee devoted to enforcing its high standard of ethics. The Florida Department of Financial Services looks to FAPIA and its Ethics Committee for responses on ethical issues relating to public adjusters statewide.

Harvey Wolfman, of The BCH Group, is the current chair of the FAPIA ethics committee. Mr. Wolfman is proud of the work of the committee. As it stands, FAPIA is the largest trade organization of public insurance adjusters in the nation and other public adjuster associations have modeled their groups after FAPIA.

Mr. Wolfman, along with the FAPIA board, recently invited Gary Rowland of AAA Claims Consultants Inc., to join the Ethics Committee. I had the opportunity to spend some time with Gary at the summer conference, and I learned more about Gary and his passion for helping policyholders in Florida.

Gary said that both his past experience working as a contractor and the guidance and principles from his late father have shaped his approach to helping policyholders with insurance claims.

After working more than three decades as a contractor, Gary left Atlanta and began preparing damage estimates after the 2005 storm season. It took only six weeks in Florida for Gary to see that he could use his skills here to truly help homeowners and business owners get their property back to normal. Gary studied to become a public insurance adjuster and put his construction knowledge to work for the benefit of Florida insureds with United States Public Adjusters in Hollywood, Florida.

They trained me in the proper ways to handle a claim, adjust a loss, and work with the insurer’s representative to get my clients their full benefits

When you meet Gary, you can tell right away that he has a love and passion for explaining to others how to fix a problem based on construction principles. When in Atlanta, Gary was the contractor on many renovation projects, including restoring or upgrading some of Georgia’s historical properties. Gary is well respected, and was published in the Journal of Light Construction in 1995.

Gary often focuses on explaining how renovation construction is different from a new construction project. Renovations involve repairs and replacements within an existing framework. Gary uses his background in renovations and restorations when he adjusts claims for Florida policyholders.

In 2008, Gary moved to Tampa and started AAA Claims Consultants. I asked Gary about this business now.

Starting any business from the ground up is difficult, yet basic rules remain. Be true to your client, be vigilant in getting the facts, study to know the ever changing rules, remain calm and be polite to all you meet.

My work is secure, in that we will always be the consumer’s guardian for fair treatment in claims. I know even with all our trials and tribulation in this industry, we are the voice of reason in a world filled with the mantra of business interests. It should be our goal to always have our client’s best interests as our focus and safeguard them from pitfalls that could jeopardize their claim.

I am honored to be in a profession that by its very nature throws a safety net around the consumers we represent. I have heard our job is like herding cats. Yet, in a world gone mad, we must continue to be the consumer’s best weapon.

Whether you are a public adjuster or an adjuster working for insurance companies, a best practice for adjusting claims in Florida is to print the adjuster Code of Ethics, study it, and keep a copy in your briefcase for guidance and reference.

The numbers from Patel’s article:

There are 47,040 adjusters on staff at Florida insurance companies, including those based outside the state; 29,022 independent insurance adjusters who can be hired by insurers to work on claims; and 2,602 public insurance adjusters, who are hired by policyholders.

The state received 246 complaints about public adjusters since February 2010 -- compared to 69 against insurers' adjusters, according to the state's Department of Financial Services, which handles and looks into the complaints. Another state agency, the Office of Insurance Regulation, regulates and investigates insurance companies.

Patel points out that complaints against insurance company adjusters may not be a fair comparison because consumers may have filed complaints against their insurance companies instead of the individual insurance company adjuster.

The state received 27,138 claims-related complaints against insurers since 2008, … A spokesman for the insurance regulation office could not say how many were investigated.

Patel has crunched the numbers and determined that “when Floridians complain that an insurance company's claims adjuster is mishandling, lowballing or delaying claims, there's a less than 16 percent chance the adjuster will be disciplined.”

Another issue to consider is whether the complaint forms that have been filed by Floridians accurately reflect the number of insureds who have valid claim problems.

The complaints reviewed in the article were filed by consumers on the Department of Financial Services webpage. But finding and filing a complaint against an insurance carrier or adjuster takes some determination. The homepage of the Department’s webcite does not provide any information about how to find or file a complaint.

On the Florida Department of Financial Services home page, there are two links geared towards consumers. Under what the department calls “Services,” one can elect to review Citizen Resources or Consumer Protection pages. But neither of these pages leads to the complaint form. It takes nore time and effort to stumble upon the right links.

This is how to find the complaint form.

Starting on the DFS home page, click on the Consumer Protection link. Once on that page, look for the link to Consumer Assistance. Once on the Consumer Assistance page, click the Consumer Help Online link, and the page will change. On the left side, there is a large graphic that says CONSUMER HELP ONLINE. On the right side, the page promises, “The Division of Consumer Services is ready to assist you with your insurance concerns.”

Under this section, there is another link to REQUEST INSURANCE ASSISTANCE.

Finally, the complaint form is found after clicking on the, “Request Insurance Assistance” link.

It seems strange that the complaint form is not called “Complaint Form” or given a title that would indicate it is the document consumers need to file a complaint against their insurance company and request help.

The phrase “REQUEST INSURANCE ASSISTANCE” could be interpreted by some as a resource for finding or buying insurance, or understanding the different kinds of insurance. When policyholders have a claim in Florida and they are looking for help with their insurance company, they already have insurance. What they need claim assistance.

If the department wants to help policyholders it could make the form easily available and name the form – COMPLAINT FORM.

And perhaps, if the Department made the form available on the home page or had a link to it on the homepage, more information would available to accurately show the number of Floridians who feel their insurance claim is not being handled properly.

In Dunn v. Am. Family Ins., 251 P.3d 1232, 1238 (Colo. App. 2010), the insureds’ home flooded with sewage and water, and mold resulted. After having to vacate the home, the insureds’ pipes froze and additional damages occurred. The insureds alleged that their contractor repeatedly attempted to communicate with American Family Insurance regarding potential coverage for remediation of water and mold damage. The insureds also claimed that despite repeated efforts, neither they nor their contractor were able to obtain American Family’s confirmation that certain repairs the contractor considered necessary were covered under their homeowners policy.

During the contractor’s deposition, he explained that, “without an assurance from either defendant or plaintiffs that one would pay if the other did not, he was hesitant to go forward with the work and made little progress in cleaning up the mold.” Eventually, due to this lack of progress, the insureds retained another contractor, causing further delays in the mold remediation. The insureds claimed that “this delay permitted the mold contamination to worsen and spread, causing more extensive damage to their home and adverse consequences for their health.”

The lower district court improperly granted summary judgment in favor of American Family, finding that the insureds' claims related to communication did not state a claim for violation of any good faith duty.

On appeal, the Court considered this issue of first impression. The Colorado Court of Appeal noted that bad faith breach of an insurance contract encompasses the insurer’s entire course of conduct, and that Colorado’s Fair Claims Practices Act (C.R.S. § 10–3–1104(1)(h)(II), (V)) declares that failure to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies is an unfair or deceptive trade practice. 

The Court then clarified the scope of people and entities with whom an insurer has a good faith duty to communicate. The Court stated:

The need for prompt communication and investigation is obvious: besides the absence of peace of mind, the untimely adjustment of a claim exposes a claimant to additional loss of property. Thus, we conclude that defendant had a duty to promptly and effectively communicate with anyone it was reasonably aware had or legitimately needed information pertaining to the handling of plaintiffs' claim.

This opinion is particularly helpful to policyholders who select their own contractor, rather than a contractor on the insurer’s Preferred Service Provider (“PSP”) list. Often when a policyholder selects a contractor not on the insurer’s PSP list, the insured or the insured’s public adjuster is responsible for coordinating timing of work and payment issues. For larger commercial projects, contractors usually won’t begin work unless coverage is confirmed or partial payment is received upfront. This opinion provides policyholders additional leverage when the insurer fails to communicate with the insured, the contractor, and all other entities that legitimately need information pertaining to the handling of an insured’s claim.

At exhibit number 256, Radcliff handed the public adjuster a document that listed the following:

The minimum requirements of a well documented public adjuster claims file will include:

1. Contact Information

2. Retention Contract

3. Insurance Policy

4. Summary of Coverage and Limits

5. Time Deadlines—Proof, Replacement Cost, Statute of Limitations

6. Diary

7. Communications

8. Causation Proof

9. Damage Proof

10. Checklist of Post Loss Requirements

11. Claim Costs—listed and copies of invoices.

12. Insurance Company Causation and Damage Proofs

13. Claims Payments—listed and copied.

14. Closing Statements or Public Adjuster Invoices for Services

That is exactly what I wrote in the paper, Public Adjuster Best Claims Practices and the Claims File, published in Saturday's post Public Adjuster Claims Handling Best Practices.

For all my public adjuster friends, it appears that the insurance industry may consider what I wrote authoritative enough to be a claims handling standard. While most public adjusters have files that adhere to most of these "minimum requirements," I am certain many public adjusters fail to maintain all of them. For example, some public adjusters have privately argued with me regarding the need to keep diaries of activities and communications.

The Florida Association of Public Insurance Adjusters has already asked for permission to use my paper in its orientation class required for all new members. Since I think these standards help policyholders obtain full, fair and prompt recoveries, I will promote them and provide additional details of each aspect in the future.

The hard work David Beasley provided to FAPIA has made a definite impact on the association and FAPIA’s conferences. During Beasley’s time as president, members received monthly updates about the work of FAPIA and news updates on topics affecting Florida insureds. Beasley worked closely with FAPIA’s public relations firm to increase public awareness of public adjusters, challenge unsupported negative remarks about the public adjusting industry and promote consumer rights.

Beasley also spearheaded a new sponsorship program to ensure FAPIA’s ability to continue its fight for the rights of consumers who want to hire public adjusters. He changed the educational structure of the association by hiring Florida Career Development, Inc., which successfully secured continuing education credits for public adjusters and continuing legal education credits for associate members who are attorneys. Beasley was also instrumental in bringing FAPIA and NAPIA together so that both associations work as a team in Tallahassee to best serve the public adjusting industry and consumers. This partnership has been very successful.

Beasley joined FAPIA in 2001 and has been a board member for the past seven years. He credits positive changes within the association to the hard work of the board and the close relationships of past presidents.

Long before becoming the president of FAPIA and before he became a public insurance adjuster, David Beasley worked as independent adjuster and then as a large loss residential and commercial adjuster for Nationwide.

I enjoy helping people in need. There is no greater satisfaction than when an insured gives you a big hug and thank you for assisting them put their family’s life back together after suffering a substantial loss.

As time passed, Nationwide began to make changes that caused Beasley to question his role in the process. In November 2001, Beasley decided that he no longer felt comfortable working for Nationwide and joined a public adjusting company. Beasley stated:

This was the right decision, now I can truly help people without any of the insurance company restrictions or interference. The first month or so was a big eye opener as a public adjuster. As I would meet policyholders, I could not believe how their claims were under paid or denied when there was no question that the damages were covered. My jaw kept dropping when I would witness these injustices. I would like to thank Ron Livingstone for giving me the opportunity and training which has helped me become the Public Adjuster I am today! Thanks Ron!

Since becoming a public adjuster, Beasley feels like he is making a difference and oftentimes helps people who can’t help themselves. It is not uncommon for Beasley to take a case pro bono if the insured is in need.

I have a soft spot for the elderly and the disadvantaged. I truly enjoy helping people. Insurance policies provide insurance benefits to the insureds, but insurance companies are making it increasingly difficult for policyholders to get a fair settlement.

Beasley is not only a veteran adjuster, he is also a Windstorm Insurance Network® Certified Umpire with advanced training and frequently acts as an umpire or appraiser evaluating insurance claims.

Beasley has also been called to testify as an expert on bad faith regarding the standards that should be followed during a claims investigation. He and the other members of FAPIA have pledged to follow a code of ethics that goes beyond what the Florida Statutes require; this voluntary association holds its members to a higher standard.

 

• Conduct themselves in a spirit of fairness and Justice to their Clients, the Insuring Industry, and the Insuring Public, as to command the respect and confidence of All.

• Solicitation of business will be conducted on the highest level of Propriety and Professionalism.

• Institute a rate of commission that is fair and equitable and strictly in accordance with laws of Florida and the rule of the Department of Insurance.

• Presentation of all facts will be represented to the Insuring Public and the Insurance Industry with undisputed clarity.

• Observe the rules of licensure set by the Department of Insurance and Peruse the laws of State of Florida without deviation.

• Follow a standard of education that assures the proper fitting, of knowledge and experience, for the adjusting process assumed.

• Shall never disseminate any form of agreement, advertising, or printed matter, which might subject public adjusting and Public Adjusters to criticism or disrespect.

• Will always protect the rights of the insuring public and assure professionalism within the membership of Florida Association of Public Insurance Adjusters

1. Members shall conduct themselves in a spirit of fairness & 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 FDFS.
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 company representatives, so as to foster a cordial and harmonious relationship with all branches of insurance business, and work 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.

As President of FAPIA, Beasley volunteered much of his business time making sure public adjuster and policyholder interests are front and center. Much of that time was spent fighting laws which restrict consumers from public adjuster representation; laws that harm policyholders and violate their rights to fair representation. Beasley’s hard work and dedication to FAPIA should be recognized and appreciated. He can be reached at 321-277-1784 or via email at dbeasleyfl@gmail.com

If you are interested in becoming a member of FAPIA, please contact the organization directly at their website or by calling 407-830-4892.

At the Florida Association of Public Insurance Adjusters Annual Convention, I recently gave a speech, Ethical Requirements of Public Adjusters and What Experienced Public Adjusters Should Have Included in Their Claim File. A paper I delivered as part of that speech, Public Adjuster Best Claims Practices and the Claims File, is available here. I noted the disparity between the vast sums of literature on this topic for insurance company and independent adjusters and that available for public adjusters:

Claims handling “best practices” are routinely mentioned when discussing claims handling by insurance company adjusters. The discussion and analysis of what constitutes a claims handling “best practice” for a public insurance adjuster is not in current literature. This paper is a beginning of that analysis and focuses on claims file content and organization for public insurance adjusters.

There is no complete or definitive source for property insurance claim handling “best practices.” I read hundreds of insurance company and independent adjuster claims manuals, training classes, operation guides and claims handling requirements. While the insurance defense attorneys and insurers argue their claims handling "best practices" are "trade secrets," they are substantially similar. Most would agree that any first party property insurance claims handling "best practices" would include the following:

1. They are in accord with mandated laws and regulations.
2. Timeliness is paramount. Communications must be acknowledged within mandated time frames.
3. Thorough and timely investigation of coverage and evaluation of damages are accomplished.
4. Claims are settled. A "good faith" effort is made to resolve the claim.
5. Honest and transparent communications (not misleading) are required.
6. Written procedures are adopted and updated.

Many in the insurance industry routinely teach that point number five should not be documented in the claims file. We have uncovered training seminars, sometimes taught by insurance company lawyers, indicating that only a sanitized version of facts and motives for claims activity should be placed in the claims file. According to these training materials, a sanitized claims file should protect the insurer from the consequences of its improper conduct. They essentially instruct adjusters to be dishonest in the written diary activities and communications. Dishonesty is never ethical.

On the other hand, at least there are written standards and procedures that are available for insurance company and independent adjusters to follow. There is a dearth of written claims handling standards for public adjusters. This needs to change. As I indicated in the paper, written standards are warranted as part of our ethical obligations to ensure that policyholders are treated fairly:

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.

I have also made this point as a warning to company and independent adjusters:

Insurance company adjusters that negotiate an insurance claim with contractors are knowingly engaging with others in illegal activity and committing unfair insurance claims violations.

People who act as contractors for policyholders can negotiate insurance claims only if they are licensed attorneys or licensed public insurance adjusters. If properly licensed, they can negotiate only if they are retained by the policyholders. In jurisdictions that allow a contractor to work on and act as a public insurance adjuster on a single claim, I imagine some contractors are retained as both. A conflict of interest seems inherent in the dual roles, and virtually every Bar Association in America would prohibit an attorney from representing a client as a contractor and legal counsel at the same time.

Contractors can and should discuss the damage they find and costs of repairs with insurance adjusters. The Arizona Department of Insurance clearly indicated this was acceptable:

It is not unusual for a property owner’s contractor to discuss the details of building damage with the insurance company’s adjuster, particularly when there is extensive or complex damage. Often the contractor’s expertise is essential to identify precisely what was damaged, the extent of the damage, and the cost to repair it...

Over the past fifteen years, there has been a growing trend where out-of-state and specialty restoration contractors come to catastrophe areas. Some have one or two page contracts that essentially give them the right to act as the contractor and adjust losses for policyholders, as the contracts require payment based upon the insurance recovery. The Arizona Department of Insurance noted this trend, that it is illegal and the possibility of exploitation:

The Arizona Department of Insurance (ADOI) ordered an Arizona building contractor, True-Built Construction, LLC (Weston Farnes), to stop acting as an insurance adjuster without a license. Arizona insurance law requires any person who “adjusts, investigates or negotiates settlement of claims” to have a license from the ADOI.

...In this case, Farnes had his homeowner client sign an “Authorization” form which stated that he was representing the homeowner in negotiations with the insurance company “to obtain full reimbursement under the terms of [her] policy for a property damage claim.”

The massive hail storm that hit the Phoenix valley last October generated over 100,000 homeowner’s insurance claims in a single day. The storm created so much repair work, property owners sometimes had to wait weeks to get estimates from their insurance company’s adjuster and to schedule contractors for the repair work. It is likely that the increased demand for building contractors, especially roofers, prompted an influx of contractors from out of state. Non-resident contractors may not be aware of the ADOI adjuster license requirements for representing someone in an insurance claim settlement.

If someone contacts you and offers to represent you in the settlement of your homeowners insurance claim, you should verify the adjuster's references and credentials, including whether they have a license....

Long ago, the National Association of Public Insurance Adjusters determined there is an inherent financial conflict of interest for a public adjuster that also acts as a contractor on the same loss. Its Code of Ethics specifically prohibits this arrangement. It is about time that Departments of Insurance recognize the potential conflict and prohibit the practice. It should be part of the Model Insurance Code.

There’s a disturbing nationwide trend of insurance companies chipping away at coverage for homeowners, says Amy Bach, executive director of the nonprofit United Policyholders consumer group. She says she’s disturbed by what she sees as policies becoming less adequate.

"We have been working on a number of fronts to try to reverse this tide, while alerting consumers so they have a chance to protect themselves," Bach says. "We have been going to regulators from all over the country and telling them it is getting very messy out there in the homeowners' market. Instead of blanket protection, it is more like Swiss cheese and there really are a lot of holes."

"In much of the country, the basic home policy is just for fire and theft," Bach asserts. "For everything else you have to have extra coverage.”

Public claims adjuster Steven Venook in Florida points out that mold used to be covered under standard home insurance policies; now it’s listed as an exclusion.

Like many other adjusters and policyholder representatives, Venook formerly worked for insurers but left to help policyholders. He founded Advocate Claim Service, a statewide insurance public adjusting claim service with a focus on customer satisfaction, in 2002. Venook is a graduate of the University of Florida. He gained extensive knowledge and experience as an insurance adjuster working for an independent insurance adjusting company and as an in-field claims supervisor for a major insurance company. During this time, he handled hundreds of property damage claims for both first and third party clients.

When asked why Venook changed careers, he said, "As a company insider, I observed firsthand how some insurance companies put their own profit motives ahead of their policyholders. I was schooled on how to turn a blind eye to customer feelings, only protecting what was best for the company. My hands were often tied from doing what I thought was right for the customer. After feeling remorse for my past actions, I decided to make a difference by helping policyholders with their insurance claims. Now, I put my knowledge to use helping protect consumers by making sure claims are handled in a way that is fair."

Readers are likely to be familiar with Amy Bach, she was a featured speaker at the 12th Annual Wind Conference^® last January when she addressed the expanding role of quasi-public insurance entities. Chip Merlin has also posted about United Policyholders and Amy Bach’s advocacy on the blog many times, including the posts Amy Bach and United Policyholders Supports Mississippi Insurance Protections and United Policyholders Continues its Good Work.

Not very often do we hear an insured tell his story in this format. Buschel’s blog posts are very well written.

The June 10, 2011, post about the fire is a must read, but here is a taste of Buschel describing the value of hiring an experienced public adjuster to help him with his claim:

After the Fire: Do Not Touch Anything

“I have three rules. Don’t walk into a courtroom without a lawyer. Don’t go on a date without Viagra. And never settle an insurance case without Littman.”

That’s Danny Lembo talking. As usual, he has a drink in his hand, a blonde on his arm and a story on his lips: cold, hot and hyperbolic. He’s an old friend who called himself Mr. Connected on “Survivor: Nicaragua” last year, but the guys call him Too Tan Dan. His biceps are the size and color of tawny lap dogs, and they receive just as much attention, exercise and health-enhancing treats. By profession, Too Tan Dan is a property builder and manager; by avocation, he is a fixer. He knows people. He knows people who know people. He knows Littman.

Jeffrey Littman wears a pinkie ring and speaks softly, politely, incessantly. He’s been a public adjuster for 32 years, which means he advocates for policyholders, appraises damage, assesses coverage and negotiates settlements with insurance companies. His son is a lawyer, by the way, who defends insurance companies. I wouldn’t wish those kinds of Oedipal issues on anyone. (Except maybe Laius.)

“Lembo says you’re a friend, so I will give you my lowest rate, and you know I will do good by you,” says Mr. Littman. “‘Cause if I don’t, Lembo will have my head.” I trust Mr. Littman, too, is prone to hyperbole.

First thing, he says, touch nothing. Leave everything smelly, sooty and living proof that we need a special task force to clean every fork and light fixture and square inch of wall…

Mr. Littman also needs the cost of the building, the cost of the contents of the building, a copy of the deed, all insurance policies, rental agreements, reservations, payroll, a list of every opened bottle, all product thrown out that night, since that night, and before we can reopen. When can we reopen? Who knows? The fire investigators need time, the insurance companies need time, the cleaners need time, city hall needs permits, the board of health needs to inspect, and the staff needs retraining and probably restocking; surely, some good people will find other work during this unplanned summer hiatus. Then we have to let the public know we have reopened.

