Public adjusters should adjust first party claims and not third party liability claims. To do otherwise is the practice of law. I am warning public adjusters about this topic because of an email I received:

Chip, good morning. we need your input on Public Adjusters doing 3rd party claims. In several of your presentations I have heard, Public Adjusters are not allowed to do 3rd party claims. Other FAPIA members said the contrary. Please clarify. Please see the string of emails below in chronological order from the most recent to the latest. Thank you.

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. 

  • Craig Drillich

    While I agree with you that Public Adjusters should not handle third party liability claims, I disagree with your comment that those who do should expect to be arrested.The Florida Statute specifically authorizes Public Adjusters to represent Third Party Claimants on property damage claims. See Below… Your comments are appreciated.

    626.854 “Public adjuster� defined; prohibitions.—The Legislature finds that it is necessary for the protection of the public to regulate public insurance adjusters and to prevent the unauthorized practice of law.
    (1) A “public adjuster� is any person, except a duly licensed attorney at law as hereinafter in s. 626.860 provided, who, for money, commission, or any other thing of value, prepares, completes, or files an insurance claim form for an insured or third-party claimant or who, for money, commission, or any other thing of value, acts or aids in any manner on behalf of an insured or third-party claimant in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract or who advertises for employment as an adjuster of such claims, and also includes any person who, for money, commission, or any other thing of value, solicits, investigates, or adjusts such claims on behalf of any such public adjuster.

  • Chip Merlin


    The wording came from old language before public adjusting was licensed. It only applied to independent and company adjusting.

    Expect that you will get arrested and prosecuted if you practice third party claims handling without a law license.

    You cannot practice adjusting of a claimant without practicing law. If you practice law, you are acting unethically, regardless if it is first party or third party claims.

    The Florida Bar and the Florida Attorney General will take it very seriously if you or any public adjuster practices law by signing up to aid, assist, consult, adjust or represent a third party claimant. I know of no attorneys that have ever given a different opinion. I know of no case which would suggest otherwise. It is a criminal offense.

  • Daniel Friedman


    Just so that there will be no misunderstanding; Public Adjusters frequently find it necessary to cite policy language or statute to the carrier representatives in support of the fact that a first party claim or part of a claim the company is attempting to deny is in fact covered.

    We are discussing the claim with the carrier in follow up of a first party claim presentation and not advising the insured.

    Would you agree that this activity is legal?

  • Chris C.


    Most interesting read.

    However, I am left wondering why handling 3rd party claims automatically constitutes the unauthorized practice of law, whereas handling first party claims does not?

    In my experience, much of the same actions are taken in both scenarios.

    Look forward to your response.

  • Chip Merlin


    A third party claim is a liabilty claim. The party harmed or aggrieved has rights generally set forth as a result of common civil law tort concepts coupled with or changed by statutes and codes. To present, bargain for, analyze and counsel the “right” course of action requires legal skill.

    First party property insurance adjusting has generally been allowed because of limitations of determining the amounts of loss under a first party property insurance policy. It is not to include legal argument. Many public adjusters unethically practice law and I am surprised that the counterparts from the insurance industry do not call them out for it more often.

    The bar associations have allowed the insurance industry to have liability adjusters handle claims because the insurance carrier is ultimately responsible and the public concern is minimal. This should not be simply taken for granted. With the many legislatures providing greater immunity to insurers in third party scenarios, the question of whether liability adjusters should have a law license should be raised because those adjusters can harm the public.

  • Eric Hyman


    An Insured Florida roofer during the re-roof of a building/dwelling results in rainwater entering a business or home and damages commercial stock/HO-personal property. The policies in effect do not provide coverage for the damage BPP/HO-personal property. The Florida Public Adjuster is retained by the policyholder and makes an inventory of the BPP/personal property and submits a 3rd party liability claim for damages to the adjuster of the roofer’s liability carrier in an attempt to secure payment for the damaged BPP/HO -personal property.