With no track record, no archives to present to the insurance people, there will be a fair amount of dickering about the moneys lost. The chef, sous chefs and managers are gathering all the pertinent information. It is not their favorite activity.

…

The next day, Thursday, seven people converged on the restaurant at 10 a.m. They handed me business cards and commenced firing questions — about money and staff and guests and firefighters and mortgages and partners and family. I finally ask these men if they are actually divorce lawyers who made a wrong turn back on Montauk Highway. What the heck is going on?

They are, in point of fact, fire investigators, cleaning experts and general contractors. They need to know everything. In duplicate. The restaurant business has one insurance company (Scottsdale) and the property has another (National Specialty). Mr. Littman says the two companies could end up in a turf war: was it a kitchen fire or damage to property? No matter now. The reps pop questions and scribble in their books or type into their laptops and reveal neither pleasure nor displeasure to any response. This could be a poker game. Mr. Littman hovers over every conversation, adding his 2 cents or removing mine. There is no bluffing.

Meanwhile, two guys not taking part in the inquisition snoop around the restaurant with cameras and tape recorders. Eventually, they invite me to sit down in a booth. They are in their late 20s or early 30s. Nice guys. There’s no telling which one has rank. They come at me willy-nilly.

Willy: “What time did you first become aware of the fire?”

Buschel: “Around 7 o’clock, Saturday night.”

Nilly: “How did you become aware?”

Buschel: “The chef called me into the kitchen to show me the smoke.”

Nilly: “What is your relationship with the chef?”

Buschel: “I’m not sure I understand the question.”

Willy: “Do you two get along?”

Buschel: “We get along fine.”

Willy: “Do you owe him money?”

Buschel: “No.”

Nilly: “Is he a partner or an employee?”

Buschel: “Wait a minute. You think the chef started the fire?”

Willy: “He isn’t here today, is he?”

Buschel: “Are you guys from CSI Bridgehampton?”

Willy: “Sorry. We have to ask these questions.”

Buschel: “Why?”

Nilly: “We are investigating a fire.”

In his Thursday post, Buschel, tells readers what he wishes he would have know before the fire.

Five Things I Wish I Had Known Before the Fire

The question I now hear most often is: Do you have insurance? More experienced folks ask: Do you have business-interruption insurance? That is, recoupment of operating expenditures or lost revenues, maybe even payroll during this unplanned hiatus. The answer is that I am not quite sure; nothing about insurance is sure — not the amount or the timing or the results of investigations or who is suing whom. Every claim is contested; every cost is subrogated. You never know how good your insurance is until you try to cash in your chips.

There are three general areas that my insurance should cover: rebuilding that which was damaged, replacing lost inventory and business interruption. It could take one month or six to collect any money. The policy could pay in full or not. If the outcome is infelicitous, lawsuits could follow. The whole mess could get even messier, and I still have much to learn, all of which I would rather not be learning. This is the wisdom the serpent promised.

In the meantime, here are five things I think I know about insurance.

1. Honesty Is Best for the Policy

When in the course of insurance events, you are asked to estimate the value of your property, the contents therein, and the projected revenue, be honest. Not too high, not too low. Walk the middle path. Positive projections will cost you more each month in premiums, but negativism will catch up with you when calamity strikes. For $1,000 a month, I carry two insurance policies: one for the restaurant business and one for the property upon which it sits. I was guessing at some of the numbers when I signed up, for they preceded the actual opening. If you say all the plates are worth a mere hundred bucks, the premium will be lower, but you will collect less when all the plates break in an earthquake; more than likely, if the insurance investigator thinks you low-balled the value, he will deduct that much from the eventual payout. In his eyes, you were cheating the insurance with each premium, so they are entitled to collect that before paying out.

2. Coping With Copious Records

You think you’re compulsive? Find someone more compulsive, and put that person in charge of keeping records. This person will drive you crazy until money is missing or a delivery is questioned or invoices are misplaced. Then the handiwork will restore sanity, for he or she will have kept records of every napkin, every fish head, every inspection, every warranty, every spec sheet, every beer keg, every reservation, every e-mail, every hour logged by every employee. You cannot possess too many records. Or backups of those records. Computers fail. Files disappear. Restaurants burn.

3. Preparation for Reparations

Pretend you are located near a nuclear power plant and a tsunami is brewing off the coast. Your employee manual should outline the responsibilities of every person on site in case of any emergency: escape routes, gathering places, location of fire extinguishers, contacts for the alarm company and police department. Like kids in elementary school, you and your employees should have practice drills. What do you want your servers to say to guests? Who grabs the money? Who saves the records? Insurance companies want to know what preparations were taken before the emergency occurred.

4. Brokers Will Help You Go Broke

When Jeffrey Littman, mild-mannered public adjuster, reads over my policies and says, “I am not an insurance broker, but I wouldn’t have written it this way,” you know you have just lost money. You ought to consult an adjuster before you sign your insurance policy, not after the ruinous incident occurs. Then it’s too late. Adjusters know how these battles are fought and won. They live in the trenches. They are not concerned with selling insurance, they negotiate with insurance companies and collect money. They know which companies pay swiftly and which companies dawdle.

5. Only You Can Prevent Kitchen Fires

A lesson that has been smoldering for two years finally ignited along with the fire: I am responsible for this restaurant. Not the chef, not the town planning board, not the fire marshal, not the carpenters, not Jesus. Me. I am responsible for the freshness of the fish and the currency of the Web site and the selection of affordable wines. Not managers or attorneys or reviewers or some guidebook to a successful restaurant. Me.

The claim for Southfork Kitchen has not yet been resolved by the insurance company but, with Buschel’s post reaching readers all across the county, hopefully the claim will be resolved quickly and fairly so that Buschel can return his focus to the fabulous meals served at Southfork Kitchen.

May 25, 2011

XXXXXX
XXXXXXXXX
XXXXX, FL 3xXXX

RE: Company:     Tower Hill Prime Insurance Company
Insured:                XXXXXXXX
Claim Number:   XXXXXXXXX
Policy Number:   XXXXXXXX
Date of Loss:      April XX, 2011

Dear XX XXXXXX:

We are in receipt of your recent XXXXXX claim. It is our understanding you have retained the services of XXXXXXXX, a public adjuster, to assist you in documenting you claim. We will continue to adjust your claim with you and your public adjuster according to the terms and conditions of the insurance policy.

In the event that the insurance company may require reasonable access to the insured property, we will contact you or your public adjuster to coordinate any such arrangements. Please be advised that you are required to provide access to an on-site inspection of the insured property so long as the individual acting on behalf of the insurance company provides proper notice. Moreover, you [sic] public adjuster may not restrict or prevent an individual acting on behalf of the insurance company from reasonable access at reasonable times to the insured property.

Although you have retained the services of a public adjuster, we may still communicate directly with one another regarding the possible settlement of your claim. Additionally, we will advise you of any settlement offers proposed by the insurance company, as you have the right to approve the terms and conditions of any settlement. Your public adjuster may not prevent, or attempt to dissuade or prevent, you from speaking privately with the insurer, company or independent adjuster, attorney or any other person regarding the settlement of your claim. Moreover, your public adjuster may not restrict or prevent an individual acting on behalf of the insurance company from reasonable access to you, at reasonable times.

Please be advised that a public adjuster may not represent or imply to you that insurers, company adjusters or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy. Public adjusters, company adjusters, and independent adjusters are required to act with dispatch and due diligence upon undertaking the handling of a claim to achieve a proper disposition of the claim.

Also, be mindful to review your public adjuster's contract to ensure that the fee structure or arrangement complies with Florida Statute 626.854.

Nothing herein constitutes, or should it be construed by you as a waiver of any of the right of the Tower Hill Prime Insurance Company under its policy of insurance, not is it the purpose of this letter to waive any of the policy terms and/or conditions.

We look forward to working with you and your public adjuster in the prompt settlement of your claim. Should you have any questions, please contact me at (XXX) XXX-XXXX extension XXXX

Sincerely,

XXXX XXXXXXX
Claims Representative

This particular letter from Tower Hill is dated May 25, 2011, just eight days after Governor Rick Scott signed Senate Bill 408. This letter, I assume, was written by Tower Hill (or Tower Hill’s lawyers) to tell policyholders to be weary of their public adjusters and reference a few of the changes put in place because of SB 408. I am sure Tower Hill was hoping its insured would read the letter and become concerned about the role of their public insurance adjuster, or at least question whether the public adjuster was following the rules.

But in this instance, the insured’s reaction was exactly the opposite. The insured called his public adjuster and expressed great concern about Tower Hill. He said that after reading the letter, he was more worried about whether his insurance company would be fair. Tower Hill wrote, “[p]lease be advised that a public adjuster may not represent or imply to you that insurers, company adjusters or independent adjusters routinely attempt to, or do in fact, deprive claimants of their full rights under an insurance policy.” This statement in particular caused the insured to express to his public adjuster heightened concern about how Tower Hill handles and pays claims. The insured expressed gratitude towards his public adjuster and said he was glad he hired the public adjuster to help him through the claims process.

Merlin Law Group has posted extensively about Senate Bill 408, for more information click here.

I replied:

You asked three questions, not one.

Here are the answers:

1. Nothing.
2. Yes.
3. I cannot tell you because of attorney client confidentiality. However, many public adjusting firms are losing money and policyholders are as well because of this legislation. I expect there will be many challenges to this aspect of the law.

Finally, all public adjusters should go to the FAPIA annual convention this summer. This will be a major topic of conversation and united opposition is needed. (emphasis added)

There has been far too much bellyaching about FAPIA by public adjusters--- members and non-members. Not all the criticism is unwarranted. I know those toiling in FAPIA’s leadership have an impossible task because people have significantly different opinions about ethics and what “good policy” should be reflected in law and insurance regulation.

While thinking about the problems we face, I instantly thought of Franklin’s quote above. Many speak and complain but give little time or money to fight the good fight. They are foolishly undermining the “good” and inviting the “bad” to make some “ugly” legislation which will negatively impact everybody.

In Florida Association of Public Insurance Adjusters Urges Policyholders to be Prepared for Hurricane Season 2011, Nicole Vinson briefly wrote about FAPIA and the upcoming Convention July 7-9, in Ft. Lauderdale. She provided the registration form. FAPIA has further information available here.

I urge all public adjusters to join FAPIA and constructively become involved with raising the standards and competency of public adjusting. Another of Benjamin Franklin’s famous statements, made at the time of signing the Declaration of Independence, inspired me to emphasize this point:

“We must all hang together, or assuredly we shall all hang separately.”

The Florida Association of Public Insurance Adjusters, commonly called FAPIA, has been an active organization of public adjusters helping policyholders in Florida with insurance claims since 1993. I wrote about the history of FAPIA in my prior post, The FAPIA website lists the contact information for its members and its directory can be searched by name or by zip code. FAPIA consists of nearly 500 members and associate members who have joined together to protect the interests of insured homeowners and businesses that suffer an insurance loss. Where company and independent adjusters represent the insurance companies, public adjusters represent the insured. The association is based in Maitland, and its members are located everywhere from the Panhandle to the Keys.

David Beasley is the current FAPIA president. Before becoming a public insurance adjuster, Mr. Beasley worked as a large loss adjuster for a very well known insurance giant. David Beasley and FAPIA remind policyholders to secure their property and check their policies of insurance.

Once basic supplies are secured and stored for the storm, begin a review of your insurance coverage. Does it cover flood or wind damage? Does it take into account current market value to rebuild your home or business? What is required of you under "Duties After Loss"? Failure to follow the provisions here could result in non-payment on your legitimate claim.

Carefully review the "Exclusions" portion of your windstorm policy. Some insurance companies have added new exclusions to coverage, which could affect your protection against property damage.

Now is the time to locate your policy, review the provisions, and ask questions.

Now is also a good time to take pictures. Many times, people photograph the damage after the storm, but photographs and video should also be taken before a storm starts brewing. Videos and photos complete with dates and descriptions are a great way to show an insurance company the condition of your property before a loss. These photos also become very valuable when trying to make a list of damaged property after a loss. Be sure to keep this information in several places or in a format that isn’t easily destroyed.

FAPIA’s website offers more tips to help prepare for a storm, suggesting stockpiling two weeks worth of necessary supplies, making a written hurricane plan for whole family, and making a few copies of your insurance policies before and storing them in more than one safe place.

FAPIA members follow the same statutory and ethical requirements imposed on all public adjusters licensed in Florida, but members have also elected to follow FAPIA’S Code of Ethics. The Code emphasizes professionalism and education. Each year, FAPIA holds two conferences with numerous educational courses for public adjusters.

Merlin Law Group has been invited by FAPIA to present at the next conference, in Fort Lauderdale, July 7-9.

Chip Merlin,  Doug Grose and David Pettinato will be presenting "What Experienced and Advanced Public Adjusters Should Have Included in their Claims File” -- Reaching the level of excellence through best practice methods of claim file documentation.

Javier Delgado and I will be presenting “Case Law Update” -- An overview of current case law that affects property insurance claim settlements –from the daily claim to those pertaining to windstorm claims.

For more information on how to attend the conference as a member or non-member, click here.

To be of assistance to public adjusters who routinely read this blog, attached is a break-down of the effective dates on the sections relating to public adjusters (underlined text is new wording in the statutes).

Gene Angelotti made a correct comment relating to the Citizens section of the new legislation relating to public adjuster fees. It was effective upon signing, May 17, 2011.

The public adjuster contract and advertising sections become effective January 1, 2012. This delay provides the Office of Insurance Regulation time to implement Administrative Rule changes impacting the new legislation.

A number of public adjusters have called and written about this, some in disbelief. In response, this is the actual wording in the new law:

6. For any claim filed under any policy of the corporation, a public
adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10 percent of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim.

A past President of the Florida Association of Public Insurance Adjusters (FAPIA), Randy Paul, believed that the wording was made to prevent more than ten percent of any re-opened or supplemental claim from being charged because twenty percent is allowed in other parts of the legislation. This has some validity, as I noted:

Current law provides that a public adjuster may not charge more than 10% of the amount of insurance claim payments made for claims based on an event that is the subject of a declaration of emergency by the Governor. The 10% limitation applies to claims made up to 1 year after the declaration. This law is amended to provide that after the 1 year period, the public adjuster fee limitation is 20% of the amount of insurance claim payments.

Unfortunately, though, the law was not written to apply only to re-opened or supplemental claims. The new statute says "any claim."

"The amount that was originally offered" is vague. What constitutes the amount "originally offered?" In third party scenarios, adjusters "offer" an amount to settle and get a release. In first party claims practice, insurance companies pay undisputed amounts of money as determined. An offer should only be made if there is a bona fide dispute.

Does the limitation to ten percent also include the costs of a public adjuster? Does the broad language include phrases such as "other thing of value?" Experts are often retained by public adjusters with approval of their clients to help analyze a loss. It’s not clear whether the ten percent limits the fee or includes these costs.

It is hard to see how any qualified public adjuster can make a profit when a ten percent cap is applied to monies obtained after Citizens, in good faith, fully pays a loss as its original offer. Of course, whether Citizens Property Insurance Corporation will act in "good faith" is another issue. I have heard dozens of Citizens stories in the last 48 hours and plan to share those with others in the future.

Still, the law is an unreasonable restraint of trade as written, and it will be challenged in court. It will be a topic at the next legislative session. The law is not good policy because it prevents policyholders from retaining professional services who will help them obtain the full benefits to which they are entitled. Why do our legislators want to prevent their constituents from receiving help in the wake of a disaster?

Our firm will continue to do everything we can to fight against and prevent these types of wrongs and injustice. We will never give in:

- Compensation for a reopened or supplemental claim may not exceed 20 percent of the reopened or supplemental claim payment. (pg. 9)

- Current law provides that a public adjuster may not charge more than 10% of the amount of insurance claim payments made for claims based on an event that is the subject of a declaration of emergency by the Governor. The 10% limitation applies to claims made up to 1 year after the declaration. This law is amended to provide that after the 1 year period, the public adjuster fee limitation is 20% of the amount of insurance claim payments. (pg. 10)

- Senate Bill 408 outlines the definition of “misleading and deceptive” adjuster practices in 626.9541. The following statements are prohibited:

1.      A statement or representation that invites an insured policyholder to submit a claim when the policyholder does not have covered damage to insured property.

2.   A statement or representation that invites an insured policyholder to submit a claim by offering monetary or other valuable inducement.

3.   A statement or representation that invites an insured policyholder to submit a claim by stating that there is “no risk” to the policyholder by submitting such claim.

4.   A statement or representation, or use of a logo or shield, that implies or could mistakenly be construed to imply that the solicitation was issued or distributed by a governmental agency or is sanctioned or endorsed by a governmental agency. (pg. 12)

- The following must be printed on any written advertisement (defined as newspapers, magazines, flyers, and bulk mailers) distributed by a Adjuster: “

THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT. (pg. 12)

- A company employee adjuster, independent adjuster, attorney, investigator, or other persons 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 must provide at least 48 hours’ notice to the insured or claimant, public adjuster, or legal representative before scheduling a meeting with the claimant or an onsite inspection of the insured property. The insured or claimant may deny access to the property if the notice has not been provided. The insured or claimant may waive the 48-hour notice. (pg. 13)

- A public adjuster must ensure prompt notice of property loss claims submitted to an insurer by or through a public adjuster or on which a public adjuster represents the insured at the time the claim or notice of loss is submitted to the insurer. The public adjuster must ensure that notice is given to the insurer, the public adjuster’s contract is provided to the insurer, the property is available for inspection of the loss or damage by the insurer, and the insurer is given an opportunity to interview the insured directly about the loss and claim. The insurer must be allowed to obtain necessary information to investigate and respond to the claim. (pgs. 13-14)

-The insurer may not exclude the public adjuster from its in-person meetings with the insured. The insurer shall meet or communicate with the public adjuster in an effort to reach agreement as to the scope of the covered loss under the insurance policy. (pg. 14)

- A public adjuster must not impede “reasonable access” to the insured or the insured’s property. (pg. 14) 

- A public adjuster may not act or fail to reasonably act in any manner that obstructs or prevents an insurer or insurer’s adjuster from timely conducting an inspection of any part of the insured property for which there is a claim for loss or damage. The public adjuster representing the insured may be present for the insurer’s inspection, but if the unavailability of the public adjuster otherwise delays the insurer’s timely inspection of the property, the public adjuster or the insured must allow the insurer to have access to the property without the participation or presence of the public adjuster or insured in order to facilitate the insurer’s prompt inspection of the loss or damage. (pg. 14)

- A licensed contractor under part I of chapter 489, or a subcontractor, may not adjust a claim on behalf of an insured unless licensed and compliant as a public adjuster under this chapter. However, the contractor may discuss or explain a bid for construction or repair of covered property with the residential property owner who has suffered loss or damage covered by a property insurance policy, or the insurer of such property, if the contractor is doing so for the usual and customary fees applicable to the work to be performed as stated in the contract between the contractor and the insured. (pg. 14)

**Note: The paragraphs above apply only to residential or condominium unit owner policies. The previous statutory language was changed to specify unit owners rather than condominium associations.

- A public adjuster contract relating to a property andcasualty claim must contain the full name, permanent business address, and license number of the public adjuster; the full name of the public adjusting firm; and the insured’s full name and street address, together with a brief description of the loss. The contract must state the percentage of compensation for the public adjuster’s services; the type of claim, including an emergency claim, nonemergency claim, or supplemental claim; the signatures of the public adjuster and all named insureds; and the signature date. If all of the named insureds signatures are not available, the public adjuster must submit an affidavit signed by the available named insureds attesting that they have authority to enter into the contract and settle all claim issues on behalf of the named insureds. An unaltered copy of the executed contract must be remitted to the insurer within 30 days after execution. (pg. 15)

- For any claim filed under any policy of Citizens, a public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10% of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim. (pg. 30)

Statute of Limitations 

s. 95.11(2) has been amended specifically as to property insurance contracts. In an action for breach of a property insurance contract, the 5 year limitations period now begins to run from the date of loss. Previously, the period began running from the date of denial of the claim. It is extremely important to recalculate each case to be sure the limitations period does not run before a suit can be filed. (pg. 4)

Claims Handling

- A claim, supplemental claim, or reopened claim under an insurance policy that provides property insurance, as defined in s. 624.604, for loss or damage caused by the peril of windstorm or hurricane is barred unless notice of the claim, supplemental claim, or reopened claim was given to the insurer in accordance with the terms of the policy within 3 years after the hurricane first made landfall or the windstorm caused the covered damage. For purposes of this section, the term - supplemental claim or ―reopened claim means any additional claim for recovery from the insurer for losses from the same hurricane or windstorm which the insurer has previously adjusted pursuant to the initial claim. This section has an effective date of June 1, 2011. (pg. 15)

- In the event of a loss for which a dwelling is insured for replacement costs: the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible. The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. If a total loss of a dwelling occurs, the insurer shall pay the replacement cost coverage without reservation or holdback of any depreciation in value, pursuant to s. 627.702. (pg. 55)

- In the event of a loss for which personal property is insured for replacement costs: the insurer must offer coverage under which the insurer is obligated to pay the replacement cost without reservation or holdback for any depreciation in value, whether or not the insured replaces the property. (pg. 56)

- The insurer may also offer coverage under which the insurer may limit the initial payment to the actual cash value of the personal property to be replaced, require the insured to provide receipts for the purchase of the property financed by the initial payment, use such receipts to make the next payment requested by the insured for the replacement of insured property, and continue this process until the insured remits all receipts up to the policy limits for replacement costs. The insurer must provide clear notice of this process before the policy is bound. A policyholder must be provided an actuarially reasonable premium credit or discount for this coverage. The insurer may not require the policyholder to advance payment for the replaced property. (pg. 56)

Sinkhole Laws

- CPIC must provide that new or renewal policies issued by the corporation on or after January 1, 2012, which cover sinkhole loss do not include coverage for any loss to appurtenant structures, driveways, sidewalks, decks, or patios that are directly or indirectly caused by sinkhole activity. The corporation shall exclude such coverage using a notice of coverage change, which may be included with the policy renewal, and not by issuance of a notice of nonrenewal of the excluded coverage upon renewal of the current policy. (pg. 45)

- The insurer may require an inspection of the property before issuance of sinkhole loss coverage. (pg. 58)

- The insurer may restrict catastrophic ground cover collapse and sinkhole loss coverage to the principal building, as defined in the applicable policy. (pg. 58)

Changes to Definitions:

- Neutral evaluator is defined as a professional engineer or a professional geologist who has completed a course of study in alternative dispute resolution designed or approved by the department for use in the neutral evaluation proves and who is determined by the department to be fair and impartial. (pg. 59)

- Sinkhole activity means settlement or systematic weakening of the earth supporting the covered building only if the settlement or systematic weakening results from contemporaneous movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation. (pg. 59)

- Professional engineer means a person, as defined in s. 471.005, who has a bachelor’s degree or higher in engineering. A professional engineer must also have experience and expertise in the identification of sinkhole activity as well as other potential causes of structural damage. (pgs. 59-60)

- Professional geologist means a person, as defined in s. 492.102, who has a bachelor’s degree or higher in geology or related earth science and expertise in the identification of 3093 sinkhole activity as well as other potential geologic causes of structural damage. (pg. 60)

- Structural damage means that a building has experienced the following:

1.      Interior floor displacement or deflection in excess of acceptable variances as defined in ACI 117-90 or the Florida Building Code, which results in settlement related damage to the interior such that the interior building structure or members become unfit for service or represents a safety hazard as defined within the Florida Building Code;

2.      Foundation displacement or deflection in excess of acceptable variances as defined in ACI 318-95 or the Florida Building Code, which results in settlement related damage to the primary structural members or primary structural systems that prevents those members or systems from supporting the loads and forces they were designed to support to the extent that stresses in those primary structural members or primary structural systems exceeds one and one-third the nominal strength allowed under the Florida Building Code for new buildings of similar structure, purpose, or location;

3.       Damage that results in listing, leaning, or buckling of the exterior load bearing walls or other vertical primary structural members to such an extent that a plumb line passing through the center of gravity does not fall inside the middle one-third of the base as defined within the Florida Building Code;

4.      Damage that results in the building, or any portion of the building containing primary structural members or primary structural systems, being significantly likely to imminently collapse because of the movement or instability of the ground within the influence zone of the supporting ground within the sheer plane necessary for the purpose of supporting such building as defined within the Florida Building Code; or

5.      Damage occurring on or after October 15, 2005, that qualifies as ―substantial structural damage as defined in the Florida Building Code.

(d) Primary structural member means a structural element designed to provide support and stability for the vertical or lateral loads of the overall structure.

(e) Primary structural system means an assemblage of primary structural members.  (pg. 60)

- Any claim, including, but not limited to, initial, supplemental, and reopened claims under an insurance policy that provides sinkhole coverage is barred unless notice of the claim was given to the insurer in accordance with the terms of the policy within 2 years after the policyholder knew or reasonably should have known about the sinkhole loss. (pg. 61).

Policyholder demand for testing:

- The policyholder’s demand for testing must be communicated to the insurer in writing within 60 days after the policyholder’s receipt of the insurer’s denial of the claim.

- The policyholder shall pay 50 percent of the actual costs of the analyses and services provided under ss. 627.7072 and 627.7073 or $2,500, whichever is less.

- The insurer shall reimburse the policyholder for the costs if the insurer’s engineer or geologist provides written certification pursuant to s. 627.7073 that there is sinkhole loss. (pg. 63)

Repairs

- If a covered building suffers a sinkhole loss or a catastrophic ground cover collapse, the insured must repair such damage or loss in accordance with the insurer’s professional engineer’s recommended repairs. However, if the insurer’s professional engineer determines that the repair cannot be completed within policy limits, the insurer must pay to complete the repairs recommended by the insurer’s professional engineer or tender the policy limits to the policyholder. (pg. 63)

- In order to prevent additional damage to the building or structure, the policyholder must enter into a contract for the performance of building stabilization and foundation repairs within 90 days after the insurance company confirms coverage for the sinkhole loss and notifies the policyholder of such confirmation. This time period is tolled if either party invokes the neutral evaluation process, and begins again 10 days after the conclusion of the neutral evaluation process. (pg. 63)

- The stabilization and all other repairs to the structure and contents must be completed within 12 months after entering into the contract for repairs described in paragraph (b) unless:

1. There is a mutual agreement between the insurer and the policyholder;

2. The claim is involved with the neutral evaluation process;

3. The claim is in litigation; or

4. The claim is under appraisal or mediation.

Upon the insurer’s obtaining the written approval any lienholder, the insurer may make payment directly to the persons selected by the policyholder to perform the land and building stabilization and foundation repairs. The decision by the insurer to make payment to such persons does not hold the insurer liable for the work performed. The policyholder may not accept a rebate from any person performing the repairs specified in this section. If a policyholder does receive a rebate, coverage is void and the policyholder must refund the amount of the rebate to the insurer. Any person making the repairs specified in this section who offers a rebate commits insurance fraud punishable as a third degree felony as provided in s. 775.082, s. 775.083, or s. 775.084. (pg. 64)

As a precondition to accepting payment for a sinkhole loss, the policyholder must file a copy of any sinkhole report regarding the insured property which was prepared on behalf or at the request of the policyholder. The policyholder shall bear the cost of filing and recording the sinkhole report. The recording of the report does not:

1.      Constitute a lien, encumbrance, or restriction on the title to the real property or constitute a defect in the title to the real property;

2.      Create any cause of action or liability against any grantor of the real property for breach of any warranty of good title or warranty against encumbrances; or

3.      Create any cause of action or liability against a title insurer that insures the title to the real property (pgs. 66-67)

Neutral Evaluation:

- Neutral evaluation is available to either party if a sinkhole report has been issued pursuant to s. 627.7073. At a minimum, neutral evaluation must determine:

(a) Causation;

(b) All methods of stabilization and repair both above and below ground;

(c) The costs for stabilization and all repairs; and

(d) Information necessary to carry out subsection (12). (pg. 68)

- Neutral evaluation supersedes the alternative dispute resolution process under s. 627.7015, but does not invalidate the appraisal clause of the insurance policy. (pg. 68)

- The neutral evaluator must be allowed reasonable access to the interior and exterior of insured structures to be evaluated or for which a claim has been made. Any reports initiated by the policyholder, or an agent of the policyholder, confirming a sinkhole loss or disputing another sinkhole report regarding insured structures must be provided to the neutral evaluator before the evaluator’s physical inspection of the insured property. (pg. 68)

- The department shall allow the parties to submit requests to disqualify evaluators on the list for cause. The department shall disqualify neutral evaluators for cause based only on any of the following grounds:

1. A familial relationship exists between the neutral evaluator and either party or a representative of either party within the third degree.

2. The proposed neutral evaluator has, in a professional capacity, previously represented either party or a representative of either party, in the same or a substantially related matter.

3. The proposed neutral evaluator has, in a professional capacity, represented another person in the same or a substantially related matter and that person’s interests are materially adverse to the interests of the parties. The term “substantially related matter” means participation by the neutral evaluator on the same claim, property, or adjacent property.

4. The proposed neutral evaluator has, within the preceding 5 years, worked as an employer or employee of any party to the case.

- The parties shall appoint a neutral evaluator from the department list and promptly inform the department. If the parties cannot agree to a neutral evaluator within 14 business days, the department shall appoint a neutral evaluator from the list of certified neutral evaluators. The department shall allow each party to disqualify two neutral evaluators without cause. Upon selection or appointment, the department shall promptly refer the request to the neutral evaluator. (pg. 69)

-Within 14 business days after the referral, the neutral evaluator shall notify the policyholder and the insurer of the date, time, and place of the neutral evaluation conference. The conference may be held by telephone, if feasible and desirable. The neutral evaluator shall make reasonable efforts to hold the conference within 90 days after the receipt of the request by the department. Failure of the neutral evaluator to hold the conference within 90 days does not invalidate either party’s right to neutral evaluation or to a neutral evaluation conference held outside this timeframe. (pg. 69)

- If, based upon his or her professional training and credentials, a neutral evaluator is qualified to determine only disputes relating to causation or method of repair, the department shall allow the neutral evaluator to enlist the assistance of another professional from the neutral evaluators list not previously stricken, who, based upon his or her professional training and credentials, is able to provide an opinion as to other disputed issues. A professional who would be disqualified for any reason listed in subsection (7) must be disqualified. The neutral evaluator may also use the services of professional engineers and professional geologists who are not certified as neutral evaluators, as well as licensed building contractors, in order to ensure that all items in dispute are addressed and the neutral evaluation can be completed. Any professional engineer, professional geologist, or licensed building contractor retained may be disqualified for any of the reasons listed in subsection (7). The neutral evaluator may request the entity that performed the investigation pursuant to s. 627.7072 perform such additional and reasonable testing as deemed necessary in the professional opinion of the neutral evaluator. (pg. 70)

- The evaluator’s report shall be sent to all parties in attendance at the neutral evaluation and to the department, within 14 days after completing the neutral evaluation conference. (pg. 70)

- Neutral evaluator’s written recommendation, oral testimony, and full report shall be admitted in any action, litigation, or proceeding relating to the claim. (pg 70)

- Neutral evaluators are deemed to be agents of the department and have immunity from suit as provided in s. 44.107. (pg. 71)

- The department shall adopt rules of procedure for the neutral evaluation process. (pg. 71)

- FIGA may not pay for attorney’s fees or public adjuster’s fees in connection with a sinkhole loss. (pg. 72)

Legal Analysis\

The following legislative finding regarding sinkholes is contained in SB 408/Chapter Law 2011-39 (p. 57-59):

The Legislature finds and declares:

(1) There is a compelling state interest in maintaining a viable and orderly private-sector market for property insurance in this state. The lack of a viable and orderly property market reduces the availability of property insurance coverage to state residents, increases the cost of property insurance, and increases the state’s reliance on a residual property insurance market and its potential for imposing assessments on policyholders throughout the state.

(2) In 2005, the Legislature revised ss. 627.706–627.7074, 2992 Florida Statutes, to adopt certain geological or technical terms; to increase reliance on objective, scientific testing requirements; and generally to reduce the number of sinkhole claims and related disputes arising under prior law. The Legislature determined that since the enactment of these statutory revisions, both private-sector insurers and Citizens Property Insurance Corporation have, nevertheless, continued to experience high claims frequency and severity for sinkhole insurance claims. In addition, many properties remain unrepaired even after loss payments, which reduces the local property tax base and adversely affects the real estate market. Therefore, the Legislature finds that losses associated with sinkhole claims adversely affect the public health, safety, and welfare of this state and its citizens.

(3) Pursuant to sections 22 through 27 of this act, technical or scientific definitions adopted in the 2005 legislation are clarified to implement and advance the Legislature’s intended reduction of sinkhole claims and disputes. Certain other revisions to ss. 627.706–627.7074, Florida Statutes, are enacted to advance legislative intent to rely on scientific or technical determinations relating to sinkholes and sinkhole claims, reduce the number and cost of disputes relating to sinkhole claims, and ensure that repairs are made commensurate with the scientific and technical determinations and insurance claims payments.

The Legislature included these “clarifications” in an attempt to make certain changes retroactive. [I]t is generally accepted that the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.” Hassen v. State Farm Mut. Auto. Ins. Co., 674 So.2d 106, 108 (Fla. 1996) (citing Lumbermens Mut. Cas. Co. v. Ceballos, 440 So.2d 612, 613 (Fla. 3d DCA 1983)); see Esancy v. Hodges, 727 So.2d 308, 309 (Fla. 2d DCA 1999). Undoubtedly, insurers will claim that the sinkhole clarifications contained in SB 408 are merely procedural and can be applied retroactively.  In Menendez v. Progressive Express Insurance Co., 35 So.3d 873 (Fla. 2010), the supreme court outlined a two-part test to determine whether a statute that was enacted after the issuance of an insurance policy should have retroactive effect on claims arising out of that policy. First, a court must determine whether the legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the court must determine whether the retroactive application would violate any constitutional principles. Id.at 877 (citing Metro. Dade Cnty. v. Chase Fed. Hous. Corp., 737 So.2d 494, 499 (Fla.1999)).  The Menendez court concluded that the Legislature intended for the statutory provision in that case to be applied retroactively but rejected the application:

In agreeing with the insureds that the statute cannot be applied retroactively, we conclude that the most problematic provisions of the statute are those which (1) impose a penalty, (2) implicate attorneys' fees, (3) grant an insurer additional time to pay benefits, and (4) delay the insured's right to institute a cause of action. We first note that this Court has generally held that statutes with provisions that impose additional penalties for noncompliance or limitations on the right to recover attorneys' fees do not apply retroactively. In Laforet, this Court held that section 627.727(10), Florida Statutes, which imposed a penalty on insurers who in bad faith failed to settle uninsured motorist claims, could not be applied retroactively “because it [was], in substance, a penalty.” Laforet, 658 So.2d at 61.

Menendez v. Progressive Exp. Ins. Co., Inc., 35 So.3d 873, 878 (Fla. 2010). A similar argument could be made regarding the sinkhole “clarifications” contained in SB 408.

Anita Lee of the Sun-Herald first reported about the camera system in 2007. This week, Lee provided an update on the camera system that Jones calls the “Eye of the Storm.”

Why did Jones develop the camera system? After Hurricane Katrina's unprecedented tidal surge and the following wind versus water debate, Jones understood how valuable it would be to know what damages were caused by the wind.

After Katrina, policyholders filed hundreds of wind vs. water disputes against insurance companies that denied coverage, maintaining damage was from storm surge. Policyholders and insurers went to great expense to hire experts asked to determine the cause of losses. The cameras might not pinpoint damage at every location, but they would give insurance companies and homeowners more information about forces at work during a storm.

In windstorm cases where the carrier denies coverage based on the flood exclusion, meteorologists are often retained to try to explain what the weather data shows happened at a loss location during the hurricane. Having the video cameras rolling during a storm could be powerful evidence showing what actually happened at a specific location.

Many people seem to be interested in and fascinated by catastrophic weather. And, many times, people take risks during times of bad weather just to see what is going on. The storm chaser curiosity and property owners’ concern could be remedied by viewing the weather event from a safe location. The 24-hour surveillance camera has recording components that are waterproof, shatterproof and run on batteries for up to seven days.

Darrell Jones, of Ocean Springs, is selling the cameras and looking to set up cameras in coastal Mississippi. As a public adjuster, Jones saw had firsthand how difficult it can be to separate wind damage from tidal surge.

The biggest problem we've faced is the insurance company comes in, sees a slab and says, 'Water did it,' when we know that is not always the case," Jones said. "The camera takes real-time video footage of your property as a hurricane comes through.

The cameras are built to withstand winds of 300 miles per hour and are encased in 1/4-inch stainless steel with special mountings. Herbert Saffir, the engineer who helped develop the Saffir-Simpson Scale was intrigued by “Eye of the Storm” and thinks the camera’s data could be very helpful to understanding the dynamics of the storm. "That's one of the problems in most hurricanes," Saffir said. "Very little visual data is available.”

How "Eye of the Storm" will impact future hurricane insurance claims is yet to be determined, but any policyholder who has visual proof will likely make a strong claim presentation.

This spring has been particularly bad for this region and the effects of the tornados will be far reaching- even after the debris is cleaned up.

On Thursday, the Wall Street Journal reported that Nationwide Insurance Company was dealing with an unprecedented number of claims for the spring storm season. Nationwide had more than 14,200 claims in North Carolina alone. As of Thursday, State Farm had received more than 15,000 claims for damage as a result of the severe storms in the region. The National Weather Service has indicated that on average, the month of April has historically more tornados, but the numbers for 2011 are topping the charts.

The Wall Street Journal article reported prompt actions were taken by many insurance companies after the tornados. Hopefully, this is an accurate report and policyholders are being helped after these devastating losses. But will these claims be properly handled to their finality and paid in full? Living through a catastrophe is incredibly taxing on policyholders. Often, when policyholders hire experienced public adjusters to assist with a claim, their claim payment increases (see my post referencing the OPPAGA study) and the policyholders can devote their time to putting their lives back together.

One public adjusting firm in North Carolina, The Baldwin Company, explains why a public adjuster can assist with claims:

If you try to do this yourself, you may as well face it: you are going to have to change professions and become a professional claims adjuster. You’ll have to become an expert in pricing everything from roofing nails to original artwork, and you will have to develop organizational and negotiating skills miles beyond any you have ever had to use in the past. What is more, in many cases, this will become your full time job.

Wes Baldwin, the 2003 President of the National Association of Public Insurance Adjusters, is the president and founder of The Baldwin Company. Baldwin’s website explains that after a loss many companies will come to a loss site, like building contractors and cleaning/restoration companies who want to work on the property and help with insurance claim. Baldwin cautions:

This fairly recent development is causing confusion for many policyholders: Salesmen and building contractors are presenting themselves as being qualified to help you understand the intricacies of your insurance policy as well as purporting to have the expertise to help you get your insurance company to pay for all your repairs and clean-up. However, for the most part, these people are not licensed by any state’s insurance department to act as claims adjusters of any sort, nor do they have the training to do so.

Sadly, in times of tragedy, there are likely to be those looking to take advantage of the situation. If you have concerns about individuals or companies offering to help you, trust your instincts and ask for qualifications and license numbers. Most of this information should be on a business card. Then be sure to verify the credentials with the regulating authority.

If you are not already a member of TAPIA, I encourage you to join and meet us there.

For over 25 years, Everest has worked to develop and implement strategic corporate and industrial sports medicine programs, wellness, and injury and illness prevention plans. His work with professional athletes has carried over to help companies and individual workers reduce the risk of injury and stay healthy. Everest, who worked with the Pittsburg Steelers, explains that the inspiration for lifestyle management systems was developed through his work with professional athletes. In the same way a professional athlete prepares for the game, business professionals should also prepare their bodies for work in ways that minimize stress and injury.

Everest recognizes that public insurance adjusting can be a different job each day and with the new wellness system he hopes to provide the necessary information public adjusters need to stay healthy. Everest’s guide to safety and wellness will address daily ways to minimize the risk and the accidents that can incur in connection with claims inspections. In a recent podcast with Gene Veno, President of the American Association of Public Insurance Adjusters (AAPIA), Everest announced his reasons for the book and shared why adjusters need an interactive lifestyle management system. Everest explained that to live happier, longer lives, adjusters need to actively work to improve their health, and be aware of the risks of injury. Everest explains that our work environment affects our well being and the kind of work performed takes a toll on the body. To listen to the recent interview with AAPIA, click here. Everest's system, due out this summer, will help public adjusters with life style management.

Awareness of health and safety is very important, especially for public adjusters who often find themselves out of the office and in the field. I highlighted safety information in my post, Safety Instructions for Public Adjusters.

The public adjuster who inspired my previous post on safety, Charles “Dick” Tutwiler, is scheduled to present a live webinar addressing public adjuster safety on Thursday, April 21, 2011. More information about the webinar and safety of public adjusters is available at AAPIA.com. Also, stay tuned, as we will provide new information about Everest's lifestyle system as it becomes available.

Carter Auslander provided a detailed account of the Hurricane claim he handled at a historical property called “Latrobe’s,” and both the trial and appellate court that heard the issues relating to the loss have provided detailed opinions. Royal Cloud Nine, LLC, purchased insurance from Lafayette Insurance to cover Latrobe’s, a “historical architectural gem,” in New Orleans. Latrobe’s on Royal is one of New Orleans most architecturally significant buildings, and is located in the heart of the enchanting French Quarter. Designed by the “Father of American architecture,” Benjamin Henry, Latrobe’s building was originally intended to house the Louisiana State Bank Now, this stunning building is used for exquisite special events and celebrations. But this classic property suffered damage as a result of Hurricane Katrina. Lafayette Insurance Company eventually accepted coverage for the loss, but the claim assessment was wholly inadequate.

The insured retained Carter J. Auslander and Associates. Auslander described Latrobe’s as a first class property that was impeccably maintained. But after Hurricane Katrina, Lafayette failed to properly pay the claim. The carrier did not come to inspect and adjust the loss with the necessary objective to properly indemnify the insureds. In February 2006, Lafayette sent an expert to inspect and evaluate the damages to the property, including the roof damage. Lafayette’s expert indicated that he believed that roof was damaged and submitted to Lafayette an estimate for repair and an estimate for replacement. Lafayette disregarded the reports. On behalf of Royal Cloud Nine, Auslander presented the claim with a complete estimate for the property damage, including an estimate for the replacement of the slate roof. The independent adjuster hired by Lafayette also submitted an estimate for roof damage, but Lafayette ignored all submissions.

David Connor, the head of Lafayette claims, ordered a third estimate. The new expert submitted an estimate of damages for the roof, but the expert did not properly evaluate the damages.

“Mr. Lehman did not physically walk on the roof, but inspected it from a manlift from which much of the damage to the roof, particularly, the hairline cracks, were not visible. Mr. Lehman prepared a roofing estimate to make spot repairs with gray slate totaling only $5,500 that did not include the carriage house, nor did it include any warranty of the work performed”

It was obvious that the carrier was looking only to give a band-aid remedy to the insured after two of its own representatives’ recommendations were dismissed.

Since Lafayette was ignoring its own experts, Auslander knew he had to present more information detailing damages and highlighting the significance of the historical nature of the property. Auslander was able to present documentation from the Vieux Carre Commission about the property. The Vieux Carré Commission’s task is to protect, preserve, and maintain the distinct architectural, historic character, and zoning integrity of Latrobe’s and other historical buildings. The Commission’s position was that Latrobe’s roof had to be replaced with genuine slate. The revised estimate presented by Auslander totaled $487, 723.70. Finally, at the end of June 2006, Lafayette sent its first payment on this claim, but despite having been advised in detail of the damages, it only paid $61,403.33. Lafayette classified this payment as the settlement.

Ultimately, Royal Cloud Nine had to file suit against Lafayette for the damages. The Court found that it was improper for Lafayette to specifically reject its own adjuster’s submission of the damages and that it acted arbitrarily and capriciously in disregarding the roofing estimates in favor of the much lower and unreasonable estimate of $5500.00.

The trial court ordered Lafayette to pay Royal’s Hurricane Katrina damages.

• It awarded replacement of the interior damage, as provided in the claim presentation provided by Auslander.
• Lafayette was also ordered to pay for the replacement cost of the exterior damages presented in Auslander’s revised estimate (presented with the information for the standards for historical building repairs) and for the replacement of the slate roof as presented in Auslander’s claim package.
• Lafayette was ordered to pay a penalty of $247,784.80, plus interest for withholding payment after the proof of loss was submitted.
• Royal Cloud was awarded Attorneys’ fees and costs
• All costs were taxed against Lafayette
• Royal Cloud was also awarded judicial interest.

Lafayette appealed the trial court’s judgment. The appellate court affirmed the majority of the order but amended the judgment to give Lafayette a credit for the deducible and reduced the attorney fee percentage, It also awarded Royal Cloud interest from the date of the judgment and an additional $62,400.00 for roof damages.

The newly amended bill forces Citizens to cover sinkholes, but mandates that “the payment must be dedicated entirely to the costs of repairing of the structure or remediation of the land,” otherwise “the corporation is prohibited from making payments.” (emphasis added) Further, the bill prohibits Citizens from covering any newly permitted structure seaward of the coastal construction control line.

Of course, the bill also provides that:

The corporation shall implement a rate increase each year for each residential line of business it writes, which may not exceed 20 percent by territory and 25 percent for any single policy, excluding coverage changes and surcharges. This subparagraph expires January 1, 2015, and does not apply to rates for sinkhole coverage or costs for the purchase of private reinsurance, if any. (emphasis added)

Regarding public adjusters,

[P]olicyholders may not engage the services of a public adjuster to represent the policyholder with respect to any claim filed under a policy issued by the corporation until after the corporation has tendered an offer with respect to such claim. For any claim filed under any policy of the corporation, a public adjuster may not request payment or be paid, on a contingency basis or based in any way, directly or indirectly, on a percentage of the claim amount, and may be paid only a reasonable hourly fee based on the actual hours of work performed, subject to a maximum of 5 percent of the additional amount actually paid over the amount which was originally offered by the corporation for any one claim.

Everyone should also take a look at the deletion of lines 46-81. These were the findings of the Legislature a few years ago; it is very interesting to see that we have come full circle since then and that the legislature sees fit to depart from its position under now U.S. Senator Rubio and now CFO Jeff Atwater. As an ironic side note, those two men were the architects of the current insurance system that the Legislature is now dismantling.

The Chartered Property Casualty Underwriter designation is not just for underwriters. Adjusters, Agents and Risk Managers also benefit from the CPCU designation.

The American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America, offers the CPCU program.

As a CPCU candidate, you will learn about the financial, legal, operational, and technical aspects of risk management and insurance. You can even choose either a personal or commercial insurance concentration, depending on your professional background and needs.

In becoming a CPCU, you will:

• Gain in-depth, broad-based knowledge in risk management and insurance.

• Learn practical skills that you can put to work immediately.

• Learn how to make better decisions on the job.

• Distinguish yourself from your peers while demonstrating your commitment to professionalism.

• Earn the respect accorded those who hold the designation.

The CPCU curriculum balances practical skills with insurance and risk management theory. By learning the why and not simply the what, you will have a better understanding of the p-c business and will be able to make better business decisions.

Earning the designation involves intensive testing. Applicants must pass eight exams. In addition to the four CPCU foundation exams and one elective exam, participants must also pass the Ethics and the CPCU Code of Professional Conduct exam, and three exams in either the Commercial Lines or Personal Lines.

The CPCU designation is easily be explained to potential clients as the highest insurance designation in the industry. The courses focus on giving participants an edge when it comes to education, experience and ethics.

If you obtain the technical designation of CPCU, you must subscribe to the CPCU Code of Ethics. While the code has been in place since 1976, the ethical course was recently added to the program to ensure that participants recognize the need for all insurance transactions to be handled with the highest level of ethics in order to preserve the public’s trust of insurance.

In addition to the benefits, CPCU professionals earn more money. According to a 2008 survey of CPCU Society members:

• 91% saw an increase in job opportunities, while almost all say earning the designation fast tracked their career;
• 75% received a salary increase, and nearly a quarter of those attributed 10% or more of the increase to earning the designation; and
• 97% gained professional recognition.

The Institutes declare that the CPCU designation allows recipients to handle complex commercial property and personal loss exposures with advanced technical knowledge and increase effectiveness and positively affect overall operations with an increased understanding of how different functional areas interact with and relate to each other.

The CPCU program is a very intense. It takes most candidates three years to complete the program and, after all of the course work is finished, the participant’s character has to be approved. An in-depth evaluation into the background of the participant is conducted before the designation is granted. The designation can also help extinguish potentially negative attitudes held by other adjusters when they meet you. When the SIU, CAT or desk adjuster sees your qualifications, they know you have the education, experience, and the ethical standards of the elite.

Of course, you don’t have to have the CPCU designation to be a competent public adjuster, but holding this title can easily help you explain to a potential client what sets you apart from the others who have offered to help. The Institutes offer 100 scholarships for the CPCU designation program each year.

We welcome your comments about the how the CPCU designation has positively impacted your claims. Tell us your story below.

As a matter of fact, the independent and company adjuster community outnumbered public adjusters by four to one. The insurance adjuster who made that post conflated the statistics. Here is the percentage of attendance by classification at the 2011 Windstorm Conference held in Houston: 

Insurance defense attorney Janet Brown was instrumental in organizing the Windstorm Insurance Network® in 1999. She described the idea and creation of it in the Tenth Anniversary Newsletter:

The idea for WIND was born out of a casual conversation with our firm’s managing partner, Rick Boehm,” says Janet L. Brown, also a partner in Boehm, Brown, Fischer, Harwood, Kelly & Scheihing, an insurance defense firm. “Rick kept asking me why we were sending our attorneys out of state for conferences on property issues and catastrophic losses. He inquired why we didn’t have something similar in Florida,” recalls Janet. “Finally, he asked me to explore the idea for an association geared to training and education for professionals involved in catastrophe insurance claims.” From that initial conversation, the WIND concept grew to the creation of an educational organization to address similar interests shared by other industry practitioners. Presentations and workshops would also be “balanced,” with participation from both the insurance industry and its counsel, as well as public adjusters and policyholder attorneys. The targeted group included those responsible for adjusting, sales, marketing, and underwriting of windstorm coverage, as well as those persons whose employment and professional responsibilities were geared toward windstorm insurance issues.

In The Windstorm Conference: A Claims and Insurance Law Conference That Cannot Be Missed, I noted:

Seriously, most significant "players" in the windstorm claims industry make this conference every year. After reviewing the panelists and workshops, it is obvious that this Windstorm Conference was very well thought out in terms of cutting edge issues that have many of us scratching our heads and debating among ourselves. The learning opportunities, as well as the networking opportunities because of the large attendance, make this entire event special.

The Wind Regional Symposium will be held in Atlanta on May 10, 2011. The Workshops are as follows:

Adjuster’s Ethics
The presenters will examine relevant Florida and Georgia statutes and case law applicable to insurance company adjusters, public adjusters and others involved in handling property insurance claims. The presentation will focus on the shared ethical responsibilities of each perspective and highlight the differences. Topics will include recent developments, pending legislative changes and the unauthorized practice of law.
Faculty: Curtis Hutchens, Esquire, Citizens Property Insurance Corporation; Gary Miller, Esquire, Freemon & Miller

Appraisal from ‘A to Z’
This workshop includes an overview of seminal cases on appraisal and discussions of recent decisions and their impact on the appraisal world. Issues such as the definition of appraisal and what is a coverage question will be addressed. Other topics include when appraisal is ripe and whether causation is a coverage question for the court or an amount of loss question for the appraisal panel. Issues such as waiver, selection of appraisers and umpires, as well as the procedure to invoke appraisal will be covered. Post-appraisal issues such as challenging an award and whether attorney’s fees, costs and interest are awardable will also be addressed.
Faculty: William “Bill” Berk, Esquire, Berk, Merchant & Sims PLC; Michael Duffy, Esquire, Childress, Duffy, Goldblatt, P.A. Jose Palacios, Peninsula Insurance Bureau

BI/Extra Expense: BI Losses for New and Unprofitable Losses
This program will address the determination and calculation of business income losses for companies that were not operating at a profit before the loss occurred. It will include a discussion about calculating loss of earnings in situations where the company previously was losing money and/or the company was a start-up and there is a difficulty in utilizing historical data.
Faculty: Stan Johnson, CPA, Navigant Consulting, Inc.; Howard Zandman, CPA, Habif, Arogeti & Wynne, LLP

Property Insurance Case Law Update
A review, explanation, and discussion of recent court decisions and legislative changes within the past twelve months affecting the interpretation of coverage issues and the adjustment of property/catastrophe claims from the perspective of both the insurer and the policyholder.
Faculty: Maureen Pearcy, Esquire, Hinshaw & Culbertson; R. Hugh Lumpkin Esquire, Ver Ploeg & Lumpkin

Salvage, Who Gets What
Exploring the seldom discussed issue of “who gets what?” when inventories are damaged. The class will touch on the issue of salvage recovery when there isn’t enough insurance to cover the loss, who has first rights to the salvage and first rights to the salvage recovery check.
Faculty: Jim Toukatly, Renaissance Adjusting; Kim Harris, Harris & Wilemon Company, Inc.

Science and Law of Hail Damage
This course will present a general background on the properties of hail stones and the effects of hail impact on roofing materials. Information will be presented on industry standards for the testing and performance of roofing products as well as expected results of hail impact on those materials. Examples will also be presented of roof conditions which are commonly mistaken for hail impact, and the actual causes of these conditions explored.
Faculty: Paul Burke, Esquire, Drew Eckl & Farnham, LLP; Pete Craig, P.E., EFI; Jeff Diamond , Esquire, Law Offices of Jeffrey D. Diamond

Xactimate 27.3: The Best Just Got Better
With exciting new tools like Aerial Sketch, Xactimate is simplifying the life of the estimator. Learn how the most complex roofs go right into Sketch with just a few clicks. Aerial Sketch, Graphical estimating, and the most recent technological developments will be discussed.

Note: If you plan on following along, please have Xactimate 27.3 LIVE or DEMO versions installed on your computer before the session begins. Follow this link to install the free demo version of 27.3.
Faculty: Chris Hatcher, Xactimate Certified Trainer, Top Adjuster Xactimate Training

WIND Umpire Certification®
This four-hour course will be taught in four components. The first segment will focus on ethics and professionalism as an umpire in the appraisal process. Case law will be the subject of the second segment. The third portion deals with the how-to of acting as an umpire and will include an open discussion of techniques. The final segment will address forms and awards.
Faculty: Janet Brown, Esquire, Boehm, Brown, Fischer, Harwood, Kelly & Scheihing, P.A.; Jon Doan, Claims Consultants Group; Wayne Taylor, Esquire, Mozley, Finlayson & Loggins LLP; John Voelpel, Voelpel Claim Service

One educational course that nobody should miss because of the outstanding faculty and guaranteed joy to be received while learning is the following:

"Layered Insurance Programs"
This session will examine the complexities in utlilizing a layered insurance program. When a primary policy is followed by multiple excess layers and/or with multiple insurers sharing in each layer, the insurers may not necessarily follow the same policy terms and conditions. Different insurer forms and a labyrinth of endorsements and conditions can create gaps in coverage and/or differences in terms and conditions. Naturally, problems and conundrums pop up when claims are filed. The panelists will discuss the best practices of handling and negotiating complex claims through a multitude of insurers. Speakers: Harvey Goodman, GGG; John Intondi, AXIS; Matt Litsky, Esquire, Phelps Dunbar; Chip Merlin, Esquire, Merlin Law Group

The rest of the email string was interesting and shocking:

“Chip has strongly suggested that Florida Public Adjusters avoid processing third party claims. He has never said that it was not allowed.”

* * *

“REF your statement "Florida allows PA's to do 3rd party claims", Chip Merlin (Merlin Law Group) has indicated many times at FAPIA's conferences that Public Adjuster's are not allowed to do third party claims.”

* * *

“I have handled 100's of subro claims similar to this. (As a side note, Surprisingly, Florida allows PA's to do 3rd party claims, some states do not. I don't know where your claim is located.)

You can contact me, but off the top of my head, the roofer is the responsible party, hence his liability policy should pay (only ACV-on
Liability) I don't know who you represent, but your client can seek the difference from his own carrier, who in turn could submit it to Arbitration Forums (if they are members), and the Roofers Liability carrier would wide up paying them back.An assignment of benefits may also be accepted and/or helpful.

Note: on subro claims, receiving 80% is considered a Home-Run.”

* * *

“I am assisting on a fire claim on an out of state commercial structure where the sub-contractor had a certificate of insurance issued to the prime contractor (my client) for any property damage liability. The sub-contractor caused a fire in the roof of the structure when doing the roof work.. The prime contractor is now a named insured under the sub's policy through a certificate of insurance. There is a dispute regarding the cost of repairs for fire damage to the structure that the prime contractor incurred while making necessary repairs. The prime contractor got verbal authorization from the sub's carrier adjuster to do what ever was necessary to get the commercial structure back in business as quickly as possible.

The prime contractor went to defcon four and worked night and day to get the business back open after the fire. When the prime contractors cost were submitted to the sub's adjuster, he responded with a negative for paying the amounts submitted. They have offered to pay sums that are substantially less than what is owed and require also releases to be signed releasing the sub for all future liability from all parties.

I have asked for a copy of the sub's policy from the sub's carrier but I have not had a response. (this is outside the state of Florida) I am not sure how disputes are to be resolved where the sub-contractor's insurer owes the insured for damages that he had to make good to the structure owner/client of the insured through a certificate of insurance. I have never handled a certificate claim loss before and I understand the issues and not sure how to proceed is seeking the resolution, should the carrier refuse to accept the amounts that is determined to be my clients cost of repairs. Any thought public or private would be appreciated.”

Third party claims handling is not public adjusting. Paul Cordish, the long time general Counsel to the National Association of Public Insurance Adjusters, repeatedly warned that the biggest threat to the licensing of public adjusters are those who attempt to practice law and adjust third party claims. He was concerned that it was a strong financial temptation for many.  If it occurred, and insurers and attorneys learned of the practice, bar associations and insurers would bring this to the attention of legislators and outlaw public adjusting altogether.

This point was made in TAPIA is Formed and the Unauthorized Practice of Law is Discussed:

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. (emphasis added)

I have covered and taught this topic for almost twenty years. I have always said the same thing—third party claims handling is illegal for public insurance adjusters. In Public Adjusters Have Many Ethical Obligations, Including Not to Practice Law, I noted:

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).

Third party claim handling is the practice of law. It is unethical for a public adjuster to engage in third party claims as the representative or adjuster of the claimant. If you are a public adjuster and do it, expect to be arrested, lose your public adjuster license and harm the reputation of your profession. Public adjusters should expect independent and company adjusters to notify state departments of insurance and the bar associations of unethical conduct any time a public adjuster claims to represent, aid, adjust or act as the consultant to a claimant in a third party liability claim.

Our law firm has lawyers fighting a pending bill in Tallahassee that outlaws public adjusting of Citizens Property Insurance claims. Policyholders and consumers of insurance need the services of public adjusters. Unethical conduct does not help us fight off insurance lobbyists. 

If you want to represent claimants in a matter where you interpret law and various theories of tort principals, you need to be a lawyer with a law license in the state where the action is pending. 

The seminar will provide six continuing educational credits for all SPPAs and CPPAs and CE credits have been submitted to California and other states.

The seminar will be opened by Clay Morrison. I wrote about Clay’s story in my post, “Membership in Professional Organizations Helps a Small Public Adjusting Firm Achieve a Big Result”.

Tony Astone from The Greenspan Company/Adjusters International (AI), will present the closing seminar, “Cause, Estimate and Depreciation in a Building Loss - A Case Study of Reiters Marina.” The AI webpage provides a great catalogue of real losses called “Case Studies” that explain how their adjusting helped policyholders. Each case study provides background information on the loss, the challenges faced in securing payment, the solutions or the strategies used to obtain a proper claim payment, and the outcome of the case. I particularly like these case studies because the details of the losses matter a great deal but are often omitted from court opinions and orders.

AI did a case study for a fire loss that occurred at the Village Baptist Church in Marin, California. The fire was a result of a malfunction in the electrical wiring of the Church’s sound system. It destroyed the main sanctuary, just one wall was left standing, and also damaged the school buildings and office areas. The carrier accepted coverage for the loss but the scope was inadequate to repair the property. Greenspan/Adjusters International identified four main issues in this loss.

1. Could the parties agree to the scope of damages and return the property to its pre-fire condition?
2. Balancing the needs/ code/ policy limits and policy conditions, what was best for the Church?
3. As part of the reconstruction, the Church faced costly upgrades related to codes and ordinances. Could they all be covered?
4. While the Church was out of commission, where could the worshippers gather?

AI addressed these issues by thoroughly investigating and working the loss. A detailed scope of the loss included the expensive church pews, custom stained glass windows and the required code upgrades. The carrier had evaluated the pews as personal property of the Church, AI explained these pews should be included in the estimate to repair the structure.

The code upgrades seemed to be the most involved issue with this loss. AI hired a team of engineers to evaluate the code issues. The engineers determined that the foundation needed to be brought up to code, a sprinkler system had to be added to the property to meet code, and other code upgrades were required for the parking lot, bathrooms, and entrance areas. The work required to return the property to its pre-fire condition was so extensive that the Church needed demolish the fire damaged building and rebuild a brand new one on the same site

The Church was able to continue operating during the claim investigation. AI presented a claim for extra expense coverage that allocated payments for the Church to rent another location for services. The claim was settled when AI helped the Church secure a payment of more than triple the offer from the carrier.

I expect the case study presentation by Tony Astone at the NAPIA/CAPIA Insurance seminar to provide an equally detailed look at the specific issues encountered in the Reiters Marina loss, complete with the strategy his firm used to adjust the claim for the insured. Learning by example is a great opportunity for public adjusters, and I am sure this seminar will be very informative and engaging. More information for this seminar is available here.

Julie Patel provided the highlights of the proposed legislation in Hefty Rate Hikes Proposed for Citizens Insurance Policyholders:

Allow policyholders' premiums to rise by up to 25 percent, not including rates for sinkhole coverage or for private catastrophe backup coverage.

Prohibit policies for customers who find coverage from a private insurer that charges up to 25 percent more.

Require Citizens to drop policies covering homes that cost $500,000 or more to replace by 2016. The deadline would be a few years earlier for homes that cost $750,000 or more to rebuild.

Bar Citizens policyholders from hiring public insurance adjusters to represent them in claims disputes.

Require Citizens to consider outsourcing more of its work, similar to state-backed insurers in other states. The insurer would hire a consultant to make recommendations on the costs and benefits of outsourcing, have its board submit a plan to the Cabinet for approval, and start implementing the plan by 2013.

Some public adjusters may think this legislation will never have a chance of passing. I suggest they read Vote held by Sawgrass Mutual: Policyholders elect to bar themselves from using public insurance adjusters, but were they informed? and get in touch with the hardworking and dedicated leadership of the Florida Association of Public Insurance Adjusters to see what they can do to better inform their legislators.

I had the opportunity to discuss the loss with Johnson and leaned that the remediation company the insurance company sent to the property was disposing of Coburn’s personal items but wasn’t adequately recoding the damages. For example, Coburn, a college student, lost many expensive textbooks in the fire. But the contents inventory the remediation company was keeping was too general. They grouped books as a category and assigned a general value for all the books multiplied by the quantity. Johnson explained that he was able to document the specific textbooks damaged and destroyed by the fire and list the books individually. Before hiring his public adjuster, Coburn believed the insurer would only pay about $15,000.00 for his personal property but ultimately the insurer agreed the claim met the policy limits for contents.

Interestingly, in the piece on Coburn, Florida statistics were used to show readers the benefits of hiring a public adjuster:

In Florida, a study for the state Legislature found that public adjusters helped homeowners get, on average, 574 percent more for their claims. Average noncatastrophe claims there generated $9,379 when a public adjuster was involved; $1,391 when it was not.

These statistics were first printed in the January 2010 OPPAGA report. Findings from of OPPAGA report were discussed in my post, Public Adjusters and Sinkhole Claims. It is encouraging to see that the good work of Florida public adjusters documented by OPAGGA may also be indirectly helping policyholders in other regions of the nation.

Benjamin Johnson explained why his involvement can increase claim payments. Looking at Coburn’s claim as an example, Coburn was allocated his full benefits because Johnson spent the time and energy to individually list the items and the specific replacement cost of each. Most insurance policies require the insured provide an inventory of damaged personal property, but often, the insurance company does not explain how to do this properly. The insurance company might send a blank form without instructions, and only rarely does one send an adjuster to the home to help the insured rifle through all of his or her damaged possessions to help make a comprehensive list. But this is exactly what a public adjuster will do to help an insured, and this is exactly what Johnson did to help Coburn.

Prior to becoming a public adjuster, Johnson was an insurance agent. As an agent, he saw the need for insureds to have help with their insurance claims. Johnson, a father of five, became a licensed public adjuster and started Benjamin L. Johnson Inc., his public adjusting firm. Johnson’s website provides a little more detail about his background and his work. “I value family, doing the best job possible, helping people, and having a strong personal network of friends.” Thanks to Johnson’s hard work, the Coburn family can move on, put the fire behind them, and replace their personal items.

The importance of TAPIA as a service organization 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 customers from improper treatment. The only licensed individuals, other than attorneys, who 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.

If you are not already a member of TAPIA, now is a good time to join and take advantage of the educational and networking opportunities available through conferences such as this.

To register online for the TAPIA 2011 Conference, Click Here.

I look forward to seeing you at TAPIA 2011 on April 21st in Houston.

Jake Pearson reported that four homes remain without roofs in one Brooklyn neighborhood and several other homeowners still have open claims with their carriers for various other damages caused by the September tornado.

Rufus James’ home was damaged by the storm and he was ordered by the city of Brooklyn to vacate his brownstone home. James has been displaced from his house since then. Brooklyn resident, Robert Grady, has also suffered greatly as a result of his insurance claim. Grady had just finished a $36,000 renovation project to his home in August 2010. One month later, the storm destroyed his roof. Grady revealed sentiments that I often hear from policyholders who are not getting the treatment they expected from their insurance carriers. Grady said, "I'm stressed out and stretched thin."

Another policyholder with severe damage to his home, Carl Fanfair, expressed aggravation and concern about his loss, but Fanfair took action to get assistance with his claim. Fanfair enlisted the help of a public insurance adjuster to help get his claim resolved. He hired Unlimited 1 Adjustments LLC, a New York public adjusting firm, to assist in his claim against New York Property Insurance.

I was able to discuss the tornado claims at length with this public insurance adjusting company, and I gained insight into one of the reasons the carriers were delaying the claims. Jodi L. Miller, General Manager of Unlimited 1 Adjustments said:

It took longer than expected to settle these claims due to the simple fact that the insurance companies had difficulty understanding or agreeing to why there was a need for scaffolding to be erected to the front portion of the properties and also to the exposed side of the properties. This seemed to be the one common factor in all of the Quincy Street claims we handled. The need and requirement to protect the property, protect the contractors working, and also to protect any persons walking in front of the homes was paramount.

After weeks of submitting and explaining the need for scaffolding, Unlimited 1 Adjustments convinced the insurers to pay for it. Hopefully, some of the families and individuals can now start to get back to normal in this Brooklyn neighborhood.

Unlimited 1 Adjustments LLC is a newer public adjusting firm in New York, but the team has decades of experience adjusting claims for insureds. In addition to being experienced, Jodi says the firm has a focus on customer service: “we are a hands-on firm and take each and every claim seriously whether it is a small claim or a large claim. No two claims are alike but you can be sure that we fight just as hard and provide excellent customer service to each of our clients.” Excellent customer service is a great quality to find in any service organization, and it can drastically make a difference for policyholders in the aftermath of a devastating loss.

At this year's Windstorm Insurance Conference®, Doug Branham, of Colonial Claims Corporation, Jeffery A. Froeschle, Esq., of Powell Carney Maller Ramsay & Grove, P.A., and Charles R. “Dick” Tutwiler, of Tutwiler & Associates, gave a presentation on safety in the field called Life, Health & Safety Issues for Field Adjusters.

Several tips from this presentation and from other seasoned public adjusters should be incorporated into every public adjuster’s list of business practices and daily habits.

• Leave a flight plan. Many public adjusters work for themselves or work on their own, making it important that to tell someone where they are heading for the day. If you can’t give a member of your staff a list of places you will visit in a given day, be sure to keep an accurate calendar of appointments and give a loved one or business associate access to this information. Updating and sharing your outlook calendar is an easy way to do this.
• Use the Buddy system. Sending more than one person to inspect a loss has its benefits: safety in numbers. While not all crimes take place in high crime areas, you should be more aware of the high crime areas and work with another person even if that person is not an adjuster but an assistant.
• Have an exit strategy. If something seems a little off…trust your gut. As a public adjuster you have a choice of clients and if you feel there is a too much risk in the situation, for whatever reason, exercise your right to get out of the situation.

If you feel your personal safety is not in jeopardy at the loss, you should remember that accidents can happen at a loss site. Many times you are the first expert to evaluate the true extent of the damage at the property. More tips to be safe:

• When it doubt, get out. Consider the extent of the property damage and take particular caution when inspecting buildings with extensive damage. Be sure to consider the structural framing areas of the building that are damaged or that may be damaged. You should treat each loss separately and not assume that because the damage does not look as bad as a prior job that the building is actually stable and safe. Hidden damage is dangerous. Make sure to consider extra temporary lighting so you can see the problem areas better.
• Pay close attention to wet, oily or muddy areas. Also pay attention to debris at the property. Stay in the moment when you are inspecting. Often times, adjusters can be paying more attention to getting a measurement, changing their camera function or looking in another direction when they enter the danger zone. Be alert.
• Keep your guard up when it comes to animals. Friendly Fido might be okay at site inspection one and two, but that doesn’t mean he is your friend on the third visit. Use caution when dealing with domestic animals, especially when the homeowners are not present. You should also have a plan and be on the look out for non-domestic animals, especially in strange areas.
• Utility hazards should also be on your list of dangers. Pay attention to:
  • Ladders and electricity poles
  • Electricity & water
  • Gas lines

Adhering to these safety tips and having a safety plan for your team is incredibly important. As a responding adjuster, public adjusters face many dangers and should be cautious of hazardous environments, security threats, and dangerous situations they face on a regular basis. Having talked about and planned for dangerous circumstances can greatly help you deal with a situation when you encounter it in the field.

Do you have other tips from the field to share with your fellow adjusters? Just post a comment below. The more information about staying safe… the better.

Life, Health & Safety Issues for Field Adjusters, the course presented by Branham, Froeschle, and Tutwiler, was dedicated to the memory of insurance adjuster, Katie Froeschle, who lost her life when she was inspecting a claim in Tampa, Florida. Jeff Froeschle presented this course in memory of his daughter, Katie, in an effort to educate others.

Dick Tutwiler was President of the Windstorm Insurance Network® during the devastating hurricane season of 2004, and in 2005. With his leadership, the Windstorm Insurance Network® contributed the first of many donations to the FSU School of Business for undergraduate and graduate students majoring in risk management in an effort to honor Katie Froeschle. Because of Tutwiler’s work starting the scholarship fund and for leading the Windstorm Insurance Network® during a terrible hurricane season, he was honored with the WIND® Presidential Recognition Award at the most recent conference. A special thanks to these presenters for sharing this information and for their work to help educate others and keep us all safe.

Since public adjusters are in the business of helping people, having a presence on various social media sites can make an impact on your business. Insureds get their information and share their information though sites like Twitter, Facebook, and Linked In. Anyone can post a question, start a topic of discussion, or find your business by posting on a social site. It might take a few seconds or a few minute,s but almost instantly the user has various answers posted from people the user “knows,” trusts and values. When it comes to needing help with an insurance claim, insureds are likely reaching out on social media sites. When something goes wrong, people tend to want to talk, text or type about their problems. Public adjusters need to make their services visible on social sites to help clients find out about their services. Social networking and social media sites are an easy way to spread the word about public insurance adjusting.

Also, satisfied clients who hire a representative and then post about their positive experience hit a large a demographic of people who might not otherwise learn about the work of a public adjuster.

In addition to being a tool to get business, social media outlets should also be considered by public adjusters who are assisting policyholders who have an ongoing claim with an insurance company. The public adjuster should remind policyholders that the postings they share with “friends” may also be reviewed by the insurance company. When trying to learn more about a person or a claim, insurance companies are “googling” the names of their insureds and easily seeing profiles and postings that give an inside glimpse into a claimant’s personal life. Personal photos posted on social media sites are often intended only for friends, but they eventually make their way public. Sites have different privacy settings for photos and typed postings, and a user may be unaware that they are required to perform an extra step to secure photos from public view.

The February edition of Claims Magazine explains more about social media in an article called “Speaking Of: Social Media Intelligence.” This article acknowledges that claims investigations do include an inside look into the policyholder’s life via social media:

Increasingly claims professionals and attorneys (among others) are turning to social media to conduct research for their investigations. Whether the intended purpose is to examine the validity of a claim or gauge the veracity of a plaintiff, investigators are finding new ways to leverage the information accessible on sites such as Facebook and Twitter.

Information obtained from social networking sites can provide useful material used to attack the credibility of a person or it might provide an investigator/ adjuster a closer look at the insured’s personal life. Browsing profiles may allow an investigator to learn what motivates, scares, or pushes the insured’s buttons before ever meeting your client. It is naïve to think that an insurance company is not using this information for its benefit. Of course, policyholders are often frustrated during the claims process when the process seems to take too long or the policyholder begins to realize that they may not be getting the all the benefits of the policy. Posting negative information about the insurance company’s actions or just spouting off on a public site will not help get a claim resolved and may give the insurance company a negative impression of a otherwise model policyholder.

If you think that insurance companies are not cyber-investigating policyholders, I encourage you to look at another article in Claims Magazine. “15 Questions to ask a Claimant about Social Media Usage” provides a detailed list of questions for insurance investigators to ask insureds about their social media usage. However, just as interesting as the article, are the comments posted about cyber-sleuthing.

One comment said:

I utilize internet [sic] sleuthing in claims investigation but hadn't thought about some of the other resources you suggest. I like those suggestions but question the "Ask the Claimant for this Info" approach. Unless it's something that may sought via subpoena later, I don't want to give the claimant any indication we're cyber-sleuthing. He/She may then do something like set privacy settings in Facebook, instead of having pictures and info available for people to see, which hurts rather than helps.

In response, another comment was posted that explains that if an insured changes information on a social site, it is a red flag for the insurance company:

There is always a risk that, by asking cyber-screening questions early in the investigation, the claimant might be tipped off; however, without having the claimant’s identifier information it is often impractical for insurers to perform a timely and effective open-source cyber investigation. Social networking data almost always can be obtained later by subpoena, if the claim goes to litigation. The insurer’s discovery request for production of this data should include all changes that have been made to the website, which can also provide useful evidence. The insurer can also seek discovery of the data even earlier, during the claim investigation, in an examination under oath.

While many may have thought of cyber investigations were being reserved for auto or workers’ compensation claims, property adjusters are taking advantage of the social media storm too.

• Golub & Associates, Inc was hired by an insured after her home was damaged by fire in August 2008. When the policyholder hired Golub, she signed a contract, agreeing to pay the public adjusting firm 10% of claim payments from State Farm. Golub agreed to adjust the claim on the policyholder’s behalf.
• Golub was sure to provide State Farm notice of its involvement.
• In November of 2008, State Farm issued a check for $72,076.58. The check was issued to the policyholder and Golub & Associates, Inc. Around the same time payment was issued in this case, the insured expressed her desire to discharge Golub and advised State Farm that she wished the check to be reissued without naming her public adjusting firm as a payee.
• State Farm re-issued the check without Golub as a payee.
• Golub filed suit. State Farm contended that Golub did not have a valid lien on the proceeds and it did not have an obligation to list them on the check.
• The trial court determined Golub did have a proper lien on the insurance proceeds and Golub should have been listed as a payee.
• After losing at the trial level, State Farm did not issue payment to Golub, but instead appealed the ruling.
• The Illinois appellate court issued a written opinion on January 18, 2011, agreeing with trial court’s decision in Golub’s favor. A complete copy of the opinion is available here.
• The appellate court explained the contract between the policyholder and the public adjuster in Illinois is a common law lien that must be paid and a public adjusting form is entitled to be compensated for their work according to the terms of the contract. The Court stated specifically that “State Farm was wrong to go along with Clayton’s plan to deprive plaintiff of its rightly earned fee.”

The facts of the case were clear that State Farm first issued the check with Golub & Associates and then later re-issued the same claim payment exclusively to the policyholder. Golub filed suit when it was not included on the check or paid on the claim. State Farm took the position that its only duty was to its insured and that Illinois law did allow a lien for a public insurance adjuster, as public adjusting was not a named occupation or profession in a statute providing for liens.

Golub relied upon Section 512.52 of the Illinois Insurance Code that states:

“(a) ‘Adjusting insurance claims’ means representing an insured with an insurer for compensation[ ] and while representing that insured either negotiating values, damages, or depreciation[ ] or applying the loss circumstances to insurance policy provisions.
(b) ‘Public Insurance Adjuster’ means a person engaged in the business of adjusting insurance claims who is licensed pursuant to this Article.
* * *
(d) ‘Compensation’ shall include, but need not be limited to, the following:
1. any assignment of insurance proceeds or a percentage thereof;
2. any agreement to make repairs for the amount of the insurance proceeds payable;
3. assertion of any lien against insurance proceeds payable.” (215 ILCS 5/512.52(a), (b), (d) (West 2008).

The appellate court had this to say when it affirmed the trial court’s ruling:

“The instant situation presents a classic case in which a party who has been provided a service attempts to hustle the provider out of its fee. Here, plaintiff adjusted the claim on behalf of Clayton against State Farm; however, once the claim was adjusted, Clayton attempted to “fire” plaintiff. We agree with plaintiff that no one should be expected to work in a profession that would allow clients to fire the professional after the professional's services were rendered unless there is an avenue to ensure payment. By specifically using the term “lien,” our General Assembly ensured that public insurance adjusters would be safeguarded against the type of situation presented here.”

I spoke to Bob Davis from Golub & Associates, Inc., about this case. Davis explained that he hopes this case will help other public adjusters who may be in similar situations. Golub & Associates, Inc. has been in business since 1969, adjusting claims in both Illinois and Missouri. Lester Golub was the founder and owner until 1989 when he sold the business to Ace Hart and Dan Rudman. Mr. Golub passed away a few years ago, but his business lives on. For 40 years, Ace and Dan were partners; Ace handled claims in Illinois, and Dan adjusted claims in Missouri. While still active in the company, Dan & Ace sold the business to Bob Davis and André Sullivan in January 2010. Bob Davis is a retired police detective and has lived in the Collinsville area his entire life. Golub and Associates, Inc., is located Collinsville, IL, approximately 15 miles east of St. Louis, Missouri and 100 miles from State Farm’ s headquarters.

Noted insurance counsel, Bill Berk, is the Secretary of the Windstorm Network and will be chairing this symposium. He is putting the finishing touches on various up-to-date topics involved with handling windstorm claims. For example, there will be an in depth analysis of the appraisal process with training for umpires and appraisers on the most efficient and proper methodologies to properly conduct an appraisal.

These one day symposiums can provide some fantastic claims handling information. In Texas Property Insurance Claims Deadlines and Bad Faith Statutes, I noted practical handouts and guides made for attendees regarding specific concerns in Texas. I am certain Bill Berk will make the Atlanta Symposium just as informative for claims handlers in Georgia.

So, mark the date and plan to attend.

While I was at the conference, I had the opportunity to meet many new people and reconnect with some I only get to see once a year at WIND. During this four-day conference, I had the chance to attend several sessions on topics specifically devoted to windstorm insurance claim issues.

In the mediation seminar, useful information was provided that can help public insurance adjusters resolve claims. Whether the claim is resolved through mediation, settlement talks, or other alternative dispute resolution avenues, some tactics are universal. Panel member mediators, Kim Sands of Upchurch, White, Watson and Max, and Jon King, Esq., of Williams, Birnberg & Andersen LLP, provided insight from the neutral perspective in the course, “What Works, What Doesn’t: What Mediators Want You to Know: A View from the Fence.”

A few of the helpful tips that I took away from the seminar could help resolve any claim:

• PLAN and PREPARE- The parties and their representatives need to be prepared to explain the issues of the case at the mediation. Policyholder representatives need to prepare the insureds for what to expect during the process of mediation or settlement talks. The policyholder’s claim needs to be presented with the proper support and documentation. Present the basis for the payment. It sounds simple, but supporting your position with evidence is persuasive and helps the mediator understand the claim and the issues.

• SHARE- When it comes to the amount of the policyholder’s claim, the mediators suggest that some negotiations are more successful if the insurance company has a ballpark idea before sitting down to talk. By providing the claimed amount with supporting documentation, or at least references to the support, the insurer can make sure that the representative attending the mediation has the proper amount of authority. If the insurance company thinks the claim will settle for a much lower number, the representative available for the mediation may not have the authority to settle and settlement talks may be stymied or delayed.

• MAKE SURE THE DECISION MAKER IS PRESENT- We all know that for a claim to get resolved, the policyholder has to give authority to present a demand or accept an offer, but this cannot happen if the proper policyholders are not available. Mediation is a process, and, by having all the players present, it is much easier to reach a resolution. Careful consideration should be given to corporations, condominium associations, and claims with multiple insureds. While authority can be assigned, for the sake of the policyholders relationships with each other, all decision makers should be present.

For more information on mediations in first-party insurance claims, Upchurch, White, Watson and Max has presented a series of webinars on this very topic. The webinars are available free of charge on their site. One seminar you might find particularly on point is now archived as Mediating First Party Bad Faith ~ A Mediator's Perspective.

To learn more about the Windstorm Insurance Network, check out their website so you can participate next year. Be sure to note the newest president is our very own Chip Merlin. 2010 President Michaela Scheihing passed the torch to Chip in a ceremony on Thursday morning.

It’s not too early to learn more about the 13th annual Wind Conference scheduled for Orlando Florida, January 2012.

The modern all risk insurance policy provides many technical reasons and excuses to delay and not pay claims. Condition precedents to payment, if demanded in the entirety, can delay claims. Technical exclusions and time period requirements following delayed adjustments and payments can be used to frustrate the purpose of insurance. Fantastic adjusters avoid this scenario. As a result, I do not see their claims in lawsuits too often, if at all.

At a board dinner this week, a senior claims executive explained how his company was paying collapse losses. Being familiar with the policy language, I explained that the company didn't have to pay partial collapse losses. He said he knew, but didn't want to lose good customers just because the ISO changes made paying under the collapse provision impossible. Not all claims organizations share that philosophy.

While answering a question during my captivating presentation about new Gulf Coast case law, I commented when there are experienced adjusters with good interpersonal skills and the authority get claims paid, disputes seem to disappear. For other adjusters, disputes are chronic. I could make a fortune from their very upset policyholders.

For years, Hartford had a general adjuster in Florida who paid claims fairly. No complaints--happy policyholders. I litigated only one claim against him in fifteen years. He retired and was replaced with three younger adjusters. The result was a boom in Hartford insurance litigation. The cause was the adjusters’ different mind-set and skill-set.

I briefly talked with a large loss adjuster for Travelers yesterday and asked him how long he has been plying his trade. "36 years" was his response. I asked if he was behind a desk or out in the field. He adamantly said, "oh, no. Out in the field. I love my job." I could tell he meant that he loved taking care of people.

Adjustment of claims is a very demanding job. It takes heart, skill and knowledge to do it right. When done correctly by a fantastic adjuster, the policy's goal of providing the peace of mind purchased is fulfilled. I tend to write about claims gone awry, but this silent majority of adjusters certainly deserve admiration for the work they accomplish.

I hope to meet and share success stories and techniques with other fantastic adjusters at next year's Windstorm Conference in Orlando. We have already started taking ideas and suggestions for next year’s Conference.

Cheers!

Warren and Pam Adams hired Don Wood, of Suncoast Claims Inc., as their public adjuster and also retained Chip Merlin. The Adams, through the help of Merlin Law Group and Suncoast, filed claims for both flood and wind damage with their respective insurers. Warren Adams, who was often quoted by major news media after Ike, echoed his prior sentiments about the importance of hiring help after an insurance loss. When we spoke, he said, “I would never go against an insurance company without a public insurance adjuster and a good lawyer who knows insurance law. It just makes good money sense to hire help.” Before getting help, Adams explained that he was frustrated in his dealings with the insurance company. Warren was devoting large portions of his time arguing with the insurance company and not making headway, he began to lose sleep, and tension from the situation was overflowing into the other areas of his life.

Warren explained that while his house was the last house standing, it suffered major damage that was missed by the insurance carriers. The living area of the home was built 21 feet, 6inches above sea level but sustained massive damage. Insurance company experts listed much of the damage as a pre-existing condition of the home and not damaged caused by Ike. It was through the use of experts retained by Merlin Law Group and Suncoast, including forensic meteorological experts and qualified structural engineers, that extensive damage was proved to have been caused by Ike. With respect to hiring experts, in the article, "The Last House Standing" Insurance Losses Settle,“ Don Wood said, “If your Public Adjuster has evaluated and documented your loss and your carrier still won’t cooperate, don’t quit – speak to an attorney – one who is successful in insurance litigation and who understands the value added by your Public Adjuster. Sometimes it takes both a Public Adjuster and an attorney.”

When Warren was dealing with the insurance companies directly and being thwarted at every turn, he was also being interviewed by major news media. Warren said he gave several interviews in which he explained to the reporters the status of the damage to his home and the lack of response and payment from his insurance companies, but he said that his statements about the insurance issues were not included in video or stories when they went to press. Warren said that he knows that major insurance companies buy air time from many of the large media networks and he thinks that his complaints were left out of the reports in an effort to not ruffle feathers or lose sponsors. Well, when the news media did not put pressure on the insurance company to do the right thing, Warren and Pam Adams knew to retain representatives to assist them. And it worked. Pam and Warren Adams are back living in their new home and express volumes of gratitude for the work of Suncoast and Merlin Law Group.

The Adams are able to move on with their life because their insurance claim has been resolved, but Warren explained that the sense of community also needed to be rebuilt after Ike. Warren and Pam’s solution: good home-cooking. So if you visit Crystal Beach, you can stop by their new BBQ pit and order some Texas Barbeque. The location is right across from the Adams residence. If you are lucky, you might find yourself having lunch with Warren, Don or Chip. Here is a picture of all three gentlemen taken in Texas last year.

Jefferson Dodge at BoulderWeekly discussed this problem in his article, Burned again- Fourmile Fire Victim Report Problems Getting Insurance Money. Dodge explained, “many Fourmile victims were unaware they were ‘under-insured.’ either because they hadn’t updated their policy in decades or were sold less insurance than they actually needed.” Lewis Perkins serves as one example. Perkins lost his home in the fire but doesn’t have enough coverage to rebuild the home he once had. At the time of the loss, the assessed value of his home was $210,000.00 but Perkins only received $91,000.00 for the structure damages. Perkins explained that he relied on his insurance company for proper coverage, after being insured with Nationwide for 26 years, Perkins thought he was covered: “I thought if you bought insurance, it would take care of things.” Another Colorado resident ran into a similar problem, but Nana Will thought she had performed her due diligence as an informed consumer when she checked on her coverage amounts after upgrading her home. In January 2010, after Will added solar panels to her home she notified Safeco. Safeco advised that so long as the system did not exceed $50,000.00 the coverage she had in place was appropriate. The solar system was less, but Will states the coverage she had in place during the September fire was inadequate; Safeco has issued payment far less than the amount needed for reconstruction.

As mentioned in Part I of this post, public adjuster Scott deLuise and others are attempting to help the policyholders who have suffered as a result of this fire.

One way public adjusters can help in times of catastrophe, as demonstrated by deLuise, is by reaching out to United Policyholders (UP).

Karen Reimus, of UP, explained that in cases of natural disaster underinsurance is the number one problem facing families who have lost their homes. Before a loss, UP suggests homeowners examine their policies closely and provides a practical math equation to see if more coverage should be purchased. Evaluate the structure limit on the home and compare this figure to the cost per-square-foot needed to rebuild a new home in your specific area. If this coverage is too low, higher limits need to be purchased for structure coverage and most likely for each coverages provided under the policy. UP’s website provides other practical tips for policyholders that can help before a loss happens.

• Make a personal property inventory
• Take pictures of your belongings
• Keep a record of your items and important papers somewhere safe (besides inside your home)

The recommendations Reimus makes are sound. She came to learn about issues with her own insurance company first-hand when she lost her home in a 2003 California fire. Reimus’ home had been purchased just four months before the loss. At the time the policy was issued, Reimus asked her agent questions about the amount of coverage but she was still a victim of underinsurance. Reimus states that carriers underinsure homes intentionally to minimize their exposure and protect their market share by making premiums competitive. The problems show up for the policyholders in cases of disaster and total loss scenarios.

To help local fire victims in Colorado with this problem and others, Karen Reimus is holding a monthly series of workshops. To learn more practical tips or additional information about the situation in Colorado visit www.unitedpolicyholders/disaster.com

Senate Bill 408 is lengthy and covers many topics. Here is a summary of some key provisions:

PUBLIC ADJUSTERS:

amending s. 626.854, F.S.;

·        providing limitations on the amount of compensation that may be received by a public adjuster for a reopened or supplemental claim; (20% of the reopened or supplemental claim payment) p. 13

·        providing statements that may be considered deceptive or misleading if made in any public adjuster’s advertisement or solicitation;

·        providing a definition for the term “written advertisement”;

·        requiring that a disclaimer be included in any public adjuster’s written advertisement;

·        providing requirements for such disclaimer;

·        requiring certain persons who act on behalf of an insurer to provide notice to the insurer, claimant, public adjuster, or legal representative for an onsite inspection of the insured property;

·        authorizing the insured or claimant to deny access to the property if notice is not provided;

·        requiring the public adjuster to ensure prompt notice of certain property loss claims; p.19 (& give a copy of PA contract to ins. co. including % of PA compensation)

·        providing that an insurer be allowed to interview the insured directly about the loss claim;

·        prohibiting the insurer from obstructing or preventing the public adjuster from communicating with the insured;

·        requiring that the insurer communicate with the public adjuster in an effort to reach an agreement as to the scope of the covered loss under the insurance policy;

·        prohibiting a public adjuster from restricting or preventing persons acting on behalf of the insured from having reasonable access to the insured or the insured’s property;

·        prohibiting a public adjuster from restricting or preventing the insured’s adjuster from having reasonable access to or inspecting the insured’s property;

·        authorizing the insured’s adjuster to be present for the inspection; prohibiting a licensed contractor or subcontractor from adjusting a claim on behalf of an insured if such contractor or subcontractor is not a licensed public adjuster;

·        providing an exception;

amending s. 626.8651, F.S.; requiring that a public adjuster apprentice complete a minimum number of hours of continuing education to qualify for licensure; 

amending s. 626.8796, F.S.; providing requirements for a public adjuster contract; (Must include percentage of compensation)

SUPPLEMENTAL CLAIM:

creating s. 626.70132, F.S.;

·        requiring that notice of a claim, supplemental claim, or reopened claim be given to the insurer within a specified period after a windstorm or hurricane occurs; (3 year)

·        providing a definition for the terms “supplemental claim” or “reopened claim”; providing applicability;

amending s. 627.351, F.S.; providing that members of the Citizens Property Insurance Corporation Board of Governors are not prohibited from practicing in a certain profession if not prohibited by law or ordinance;

CHANGE IN POLICY: (p. 83)

creating s. 627.43141, F.S.;

·        providing definitions; requiring the delivery of a “Notice of Change in Policy Terms” under certain circumstances;

·        specifying requirements for such notice; (must be sent with renewal) specifying actions constituting proof of notice; (placing it in the U.S. mail is proof of notice) authorizing policy renewals to contain a change in policy terms;

·        providing that receipt of payment by an insurer is deemed acceptance of new policy terms by an insured;

ACTUAL CASH VALUE: (p.87)

amending s. 627.7011, F.S.;

·        requiring that an insurer pay the actual cash value of an insured loss for a dwelling, less any applicable deductible, under certain circumstances;

·        requiring that a policyholder enter into a contract for the performance of building and structural repairs;

·        requiring that an insurer pay certain remaining amounts; (as repairs are made)

·        restricting insurers and contractors from requiring advance payments for certain repairs and expenses;

·        authorizing an insured to make a claim for replacement costs within a certain period after the insurer pays actual cash value to make a claim for replacement costs; (1 year)

·        requiring an insurer to pay the replacement costs if a total loss occurs;

·        allowing an insurer to limit its initial payment for losses to personal property; (ACV or 50% of RCV, whichever is greater, and pay holdback with receipt of purchase)

SINKHOLE: (p. 91)

amending s. 627.70131, F.S.;

·        specifying application of certain time periods to initial or supplemental property insurance claim notices and payments; (90 days)

·        providing legislative findings with respect to 2005 statutory changes relating to sinkhole insurance coverage and statutory changes in this act;

amending s. 627.706, F.S.;

·        authorizing an insurer to limit coverage for catastrophic ground cover collapse to the principal building (so no outlying buildings, sheds, etc.) and to have discretion to provide additional coverage;

·        allowing the deductible to include costs relating to an investigation of whether sinkhole activity is present;

·        revising definitions; (“covered building” – seems to exclude driveways, pools, etc.)

·        defining the term “structural damage”; p.94 (1. foundation movement outside of acceptable variance of applicable building code; 2. damage which “prevents the primary structural members or primary structural systems from supporting the loads and forces they were designed to support”)

·        placing a 2-year statute of repose on claims for sinkhole coverage; (from the time insured “knew or reasonably should have known about sinkhole loss”)

amending s. 627.707, F.S.;

·        revising provisions relating to the investigation of sinkholes by insurers;

·        deleting a requirement that the insurer provide a policyholder with a statement regarding testing for sinkhole activity;

·        providing a time limitation for demanding sinkhole testing by a policyholder (60 days from denial of claim) and entering into a contract for repairs (within 90 days);

·        requiring all repairs to be completed within a certain time; (within 12 months)

·        providing exceptions to the time to complete repairs; (mutual agreement between policyholder and insurance company or the claim is in litigation, appraisal or neutral evaluation)

·        providing a criminal penalty on a policyholder for accepting rebates from persons performing repairs;

amending s. 627.7073, F.S.;

·        revising provisions relating to inspection reports;

·        providing that the presumption that the report is correct shifts the burden of proof;

·        requiring the policyholder to file certain reports as a precondition to accepting payment;

·        requiring a seller of real property to provide a buyer with a copy of any inspection reports and certifications;

amending s. 627.7074, F.S.;

·        revising provisions relating to neutral evaluation;

·        requiring evaluation in order to make certain determinations;

·        requiring that the neutral evaluator be allowed access to structures being evaluated;

·        providing grounds for disqualifying an evaluator;

·        allowing the Department of Financial Services to appoint an evaluator if the parties cannot come to agreement;

·        revising the timeframes for scheduling a neutral evaluation conference; authorizing an evaluator to enlist another evaluator or other professionals;

·        providing a time certain for issuing a report;

·        providing that certain information is confidential; p. 110 (oral, written statements or non-verbal conduct, other than “expressly required to be admitted by this subsection, are confidential” and can be disclosed only to the parties – i.e., can’t be admitted in court)

·        revising provisions relating to compliance with the evaluator’s recommendations;

·        providing that the evaluator is an agent of the department for the purposes of immunity from suit;

·        requiring the department to adopt rules;

Changes regarding insurance law seem much more frequent than they were a decade ago. The financially endowed insurance corporations have professional lobbyists that are peddling their economic desires on a full time basis to our elected officials and insurance regulators. These same insurance corporations often are behind the propaganda to vote against judges who don’t rule for the insurance industry’s agenda or position in cases. Florida Senate Bill 408 is substantially law that only helps insurance companies and does little for policyholders. It does not take a genius to figure out who first drafted the proposed bill.

Many of Florida’s elected leaders were financially supported by this very strong insurance lobby. As a result, many of the changes proposed in the legislation may become law. In a very perverse and counterintuitive way of thinking, this law will probably result in more business for me because insurers have more reasons not to timely pay property insurance claims.

Here’s hoping that future insurance law changes will eventually help policyholders rather than increase insurance company executives’ salaries and woe to those suffering catastrophe. Since we are speaking of changes, one singer personifies how much change can happen over a period of time and the music may help those reading through this bill:
 

The relevant revised language regarding solicitation provides as follows:

No individual, firm, association or corporation licensed under this act shall:

...solicit the adjustment of a loss or damage occurring in this State from an insured, whether by personal interview, by telephone, or by any other method, between the hours of six p.m. and eight a.m. during the 24 hours after the loss has occurred;

Many states have adopted similar limitations on solicitation. As I noted in Public Adjusters Win Appeal Regarding Solicitation Ban, it is far different than the unconstitutional ban Florida tried to impose.

New Jersey also mandated new continuing education requirements:

Every adjuster's license issued pursuant to this act may be renewed for a two-year period upon the filing of an application in conformity with section 6 of this act, which shall include proof of completion of continuing education requirements as established by this section.

a. The commissioner shall require every individual licensed as a public adjuster, and each sublicensee of a licensed adjuster that is a corporation, firm or association, as a condition of biennial license renewal pursuant to this section, to complete not less than 15 hours of continuing education. Each hour of instruction shall be equivalent to one credit.

b. The commissioner shall:

(1) establish standards for the continuing education of public adjusters, including the subject matter and content of courses of study;
(2) approve educational programs offering continuing education credits and the qualification of instructors; and
(3) approve other equivalent educational programs and establish procedures for the issuance of credit upon satisfactory proof of the completion of these programs.

Continuing education is important for the public's assurance of minimum standards within the public adjusting industry. My impression is that there is also a need for experience before a public adjuster's license is ever issued. I expect other states will soon follow Florida's requirement of practical experience before issuing licenses. It is in the public's interest to do so.

DeLuise prepared the claim on behalf of Onysko, and during the evaluation of the damages, he learned from an industrial hygienist that the insulation and the walls of the property were damaged by smoke. In order to replace the insulation, the insured must remove the sheetrock or take the siding off from the outside.

According to the news report, Farmers’s spokeman, Mark Toohey, said the company has already paid for a deodorizing technique to treat the damages inside the walls. After being contacted by 7News, a Farmers representative said they would visit the loss again. As of the time of his post, however, Farmers would not agree to appraise the damages with the insured.

Dayle Cedars reported that the Colorado Division of Insurance considers appraisal proper “only when there are discrepancies concerning value, the actual cost of an item or items. In situations where the ‘scope’ of the claim is in question, a third party is not required. The Division of Insurance cannot force an insurance company to pay a claim or to go through the appraisal process with a third party, known as an umpire.”

Many policies provide for appraisal when there is a disagreement regarding the amount of the loss. To set the amount of loss, the scope of damages should to be reviewed by the appraisers and the umpire. Thus, it seems the Division of Insurance’s limitation of appraisal to exclude scope of damages is off base.

The Colorado Department of Regulatory Agencies Division of Insurance’s bulletin, Insurer Requirements Related to Disputed Claims Subject to Appraisal, does not specifically exclude evaluating the scope of damages in an appraisal. It states “most, if not all, property insurance policy contracts include an appraisal clause which may be invoked if there is a dispute between the insured and the insurer regarding a coverage determination, the claim handling process, or the settlement amount.”

Unfortunately, Joshua Onysko is not alone in his fight against his insurance company. The reporter for 7News uncovered 18 others who were having problems. Scott deLuise explained that United Policyholders has been actively helping the victims of the fire loss learn more about insurance. Amy Bach, of United Policyholders, advised that her group is partnering with the County of Boulder to host a series of educational workshops. The next workshop will be held on Monday, January 10, 2011. The information provided to the policyholders from the last educational session is available here.

Next week, my post will feature more information about the situation in Boulder.

CAPIA was formed when several public adjusters licensed in Connecticut came together as a common force opposing a bill written to regulate the amount of adjustment time a public adjuster could work a claim before the claim was required to be resolved in appraisal. Mike explained the proposed legislation would have capped the amount of time a public adjuster could present and work the claim with the insurance company to 30 days; after 30 days, the claim would be appraised. Public adjusters in Connecticut worked together to explain why it can take longer than 30 to adjust a claim for a policyholder. The united efforts of these public adjusters seemed to be beneficial-- the proposal and regulation were defeated.

Recognizing the need to work together, Mike Bayer and his business partner, Philip Falker, worked as members of the CAPIA legislative committee to push changes to Connecticut statutory definition of a public adjuster. Mike explained that working to clearly define what a public adjuster does would help to ensure unlicensed persons were not adjusting claims on behalf of policyholders. He also explained there is a need in Connecticut to stop contractors and remediation workers from attempting to negotiate settlements between homeowners and insurance carriers after a loss occurs. By more clearly defining “public adjuster” and the public adjuster’s role, the committee pushed legislation changes that proactively protected their profession rather than waiting for proposed changes or new laws that dramatically alter the role or requirements of public insurance adjusters.

The proposed changes to the legislation were simple additions that explained the duties of the public adjuster. Although the statute changes were specific only to obligations of public adjusters and did not impact independent or company adjusters, the insurance association opposed the changes. The insurance Association of Connecticut (IAC) presented testimony and an extensive written memorandum in opposition to the changes. In response, Mike Bayer and others testified in favor of the bill and provided a first-hand explanation of why clarification of the statute would benefit the policyholders of Connecticut.

The IAC argued that the drafted bill provided no benefit for the consumer and is contrary to the law in the vast majority of states. The IAC argued the proposed changes would in essense require all insurance claims be presented by public adjusters only.

The Connecticut Legislature did not appear to be persuaded by the IAC, as the changes requested by CAPIA were adopted when the bill was passed.

Thanks to the hard work of Mike, Philip, and the other members of CAPIA, the proposed changes went into effect on October 1, 2010. For 2011, the committee is working on promoting additional changes to help the policyholders in Connecticut get claims resolved with more deliberate speed and without unnecessary delay from the insurers.

Michael Bayer and Philip Flaker, CPPA, together with Roland Grenier, are the principles of North East Adjustment Company, Inc. Based out of West Hartford, Connecticut, North East has been helping policyholders since 1989.

The Court, citing case law from the United States Supreme Court, specifically quashed arguments brought by the insurance industry supporting this ban:

We reject the contention of amicus curiae that, even if the statute is construed as a prophylactic ban on all solicitation, it is constitutional under the rational employed in Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447, 449 (1978) (holding that state “may discipline a lawyer for soliciting clients in person, for pecuniary gain, under circumstances likely to pose dangers that the state has a right to prevent.”).

…

We reject the Board’s argument and hold that, as applied in this context, the solicitation ban cannot be justified as a prophylactic rule. Ohralik does not stand for the proposition that blanket bans on personal solicitation by all types of professionals are constitutional in all circumstances. Because “the distinctions, historical and functional, between professions, may require consideration of quite different factors,” …the constitutionality of a ban on personal solicitation will depend upon the identity of the parties and the precise circumstances of the solicitation. Later cases have made this clear, explaining that Ohralik’s holding was narrow and depended upon certain “unique features of in-person solicitation by lawyers” that were present in the circumstances of that case….

This is a great decision for Free Speech. The Court also noted how important the public adjuster’s role is immediately following a catastrophe:

At trial, Kortum introduced testimony that the first 48 hours after a claim inducing event are critical because an uninformed policyholder can make decisions that would substantially diminish recovery under the insurance policy by failing to preserve evidence, by failing to find damaged property, and by overspending on mitigation or restoration efforts.

A basic problem with the ban was that at the most important time an insured could best use a public adjuster’s service, public adjusters could not solicit for business. Keeping the public adjuster from being engaged at this critical time was the object of this insurance industry sponsored law.

I noted in Public Adjuster Regulatory Appeal to be Argued Today that attorney Wilbur Brewton was retained just before the argument. Congratulations to him. He obviously did a great job to get the decision reversed.

For far too long, insurance carriers have viewed public adjusters as opponents rather than as potential allies. I believe the time has come to end this “cold war” and recognize that insurers, independent adjusters, and public adjusters all share a similar goal—fast, efficient, and accurate claims resolution. By taking a team approach, we can collectively do a better job of servicing policyholders who have suffered a serious loss to their homes, businesses, or commercial properties.

Taking a unified approach would be an important step toward bringing the insurance industry more fully into the 21st century, by both improving transparency for the public, and reducing costly inefficiencies for the insurer. Today, many carriers are seeking to control as much of the claim process as possible, often delaying or minimizing settlement offers. I strongly believe that such behavior is shortsighted and ultimately harms our industry.

Many of the responding comments from the insurance community were extraordinarily harsh. Here are a few:

• This article is one sided, and doesn't address the vast majority of public adjusters that 1) commit fraud 2) takes the attitude that "everything is covered" despite what the policy states 3) do a poor job educating insured's on their policy and coverages and finally 4) the only way a public adjuster can justify their fee is to make sure the claim is overpaid, thus over indemnifying the insured. People wonder why the cost of insurance is so expensive. Just ask your friend or neighbor who hired a public adjuster for roof leaks that occurred 5 years prior to their policy was in force, but PA is requesting $67,000.00 to repair the damages. You should watch Fox News, try and be fair and balanced next time.

• I'm sorry, but this article is ridiculous. In the last fifteen years, I've met (maybe) two honest public adjusters. Possibly the bad feelings which are causing the “cold war,” arise from that fact that practically every p/a claim is estimated at three to five times the actual loss amount, so they can get policy limits and charge my insured's higher fees. If they're all such professionals, with only the insured's best interests in mind, why do most states require that p/a's have (in some cases huge) bonds, where captive and independent adjuster's mostly have none? If this site is just going to push the “p/a and restoration services line,” I don't need to receive it anymore...I face that kind of corruption in the field all of the time, and I don’t want to receive it in my emails as well.

• In a perfect world, this article may apply. The problem is that it is based on a false premise...that public adjusters want "accurate claims resolution." Unfortunately for not only the insurance industry but also for the consumer, public adjusters are very rarely interested in an accurate settlement of a claim. Perhaps the author should consider re-writing the article based on an accurate premise, such as "fast, efficient, and grossly inflated and fraudulent claims resolution." To suggest that anything else is the "way it is" is simply ignoring the truth.

• Cold War? You bet. Maybe its the fact that the job of a PA is to inflate the claim to a higher amount to earn more commission. A closed claim is a good claim. however, that doesn't mean you give the stars when the damage is consistent with the moon. Sure, there are issues with independent adjusters who miss damage, inaccurate contents evaluation(typically from information provided by the insured), and issues with coverage. I think insurance companies do their best to accurately evaluate the damages. The last thing I want to to hear damage was missed. PA's are out for themselves. Essentially, they remind me of some roofers. There are roofers right now knocking doors, telling the insured they have lots of damage, and then meeting with the field adjuster. Sure, there are plenty that have damage which we pay for. There are the other insureds that the roofers pit against my company, and blame us like we don't pay. If only they knew how many hundreds of thousands of dollars our field adjusters have paid for roofs. No, PA's brought it on themselves. and filing the claim for them.

Dogs and cats. Oil and water. I predict the civility Dan Odess suggests in his article will not be acknowledged by many on the insurer side simply because it came from a public adjuster. For adjusters with a pre-determined attitude, no matter what the truth may be, their mind is already made up.

For public adjusters and everybody in the claims business, I suggest you contemplate Randy Goodman’s comments that I noted in last week’s post, Randy Goodman NAPIA Person of the Year:

Those of us who practice this wonderful profession – the profession of public adjusting – know how unique it is, how challenging it is, and how rewarding it can be on so many levels. As a group we elevate our profession in many ways:

By becoming more knowledgeable through expanded education.
By practicing sound ethics every day.
By providing a service to the consumer that adds significant value to the results they achieve after suffering a loss.
By showing respect every day for others who participate in the insurance adjusting industry, we receive recognized and well earned respect in return. 

Amen.

Merlin Law Group will be presenting two courses at the January conference that should not be missed:

• Florida Case Law Update presented by Chip Merlin, Kelly Kubiak, and Shaun Marker
• The Sword and Shield of Ethical Public Adjusting presented by Doug Grose, Craig Kubiak, Michelle Claverol of Merlin Law Group with George Keys of Keys Claims Consultants, Inc. and Pat Cuccaro of Adjusters International.

There is still time to sign up and attend the conference; the deadline to register for FAPIA is December, 22, 2010.

If you are considering joining FAPIA, I encourage you to learn about the history of the organization.  Charter member and past president, Raymond A. Altieri, Jr., of Altieri Transco American Claims, has memorialized the history of FAPIA and explains how it all got started:

In December of 1992, NAPIA had moved its Mid-Year Convention to Miami in an effort to accommodate its members who were working in South Florida. The DOI’s Agency Director had come to the meeting as a guest speaker. He warned the entire organization of impending doom for public adjusting in Florida once the next Legislative session opened in a few short months. After this gentleman spoke, Ray Altieri’s partner (at the time) and long time public adjuster, Jerry Levin, of Utica, New York, came to him while he was talking with attorney, William “Chip” Merlin and suggested that we were going to need a state public adjusters association to fight this off. Immediately, they went to work. We contacted all of Florida’s PA’s and attorney Doug Grose. We set a meeting for all Florida Public Adjusters in Orlando.

FAPIA: The Inaugural Meeting

The inaugural meeting took place in February 1993 at the Marriott World Center in Orlando. At dinner the night before the meeting, Chip and Doug, as our legal advisors, proposed a slate of Officers, which was to be voted on the next day by the public adjusters who were in attendance. Raymond A. Altieri, Jr. of Tampa was nominated as the organization’s first President, Steven Lesser of Miami Beach as President–Elect, Stephen Sarasohn of Boca Raton as Vice President, Chuck Howarth of Tampa as Treasurer, and Allan Brodsky of Hollywood as Secretary. The Directors were James Toukatly of Orlando, Craig Tanner of Clearwater, Ron Livingstone of Orlando, and Ira Sarasohn of Boca Raton. Competing public adjusters began to work together for the common good. By the next morning the slate was voted on and accepted. As President, Ray used NAPIA as an organizational model and employed a similar system for FAPIA. It remains in place today. The Board of Directors went forward with three major themes:

• Prevent the extinction of Public Adjusting in Florida
• Uniting was mandatory for survival
• Inclusion of all licensed PA’s in FAPIA was a must to be successful

FAPIA Meets With The Department of Insurance

FAPIA was armed with one strategy. As coined by Chip Merlin, “We must approach on the side of Angels.” Testify from the perspective of what eliminating PA’s would mean to the public, not us! Many of the PA’s named above and others, testified in front of the General Counsel of the DOI on this very issue. We were successful! We were invited to participate in the writing of new legislation. They accepted our work almost verbatim. During this same period and in addition to fighting for our lives to do first party property work, we had to overcome a competing group of PA’s who formed FAPA (Florida Association of Public Adjusters). This group was trying to fight for the “right” to do liability and bodily injury adjusting as an alternative to attorneys! NO WAY!! We separated ourselves greatly from FAPA, we showed the DOI that we would support aggressive and responsible regulation as an industry, and most of all we gained credibility as a new organization with top management personnel at the DOI. WE WERE ALIVE!

FAPIA Moves Forward In It’s First Decade

Armed with newly earned credibility at the DOI, FAPIA flourished. New challenges came and went through sacrifice of time and money by many of the Charter Members. First name basis relationships were established with DOI Division Directors. New proposed Rules and Legislation came forward and the DOI actively sought our input and opinions. FAPIA’s language was inserted into new Bills involving PA’s. The Tallahassee Mid-Year Meeting tradition was established to coincide with the annual Legislative Session to keep us in front of Senators, Representatives, and the DOI. Negative legislation slowed for a period, which allowed FAPIA to turn inward.

By–Law Revisions were made in 2000 to help conform to organizational growth. An Officer’s Ladder was created to send experienced members to the Presidency. FAPIA enhanced its professionalism by developing a website and hiring an Administrator, a Lobbyist, and a CPA firm to assist the organization in its affairs. Through the personal sacrifices of some, our entire association benefits. FAPIA through the hard work of Charter Members and Past Presidents such as Mark Boardman, Kimberly Pope, and Dale McCrory continue to achieve results. Mark is responsible for spearheading FAPIA’s advancement of the industry’s professionalism through Continuing Education and political interaction. Kimberly works hard to obtain Continuing Education credits from the Department of Financial Services for FAPIA’s members. Dale McCrory has almost single-handedly been responsible for all arrangements surrounding our conventions since FAPIA’s inception.

FAPIA has also gained recognition beyond the DOI, as many of its members became members of the Windstorm Network with Dick Tutwiler becoming that organization’s President and Steve Lesser and Jim Toukatly voted to its Board of Directors. NAPIA also has repeatedly recognized FAPIA as the largest and best State public adjusting association in the country. For its efforts to further the cause of public adjusting FAPIA has also been rewarded through NAPIA, by it’s voting of Raymond A. Altieri, Jr. to its Officer’s Ladder, where he will become NAPIA’s President in 2011. FAPIA’s growth has been outstanding. Our first meetings would attract 20 to 30 PA’s. Today, at our meetings, we exceed 250 members. That’s a testimony to the hard work of all.

Look for my next post in this series of Public Adjusting Stories on January 1, 2011.

The Greenspan Company/Adjusters International was founded in 1946 in Los Angeles by Sidney Greenspan. On behalf of Greenspan/AI, Robb Greenspan, a second-generation owner and partner, accepted the award for company of the year last month.

The detailed history of The Greenspan Company is explained on the firm’s website, www.greenspanai.com:

Sidney Greenspan, whose dedication to personalized customer service quickly became legendary throughout the region. In 1985 our firm, along with a group of leading public adjusting firms in the United States, Canada and the United Kingdom, foresaw the need for an international network of highly skilled public adjusters who could bring specific expertise to servicing any type of loss, anywhere, at any time. Adjusters International was the result.” “Adjusters International was founded by the best regional firms in the nation, many of which have been in business for nearly a century. These are family–owned firms, handed down from generation to generation, are deeply dedicated to serving and supporting their local communities.

Claims Journal acknowledged that Greenspan/AI has helped thousands of homeowners and business owners navigate the claims process after suffering an insured disaster caused by fire, flood or other perils.

I contacted Sandra Jackson at Greenspan Company/AI to learn more about this recent honor and she relayed the firm's excitement and gratitude. Here is a photo of Philip Freed, Sandra and Robb Greenspan accepting the award.

Our hats are tipped to all at The Greenspan Company/Adjusters International as we congratulate them for this special honor.

Here is some of Mark’s story…

I won’t tell you the name of the insurance company I used to work for- I’ll just tell you that it was a major player. Let’s call the company I used to work for BigCo.

BigCo was really good at creating a sense of ‘welcoming culture’ within the organization for its employees. When I started there in the late eighties, the company really seemed to offer a ‘family’ atmosphere.

My landing a job at BigCo was quite a coup; BigCo was a ‘prestige’ company, and the competition to get in was fierce” “Getting promoted to supervisor in under five years was another big accomplishment. Generally, you had to work there at least seven years before you could expect something like that. So I was on the fast track. I felt as if I were on the top of the world. I was a company guy. I was all about BigCo.

A big change happened for me in 1996, though. That was when I became a part of BigCo’s newly developed national catastrophe program. I gave up my job as a local supervisor at BigCo. The new position required a lot of travel. Because I had taken the new job, I was now traveling around the country, staying in seemingly endless series of hotels, and working very, very long hours. Twelve hour days were the minimum; six-day work weeks were the norm. I got a weekend off- as in two straight days at home-only every six weeks or so.

While working on the catastrophe team at BigCo, I began to see first-hand all the subtle ways the company manipulated the process to disadvantage policyholders. I began to notice how the words of the company used pointed in one direction…but the actions we took tended to point in another, very different direction….

I found us merely scurrying about to keep just enough money in people’s hands to keep complaints at a minimum. I saw too many ‘high-fives’ among BigCo team members when a policyholder’s claim was denied.

I also began to see that the family culture that BigCo took such pride in was more complex that I had imagined. It now had a darker side- you were part of the family as long as you did exactly what you were told, and as long as you accepted, without challenge, all of the unspoken assumptions you were supposed to accept.

Some of the unspoken ‘BigCo Family’ assumptions were:

• Claims from consumers were likely to be inflated, if not fraudulent. Treat them that way.
• You can always find some reason to delay.
• You can always find something to deny, reduce payment on, or limit.
• You can always find a way to deflect responsibility. Find someone or something else to blame for the situation the policyholder is facing.
• While you are doing these things, you must maintain, and endorse, the public position that BigCo is doing everything right, and is always out to give policyholders a fair shake.

You were only part of the ‘family’ if you agreed to conceal these basic working principles from the media, from the general public, and from policyholders.

It was time to get out. I began a career as a public adjuster. Shortly after leaving BigCo and starting working in my new field, I was working the Florida Panhandle with a retired Air Force veteran whom I’ll call ‘Captain Charlie’. He and his wife had been hit hard by Hurricane Ivan.” “Captain Charlie’s insurer gave him a shockingly low building-loss offer, and denied his claim for contents of his home entirely.

It was an infuriating result- one I knew I could improve for Captain Charlie. Knowing the internal workings of companies like his as well as I did, I took it as my personal mission to win Captain Charlie a better settlement” “He ended up getting over $39,000.00 that had originally been denied for contents of his home. I also secured additional payments on his home itself that totaled over $71,000.00….

I will never forget the look on Captain Charlie’s face when he got the news- over a hundred grand in additional payments from an insurer that had chosen to fight him tooth and nail, and had lost. I have never seen a man more grateful.

In a future post, we will discuss Mark’s book in detail, but I thought it was important to know Mark’s story first. To learn more about Mark, I encourage you to visit his website.

If you are a public adjuster and have a story to tell, drop me an email at nvinson@merlinlawgroup.com.

As more was learned about the circumstances of the loss, the sincere appreciation and respect the insured held for his public insurance adjuster was clear. At the time of the loss, he had more questions than answers and did not know where to turn until he hired his public adjuster.

Recently, I came across a blog written by KDhulkonen criticizing homeowners and cautioning against hiring public adjusters. The post, 3 reasons not to hire a Public Adjuster, lists three of the author’s opinions about public adjusters. However, insureds should not be discouraged from hiring a PA.

KDhulkonen’s Reason 1: Maximizing Settlement

KDhulkonen asserts “Homeowners adjusters pay whatever it costs (less deductible) to get your home and your personal property back to the way it was prior to the loss. This is really not an item in which a public adjuster can ‘maximize’.”

The author correctly quotes the principle of insurance, but the author provides no authority to support his assertion that seems to state that all claims are handled properly by insurance companies. This is an overreaching statement. If this information was correct, I doubt that public insurance adjusters would have a profession. However,there is data in Florida that shows the use of a public insurance adjuster does increase the final amount of the claim payments. I discussed this data and the OPAGGA report in my post “Public Adjusters and Sinkhole Claims.” The claim payment increase referenced in the OPAGGA report, however, is not limited to insureds who hire public adjusters for one particular kind of claim. Several insureds have explained that, but for the assistance of their public insurance adjuster, they would not have received the amount of their claim payment for their loss.

KDhulkonen’s Reason 2: The PA is paid a percentage of your recovery

Yes, a public adjuster is paid for his or her services. I don’t think homeowners are usually surprised or against paying for a professional to assist with the claim. Many public adjusters who assist claimants are paid on a contingency fee basis only, meaning, the insured is not paying an hourly rate for the services or having to pay any money for the services to begin. When an insured pays a public adjuster a small percentage of the claim payments collected by the PA or ultimately recovered, the PA can get started helping right away and should work diligently because he has a desire to see you get properly paid for your claim so that he receives payment for his services. If a public adjuster is wrong or doesn’t work hard to obtain a payment, he likely will not be paid. If this happened with great frequency, the work of public adjusters would be extinct.

KDhulkonen’s Reason 3: The Grief of the Claim

KDhulkonen argues that the grief caused to homeowners is not caused by the insurance company’s actions but by the traumatic loss itself.

No one doubts that damages to a home cause stress and grief to the homeowners. These difficulties are only compounded when a claim is not properly handled and the insured feels the insurance company is not standing behind the promises in the policy. Because a claim can be emotional for insureds, many policyholders hire help with their claims and the emotional burdens.

Other readers also pointed out why public adjusters are necessary-

Insurance expert said:

A public adjuster is licensed in the state they do business in by the State Dept. of Insurance. I have known several people that have suffered major fire, water and wind losses that received a huge recovery from their insurance policy verse what they might have gotten by not using a public adjuster. HIRE A PUBLIC ADJUSTER IN EVERY MAJOR INSURANCE CLAIM!

Another reader explained the need for representation by a PA:

Public Adjusters exist because of the inherent conflict of interest that exists when one person or entity attempts to represent two sides of a financial transaction...

If you have suffered a property loss to your home or business and are considering hiring a public insurance adjuster to assist with your insurance claim, you can rest assured that if you do a little research, you can likely find a public adjuster who will help you. As the PA will likely be paid a contingent percentage of your claim, the PA will work to increase the amount of the payment you are rightly owed from the insurance claim. Further, the PA will take over dealing with the insurance company and at least relieve part of your stress.

The lower Court's holding is an important issue for public adjusters. I know that the insurance industry finds it equally important, but for a very different reason. The Property Casualty Insurers Association of America, the National Association of Mutual Insurance Companies and the Florida Property and Casualty Association filed amicus curiae briefs supporting the regulation.

Here is the most significant part of the underlying holding by the trial Court:

The Court's finding is that for the first 48 hours after a casualty, a public adjuster may not solicit face to face or by telephone with an insured who has sustained a loss. No other form of contact is prohibited by the statute during the first 48 hours and no prohibition of contact exists after 48 hours

Wilbur E. Brewton has been substituted as counsel and will argue on behalf of the public adjuster. Wilbur is an excellent attorney and has proved to be bright and creative. I wish him the best of luck.

You can watch the live oral argument by clicking here.

This trend and aspect of public adjusting is addressed by two can’t miss presentations:

1. 1. NAIC and Insurance Regulation
2. 2. NAIC and the Model Public Adjuster Bill

One of the speakers on these topics will be a friend, colleague and former Montana Insurance Commissioner, John Morrison. The Wikipedia Encyclopedia has this to say about Morrison:

Morrison has chaired two major standing committees of the National Association of Insurance Commissioners: Market Regulation and Consumer Affairs and Health Insurance and Managed Care. Morrison led creation of a nationwide system that collects, aggregates and analyzes information relating to the conduct of insurance companies toward consumers in the marketplace, as well the first internet portal for insurance consumers. He led passage of a model law banning discretionary clauses in insured ERISA plans that now confers broad claims handling rights on millions of Americans. Morrison chaired the committee that kept terrorism coverage in place after September 11 (Great Falls Tribune 9/8/02; Daily Interlake 1/31/02), and led a national crackdown on fake Insurance and medical discount schemes (Consumer Reports 7/3/03, 6/6/04). He was one of a three member delegation that began the relationship between U.S. and Chinese insurance regulators in 2003. As NAIC’s International Vice-Chair for Asia, he represented U.S. insurance regulators in the 2007 U.S.-China Strategic Economic Dialogues and at the 2008 U.S.-China Insurance Dialogues in Hangzhou, China.

Morrison has written numerous op/eds, including "The Climate Change Peril that Insurers See," Washington Post 9/27/07 (reprinted widely by newspapers and blogs). He has been covered by the Wall Street Journal, New York Times, Washington Post, The Times, Money, Forbes, Smart Money, Consumer Reports, Best’s Review, and other national publications.

I have often suggested to Florida public adjusters that they need to learn techniques and best practices from other public adjusters throughout the United States. Networking on matters and educational experiences are the best methods for doing this. This program has the potential for profit and certain education—what else could one ask for other than a fantastic reception at a perfect setting to make education and profitable networking fun?

On that note, the Merlin Law Group will host the Welcome Reception on Thursday December 9. I look forward to seeing you in Miami Beach. Here is a link to the Registration.

At one of the courses I attended, David Pettinato of Merlin Law Group provided the audience with an in-depth look at insurance fraud in his course called Insurance Fraud & Bad Faith: Legal Perspective. David provided many cases and scenarios for the audience to consider. After David’s class, I took a closer look at insurance fraud and found an opinion where the public adjuster’s estimate was heavily scrutinized.

An Illinois homeowner brought an action against her homeowners insurance after her home suffered a fire loss American Casualty Company failed to pay the full amount of the damages to her home. The carrier alleged that the fire was intentionally set by the owner and that she committed fraud in connection with her submission of the claim. The jury disagreed and awarded damages to the owner in excess of the amount she sought.

The Seventh Circuit reviewed the case, and its opinion contains a great explanation of the facts. The Court determined that the jury was able to properly determine there was not in fact, fraud or concealment on the part of the owner. American Casualty did not appeal the jury’s finding that the homeowner did not intentionally set fire to her home. This case, decided in 1992, is not breaking news, but the explanation from this Court is valuable.

The setting is the village of Dolton, Illinois. Dolton is such a small town that the total village consists of 4.7 square miles. When the home was destroyed by fire, the homeowner shared it with her daughter, son-in-law, and grandchild. The insurance company paid for the contents damage and additional living expenses, but did not pay the claimed structure damages. The homeowner hired Clayton Nalon, a public insurance adjuster, to assist her with the claim. His estimate was the basis for the structure damage calculation on the proof of loss. The insurance company began to investigate the claim for fraud.

It is important to note that the homeowner was widowed in 1969. Her husband and his business partner owned “Ed N’ Sam’s Motor Cars.” The record showed that the homeowner had nothing to do with the business while her husband was alive, but received rent from the business for many years after his death. She was not privy to the operations until hard times hit in the 1980’s. She attempted to sort out financial issues at business when she learned it was struggling.

Ordinarily, under Illinois law, the insurer’s defense of fraud and false swearing presents an issue for the jury, but it becomes a question of law when the insured’s misrepresentation cannot be considered innocent. The insurance company argued that any reasonable jury should have found that the insured knowingly made false statement and/or willingly sought to defraud the insurer by misrepresentation.

There appears to be three reasons the insurance company believed the homeowner committed fraud. First, the insurance company argued she fraudulently concealed her personal liability on an SBA loan for Ed-N-Sam’s Motors. However, the Court explained that since the homeowner disclosed the full amount of the debt and provided a reasonable explanation -- that she classified the loan as a business debt and not a personal debt -- the jury could find that this was reasonable and not an act of fraud. The homeowner also testified that when she signed the papers, she did not understand her personal liability for the business loan.

Next, the insurance company took issue with a purported misrepresentation on the proof of loss. The homeowner listed herself as the sole owner of the property on the proof of loss form, when, in fact, Phoenix Bond Company had an interest in the property. She explained to the jury that she did not consider Phoenix Bond Company as having a true interest in the property because, even though she knew she owed Phoenix money, she did not think there was an actual lien on the property. She knew Phoenix had “bought her taxes” in a tax sale, but she considered the home solely hers because she held possession of the home. She did not understand that a tax sale gave Phoenix an interest in the property because, as she understood it, she still had additional time before she had to pay Phoenix and risk them taking the property. The Court explained that “American exposed Mrs. Trzcinski’s ignorance of the legal effect of a tax sale but it did not foreclose the possibility that her omissions were innocent.”

Finally, the insurance company argued that the estimate submitted to the insurance company was fraudulently excessive. The public adjuster estimated the structural damage to the home at approximately $43,737.03. The insurance adjuster estimated the repairs at $21,434.00. Attempting to come to an agreement with the insurance company, additional estimates were prepared by general contractors, but those estimates were closer in number to the insurance company’s estimate. Clayton Nalon explained the discrepancy.

Nalon explained that the estimate he prepared used the National Cost Estimator Manual, a publication that provided local, current pricing on special materials. Nalon testified his estimate was not exaggerated and presented a tabular comparison of his repair estimate compared to two other estimates.

Nalon discussed several reasons for the difference between the estimates. Nalon believed the floors in the living room, dining room and kitchen should have been removed down to the joists, and the damaged joists replaced at least to the main support beams; the subflooring should have been replaced; and all of the oak flooring should have been replaced. By contrast, Nordic Construction and Sikora Builders proposed to cut out the burned sections of the joists and "sister" them together, which Nalon believed was not the most structurally sound solution. Furthermore, Nordic and Sikora proposed to replace only the burned oak, but Nalon testified that the unburned oak had sustained substantial water damage. While Nalon's estimate had included the replacement value of the Italian gold leaf wallpaper in the living room, Nordic's and Sikora's estimates did not. Lipensky noted that Nalon's estimate included the cost of replacing smoke damaged materials while Lipensky's estimate included only the cost of cleaning and refinishing these materials.

The Court determined that the estimate for the building repairs was not fraudulently excessive:

Nalon explained that his job as a public insurance adjuster was to estimate the value of the property in its pre-fire condition to determine the loss that the insureds are entitled to have compensated. This is not necessarily the same as the cost of the repairs that the insureds may decide to undertake to remedy the problem. Nalon not only explained how he arrived at his estimate but also explained some of the difference between his estimate and those of Sikora and Nordic. While Nalon's estimate exceeded those of Sikora, Nordic and Ramsey, Nalon sufficiently justified his calculations so that we cannot say he fraudulently misrepresented the true value of Mrs. Trzcinski's loss as a matter of law.

Frank Artilles is the first public adjuster to be elected to a position in Florida's government. He told me that he wants to strengthen Florida's insurance industry and make it fair for consumers. That is the way it should be.

Frank is a very independent and strong willed individual. Some of his ideas about insurance are not shared by me. However, I supported Frank Artilles in this blog when many questioned whether he could win a primary.

I would suggest that consumers help Frank Artilles during his battles in Tallahassee. The insurance industry has a legion of lobbyists and its political muscle is extraordinary.

The special meeting went forward last Tuesday, with a mere 9% of the shareholders voting. The majority (74%) of that 9% voted in favor of eliminating their option to hire a public insurance adjuster in the event of a loss.

Julie Patel, of the SunSentiel, reported the results in her article, “Sawgrass Policyholders Won’t Hire their Own Claim Reps.”

Davie-based Sawgrass, which has about 12,000 policies, is a mutual company so policyholders own the company. The plan – aimed at saving money on claims costs – was approved.

As explained Chip’s post, the agreement violates Florida regulations which prevent insurers from suggesting, as a consideration for obtaining an insurance policy, that policyholders not obtain the help and assistance of a public insurance adjuster after a loss. Chip also gave valuable insight regarding the reasoning behind Sawgrass’ proposition and the benefits that of using public adjuster:

[M]anagement of insurance companies want to gain additional profits and other competitive advantages; by prohibiting policyholders from valuable assistance in the adjustment of a claim, insurance companies increase the likelihood that a policyholder will accept less than the full value of a claim. While there is no guarantee that public adjusters will find coverages and scopes of damage missed by insurance company adjusters, the statistics obtained by the Florida Office of Insurance Regulation suggest otherwise. My own experience is that insurance companies routinely underestimate damage amounts and fail to pay for or disclose coverages available under the policy.

Patel’s article explained that public adjusters also feel that Sawgrass policyholders were not informed about the value of hiring a public adjuster.

[T]he letter did not provide Sawgrass policyholders with the benefits of hiring a public adjuster: to help level the playing field between consumers who may not understand the nuances of insurance policies and insurers with vast resources to fight claims.

The amended bylaws will be provided to the Florida Department of Insurance and the Insurance Consumer Advocate, who is charged with the duty “to represent consumer interests in regulatory proceedings regarding all insurance activities conducted under jurisdiction of the Department of Financial Services and the Office of Insurance Regulation.” It will be interesting to see their reactions.

Click below to see my interview with Nicole:

As way of background, in early spring of 1910, the New York Department of Insurance was reviewing fire insurance companies because of allegations that certain insurance companies were providing funds to influence legislation in the great state of New York.

I gathered additional details of the investigation from Best’s Insurance News.

Founded in 1899 by Alfred M. Best Company, this periodical was published monthly, and, in 1910, an annual subscription cost $2.00.

According to Best’s, the New York Department of Insurance commenced a inquiry to ascertain whether “fire insurance companies had made any corrupt use of money for the purposes of influencing legislation in this State.” This was a public investigation of the expenses spent by insurance companies from 1900-1910. Apparently, by April of 1910, the investigation had encountered difficulties. During an examination of one insurer, there appeared to be an “intimate relation between the president of that company and legislation affecting fire insurance companies during the last decade.”

A Best’s 1910 editorial states:

In short, while absolute proof showing the transit of money from the bank accounts of an insurance company into the bank accounts of a legislator is lacking, the record of the investigation as thus far made up warrants the statement that during the last decade, particularly in the first five years of such decade, a system of bill killing and law getting has existed which is a reproach to the people of the State. 

The editorial goes on to mention that the chief witness frequently refused to answer questions and made himself liable for contempt. During the examination of Phoenix Insurance Company of Brooklyn, the committee learned that “very considerable sums of money had been paid by a large number of domestic fire insurance companies and disbursed by the president of Phoenix in promoting or retarding legislation”

William Bament, a general adjuster for Home Fire Insurance Company, one of the witnesses who testified during the investigation, was quoted in the New York Time’s article.

In an attempt to understand fire insurance from the viewpoint of the policyholder, the committee began to ask questions about the claims process, but, before the committee could probe the Bament in detail, he avoided giving straightforward responses. Particularly, when Bament was being asked about the carrier’s response to valued policy law, he changed the focus from the acts of the insurer and shifted the blame to the public insurance adjusters in New York. That’s right, public adjusters were advocating for insureds during the very early 1900’s.

Bament was asked whether Home Fire would be pulling out of states with valued policy law, Bament said no, but complained that there were just too many public adjusters in New York and they made too many claims too high.

It is interesting that during an intensive investigation into the actions of the fire insurance carriers in 1910, one insurance carrier refused to respond and another blamed the representatives of the claimants. Things haven’t changed too much in the past 100 years.

Sawgrass Mutual is sent out the following letter to its members:

Some have suggested that because this is a mutual insurance company, it can ask its members to agree upon something that would otherwise be illegal. The proposed agreement violates Florida regulations which prevent insurers from suggesting, as a consideration for obtaining an insurance policy, that policyholders not obtain legal or public adjusting assistance after a claim.

I have read nothing which differentiates mutual insurance companies from compliance with the insurance code. If an insurer could do this, why not allow other illegal requirements in by-laws of mutual insurance companies?

The reason is obvious--management of insurance companies want to gain additional profits and other competitive advantages; by prohibiting policyholders from valuable assistance in the adjustment of a claim, insurance companies increase the likelihood that a policyholder will accept less than the full value of a claim. While there is no guarantee that public adjusters will find coverages and scopes of damage missed by insurance company adjusters, the statistics obtained by the Florida Office of Insurance Regulation suggest otherwise. My own experience is that insurance companies routinely underestimate damage amounts and fail to pay for or disclose coverages available under the policy.

Sawgrass Mutual’s attempt to limit its members’ rights is very much against the members’ interests. The Florida Office of Insurance Regulation should be doing something about it -- or offer an honest explanation why it is not.

Ethical constraints in this Rule include requirements that adjusters make “truthful and unbiased reports of the facts,” and “exercise extraordinary care when dealing with elderly clients.” Subsection (5) of this Rule adds additional ethical constraints on public adjusters if the Governor declares a state of emergency. For example, when adjusting a claim for damage that was incurred during a declared state of emergency, a public adjuster may only charge a fee up to 10%. The applicability of this limit was tested last week in the case of Ameriloss Public Adjusting Corp. v. Lightbourn, --- So. 3d ---, 2010 WL 3893912 (Fla. 3d DCA Oct. 6, 2010).

The Governor of Florida declared a state of emergency for Hurricane Katrina in 2005. Mr. Lightbourn’s property was damaged during Katrina, and he made a claim that his insurer paid. In 2006, the Rule limiting public adjusters’ fees to 10% during a state emergency went into effect. Then, in 2007, Mr. Lightbourn entered into an agreement with a public adjuster to reopen his Katrina claim. The public adjuster was able to get Mr. Lightbourn additional insurance benefits, but a dispute over the public adjuster’s 33 1/3% fee developed.

In 2008, Lightbourn contacted the Florida Department of Financial Services regarding the contract, and the Department asked the public adjuster to respond to Mr. Lightbourn’s inquiry. Later that year, Lightbourn filed a formal Petition for Declaratory Statement with the Department. One of the questions Lightbourn specifically asked was, “Is [the public adjuster] entitled to receive 33 1/3% fee pursuant to the Agreement?” As required by statute, the Department published a public notice of the Petition in Florida Administrative Weekly, but the notice was general and did not name the public adjuster.

In 2009, the Department issued its Declaratory Statement, applying the 10% fee cap to Lightbourn’s contract. The Department found that the public adjuster, “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.” The Declaratory Statement also included a provision for appellate review, but only for parties to the proceedings.

The public adjuster appealed the Department’s ruling, but last week the Florida Third District Court of Appeal held that the public adjuster did not have standing to appeal, because it was not a party to the Department’s proceedings, nor did it intervene during the proceedings. The public adjuster argued that the notice of the petition was deficient, but the Third DCA held that the Department was not required to name the public adjuster in the notice, but only to publish notice of the proceedings in Florida Administrative Weekly.

The Court dismissed the public adjuster’s appeal on standing grounds, and specifically did not comment on the merits of his argument, but noted that if the issue came up in any other proceeding in which the public adjuster was a party, the public adjuster could seek judicial review of the Department’s order at that time. Although the Court did not comment on the merits of the application of the fee limit to this contract, it is clear from these proceedings that the Florida Department of Financial Services’ position is that this limit shall apply to all public adjusting contracts entered into after the Rule went into effect.

Recently, I spoke with Anthony Odeh about his assistance with this claim. I learned some additional information about this loss and Odeh’s background. Odeh started Claims Consulting, LLC, in 2005 after recognizing the need for insureds to have a professional assist them with claims. His strong construction background (he was formally a general contractor) helped build his public adjusting company, which now handles claims in Louisiana, Michigan and Florida.

Odeh values the importance of being an involved member of the community. He and his team volunteer with the American Red Cross, and he is a member of NAPIA and United Policyholders.

When working Louisiana claims, Odeh explained how particularly difficult it can be to level the playing field for the insureds.

In Louisiana, insurers treat PA’s with a lot of resistance and I think this is because there is a misconstrued perception that PA’s are the enemy. Until 2007, the practice of public adjusting was not recognized in Louisiana. While other states have regulated and licensed public insurance adjusters for generations, public adjusting was something new for Louisiana. Since insurance adjusters were not accustomed to an advocate public adjuster helping and impacting claims, adjusting the damages with the insurance companies has been an uphill battle.

The resistance towards PA’s was clearly expressed in the comments posted to the article on WDSU.com. Several comments attacked public adjusting as a whole and cautioned insureds that the public adjusters were paid from the proceeds of the recovery.

Unlike many other news reports about insurance claims, Mr. Quintanila, the actual policyholder, was interviewed and quoted in the article. Quintanila explained his claim experience:

I had to get the plumber, I had to get the electrician. I had to get the permit from the city… regular citizens don’t know how insurance really works and the way I feel like now, I feel like they just, just give you this money and you have to be happy and satisfied with what they give you.

The online comments posted about the article were very critical towards public adjusting, but they failed to provide any response or solution for insureds in Mr. Quintanila’s position. Odeh, however, did provide a solution for this policyholder. In the end, the insurance company paid for loss of rents for the three apartments and paid a gross payment of more than $53,000.00 for the damage to the structure.

The full interview is available here.

In the unpublished section of the interview, Khan weighed in on why hiring a public insurance adjuster is beneficial. Recently, PAs have been under an even hotter fire than usual and, in light of all the negative news, it is refreshing to see a qualified public adjuster get the spotlight from a non-profit consumer organization.

Here is a portion of the interview:

AB: How can public adjusters get more money out of an insurance company than a policyholder can get on their own?

MK: It is simple. We level the playing field. If an insurance company adjuster told an insured following a fire to his 3,000 square foot house occupied by only two people, that what is standard in such a case is a one or two bedroom apartment or house, would he know if the information was correct? Would he know where to go to challenge it? There can be hundreds of issues on every claim where knowledge, background, expertise, experience and tenacity come together over and over again to get a policy holder more than he can on his own. It is the insurance company adjuster’s job to protect his principal. He does so by paying as little as possible. Having him represent both sides, considering he gets paid by the insurance company, makes no sense. We see to it that the policy holder is on equal footing. It requires availability of proper resources, knowledge, expertise, experience, perseverance, creativity, and just being proactive. Expertise comes with time, and through experience dealing with different types of claims and issues in a variety of ways.

AB: I’ve heard critics say that public adjusters justify their fee by padding the numbers. What is your response to that?

MK: No insurance company will ever pay a client more than they are owed after the carrier is absolutely convinced of the obligation. Any public adjuster that “pads” a claim is only asking for a protracted and long drawn out adjustment that will hurt their client as well as the public adjuster’s own reputation. This will ultimately result in a reduction in business for the public adjuster.

Every industry has bad eggs. I’ve had a philosophy that has worked for me on both sides: being aggressive, defensible and reasonable. That is why it is critical that the DOI license and regulate anyone who engages in representing a policyholder in a first-party claim.

At Greenspan we add value through our expertise with properly and accurately measuring insurance claims. We have in-house inventory specialists who go through a damaged site, and physically count every T-shirt, sock, pencil and makeup, or whatever articles you’ve got. Our building estimators have construction backgrounds and know how to properly cost what it takes to put a property back to its pre-loss condition. And, our in-house accountants and CPAs have tremendous insight on the working of numerous types of companies that allow them to accurately schedule a business interruption claim. Finally, having public adjusters who zealously advocate the policyholder’s right to fair and just indemnity under the policy is critical. That is how a public adjuster should add value.

Masood Khan previously practiced law, primarily representing insurers. Khan now represents policyholders as a public adjuster and is a vice president of Greenspan Adjusters International, in their South San Francisco office.

Recently, I had the opportunity to discuss sinkhole losses with Tim. We discussed his practice and he shared interesting information about his public adjusting firm and about his background.

In 1979, when interest rates were on the rise, Tim Zeak left the real estate industry and became a public insurance adjuster in the great state of Indiana. He adjusted losses in Michigan and Indiana for over twenty years, and he has been a full-time public insurance adjuster for 32 years. Full-time for Tim was 7 days a week for many of those years.

I asked Tim if he could share information with the world about public adjusting, what would he say? He responded with a  question, “the insurance company will have their own adjuster at the loss, shouldn’t the policyholder have their own adjuster?” Point well taken.

Tim is a true pioneer public insurance adjuster and worked diligently in 1983 with the Insurance Commissioner in Indiana to revamp the state’s public adjusting statute after it was deemed unconstitutional by the Indiana Supreme Court.

Zeak moved to Florida in 2001, when Florida Public Adjusting was born. He recommends other Florida public adjusters take advantage of professional associations like FAPIA and the Windstorm Insurance Network. Zeak learned many of his best practices and earned his stripes on his own without the benefit of a strong network of public insurance adjusters. Similar to many other public insurance firms, Florida Public Adjusting is a family affair. Tim’s wife, Charlotte, and sister, Becky Davis, are integral in the business.

Zeak provided three tips for other public adjusters:

1. Communicate-- Call them before they call you. (This can apply to clients or other professionals you are dealing with on a claim)
2. Explain-- Explain to the client what to expect and explain to the insurance company your position.
3. Florida is an infinitely better state to be a public insurance adjuster because Florida’s bad faith statutes and attorney fee statute can help you get better results for your clients. In order for these statutes to help, however, your client needs to involve a qualified first-party insurance attorney early in the claim.

I found it interesting that the Wall Street Journal article gave the impression that public insurance adjusters were canvassing neighborhoods and prowling the streets with advertisements in search of sinkholes, however, Zeak estimates that 90% of his clients have found their way to Florida Public Adjusting because of a personal referral. The other clients usually find Zeak and his firm through his website. As mentioned in the Wall Street Journal article, Tim’s website provides extensive information about sinkholes and is a valuable asset for homeowners and business owners who have property that may be on unstable ground.

To understand this Indiana Court’s ruling, it is important to understand the specifics of this loss and the facts leading up to the Court’s decision.

The Loss
The Gubics’ home was damaged by fire in January 2007. The insurance carrier, Meridian Insurance Company, resolved the structural portion of the claim with the insureds and paid approximately $200,000.00 for the structural damage. However, the personal property portion of the claim was disputed. The Gubics hired Hoffman Adjustment Company as their public insurance adjuster. The record indicates that Meridian “inventoried and examined the damaged property.” Meridian believed most of the property was salvageable and could be cleaned. Meridian argued that the inventory the insureds provided lacked certain information. The damaged property was photographed and disposed of at the end of September, 2007.

The Public Adjuster and the Contract
Hoffman Adjustment Company was hired by the insureds to assist. The contract provided for a 10% contingent fee and stated, “For such service (I) we hereby assign HAC the above amount due, or to grow by reason of such claim(s).”

The Litigation
The litigation that initiated by the Gubics, but Meridian filed declaratory actions and a third party complaint against Hoffman Adjustment Company and Joe Hoffman. The complaint alleged that the public adjuster breached the policy, failed to act in good faith, engaged in spoliation of evidence and fraud, committed unauthorized practice of law and tortiously interfered with the business and contractual relationship with the Gubics.

Hoffman argued that all counts against him should be dismissed in summary judgment because the insurance company failed to raise a genuine issue of material fact. The trial court granted Hoffman’s motion and the appellate court affirmed the decision.

The Court issued a thirteen page order detailing the reasons why Meridian’s allegations against Hoffman Adjustment Company and Joe Hoffman failed.

One of the interesting points the Court explained, deals with the relationship between the public adjuster and the insureds. The Court examined the contract and the relationships and decided that because Huffman had no contractual relationship with Meridian and because he was the Gubics’ agent, Meridian could not raise a spoliation of evidence claim against Hoffman.

Spoliation of Evidence

Spoliation of evidence is “ ‘the intentional destruction, mutilation, alteration, or concealment of evidence.’ ” Cahoon v. Cummings, 734 N.E.2d 535, 545 (Ind.2000) (quoting Black's Law Dictionary 1409 (7th ed. 1999)). If spoliation by a party to a lawsuit is proved, rules of evidence permit the jury to infer that the missing evidence was unfavorable to that party. Id. “Indiana common law does not recognize an independent cause of action for either intentional or negligent ‘first-party’ spoliation of evidence, i.e. spoliation by a party to the underlying claim.” Glotzbach v. Froman, 854 N.E.2d 337, 338 (Ind.2006) (citing Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 355 (Ind.2005))…

We agree with Hoffman that “the purported spoliation of evidence could serve as a defense to coverage under the Policy, but does not give rise to an independent claim against Hoffman.” See id. If the trial court concludes that the Gubics, and/or Hoffman, acting as their agent, are responsible for spoliation of evidence, established rules of evidence permit the fact-finder to infer that the missing evidence was unfavorable to the Gubics. See Cahoon, 734 N.E.2d at 545. Simply said, Meridian has a remedy for the alleged spoliation of evidence, and therefore, equity does not demand that we recognize an independent cause of action for spoliation of evidence under the facts and circumstances before us. See e.g. Gribben, 824 N.E.2d at 355.

Tortuous Interference with the Business or Contractual Relationship by the Public Adjuster

The Court held that the insurance company would have to prove that Hoffman intentionally interfered with the business relationship between the insurer and the insureds and that Hoffman intentionally induced a breach of contract between the two parties.

The Court determined that there was no interference because the public adjuster (by way of the contract for services) was an agent for the insureds, and insureds and their agents cannot interfere with their own business relations.

[a]s the Gubics' agent, Hoffman's actions in attempting to adjust the Gubics' personal property damage claim are imputed to the Gubics. The Gubics cannot tortiously interfere with their own business relationship or their own contractual relationship with Meridian. See Greg Allen Const., 798 N.E.2d at 175 (“[A] party to a contract or its agent may be liable in tort to the other party for damages from negligence that would be actionable if there were no contract, but not otherwise.”); Trail v. Boys & Girls Clubs of Northwest Ind., 845 N.E.2d 130, 138 (2006) (“A party cannot' interfere' with its own contracts, so the tort itself can be committed only by a third party.”). Moreover, if Hoffman failed to adequately perform his duties to the Gubics as described in the adjuster agreement and Indiana Code section 27-1-27-1, as their agent, he is liable only to his principals. See Greg Allen Const., 798 N.E.2d at 174.

The case between Meridian Insurance Company and the Gubics has yet to be resolved, but this decision may deter other insurance companies from making similar arguments against public adjusting firms or individual public adjusters in the future.

The release, in part, stated:

Early this morning, the Florida Department of Financial Services, Division of Agent & Agency Services, provided Notice of Withdrawal of its proposed amendments to Rules 69B-220.051 and 69B-220.201, Florida Administrative Code, relating to adjuster conduct and ethical requirements.

It is doubtful that there has ever been a more united and passionate response to any proposed rule change than that which the DFS experienced since it's [sic] initial surprise announcement in February 2010.

Claims adjusters (company, independent and public), their employers, and numerous local and national insurance industry trade groups came together in July and voiced their strenuous objections to the Department's attempt to correct a number of service-related issues that still remain from the 2004-2005 hurricane seasons.

After two formal rule workshops, an administrative challenge filed by the Florida Association of Public Insurance Adjusters (FAPIA), and additional feedback and discussion between the WCCP and PCCP Associations, the Property & Casualty Insurers Association of America, the Florida Insurance Council, and the National Association of Mutual Insurance Companies, the DFS has decided to leave the Ethics Rule(s) intact.

In a statement made in the July 30th workshop, Team Leader Eric Purvis admitted that they were surprised at the very obvious "passion" that these proposed changes have evoked across the claims community. Sometimes it's the passion that gets the job done. (emphasis added)

The highlighted section seems to be a rare kumbaya moment. How often do public adjusters and insurance industry adjusters agree upon anything involving public policy?

As a person that is looking out for the consumer interests, I suggest that the Department of Financial Services not abandon their work. Strong ethical regulations regarding the performance of adjusters of all types are needed so the insurance product works as intended. Sometimes, incremental regulatory changes can be adopted which make significant progress getting full, fair and prompt payment to policyholders. The goal of common-sense and ethical regulations which reflect the rules of good faith claims handling should be paramount to government leaders and inherent in public policy.

Clay Morrison is a public insurance adjuster who, in a former life, owned a restoration company. His largest customer was State Farm. Clay is now the president of Morrison & Morrison, Inc. His public adjusting office is based out of League City, Texas and similar, to many public adjusters, the business includes family—the “other” Morrison is Clay’s wife, Ruth, a Texas attorney and corporate counsel for the firm.

Morrison decided to become a public insurance adjuster when he was “urged” by one large insurance company to go against his ethical standards and change the way business was done. Morrison’s article, published in the NAPIA Summer Bulletin, details the closed door meeting he was invited into with an upper level claims manager who made a request for Morrison to help State Farm.

The request:

“We refer a lot of restoration business to you, and we need your help in rectifying the consumer’s entitlement mentality.”

Morrison declined State Farm’s request, but his very successful restoration business was quickly out of business.

Now, Morrison is a public insurance adjuster, member of the NAPIA board, Secretary of the Texas Association of Public Insurance Adjusters (TAPIA), FAPIA member, and a Windstorm Network certified umpire.

Morrison explains that even as a small operator of his own public adjusting firm, he found it very important and beneficial to be a member of professional educational programs. Morrison acknowledges the expense of being active in multiple associations, but explains his two reasons for going the extra mile and spending the extra dollar.

Number 1: “If you want to be successful in a field, you must associate yourself with people who are most successful in that field.”

Number 2: “If you endeavor to do something, you should strive to be the best.”

Two valuable points for all of us to consider as we enjoy this holiday weekend and our work.

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, Theran 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 Theran 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.

If you would like to learn more about the firm, Professional Loss Adjusters, Inc., contact me and I will forward your information, or check out their blog.

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.