    The homeowner hires a company to replace an icemaker and fails to properly cap the supply line which results in the house being flooded overnight. The homeowner has no insurance and their mortgage paid in full. The liability adjuster for the company wants to visit the property to assess damages and culpability. The homeowner retains a Fl. Public Adjuster to document the damages to the dwelling and personal property. The Fl. Public Adjuster submits the damages to the carrier and enters into negotiations of the damages for a dollar amount.

    You deem the above action on the part of the Florida Public Adjuster in the 2 cases above to be the Unauthorized Practice of Law and subject to arrest.

    I think not as the Statute reads in part:
    “(1) prepares, completes, or files an insurance claim form for an insured or third-party claimant or who, for money, commission, or any other thing of value, acts or aids in any manner on behalf of an insured or third-party claimant in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract”
    AND (3) A public adjuster may not give legal advice. A public adjuster may not act on behalf of or aid any person in negotiating or settling a claim relating to bodily injury, death, or noneconomic damages.

    a. The FL PA in the above 2 claims is not giving legal advice and not arguing culpability and is merely documenting and negotiating property damages only.

    b. Both claims are for economic damages and do not involve bodily injury or death

    c. The FL PA is specifically authorized per the statute to represent 3rd party claimants subject to the conditions in paragraph 3 of the statute.

    Based on the foregoing please clarify your position in this matter and why you think the Fl. PA is engaged in the UPL when the statute appears to be on point regarding the described activity/actions above.

    Happy Birthday and have a nice weekend. Eric Hyman

  • Chip Merlin


    Utah State Bar v. Summerhayes & Hayden, Public Adjusters, 905 P.2d 867 (Ut. 1995). TThe case discussed that third-party adjusting is not based on principles of contract law but on principles of common law tort, and there is no legal
    relationship between the party asserting the claim and the insurance company. Thus, the claim cannot be settled by merely allocating the risk according to the insurance contract, as is done with first-party adjusting. To give any advice or counsel, or to facilitate a settlement, the adjuster must determine the legal rights, duties, and relationships of the different parties. Moreover, since third-party adjusting requires consideration of
    such legal principles as statutes of limitations, jurisdictional issues and affirmative defenses, the practice of third-party adjusting is the practice of

  • Chip Merlin


    I just finished listening to another attorney in California indicate how easy it is for public adjusters to overstep and practice law. While listening to him, I did some further research and suggest you consider what the Pennsylvania Supreme Court indicated:

    “While the objective valuation of damages may in uncomplicated cases be accomplished by a skilled lay judgment, an assessment of the extent to which that valuation should be compromised in settlement negotiations cannot. Even when liability is not technically ‘contested,’ an assessment of the likelihood that liability can be established in a court of law is a crucial factor in weighing the strength of one’s bargaining position. A negotiator cannot possibly know how large a settlement he can exact unless he can probe the degree of unwillingness of the other side to go to court. Such an assessment, however, involves an understanding of the applicable tort principles …, a grasp of the rules of evidence, and an ability to evaluate the strengths and weaknesses of the client’s case vis a vis that of the adversary. The acquisition of such knowledge is not within the ability of lay persons but rather involves the application of abstract legal principles to the concrete facts of the given claim. As a consequence, it is inescapable that lay adjusters who undertake to negotiate settlements of the claims of third-party claimants must exercise legal judgment in so doing.”

  • FL PA

    This is an interesting topic. I would suggest a legal alternative would be to prepare an assessment of the damages for the third party claimant and allow an attorney to pursue the liability claim. The claimant signs a contingency retainer with the PA for the preparation of their claim, i.e. estimate, contents list, etc. The PA never processes the claim and the legal advice and/or opinions can be advocated by the attorney.

    I recently handled a first party claim that was denied by the carrier as the loss was not covered. The tenant’s location was flooded by a sewer back up (on premises), however the policy indeed excluded such a loss. Subsequently, the building owner’s agent was notified that a liability claim should be submitted to the GL carrier. Subsequently we received a letter from the GL carrier requesting that we provide them with “our theory of liability” regarding the claim.

    Knowing that providing theories of liabilty meant policy interpretation and application of tort principles; we advised our client to seek legal advice. The client ultimately decided to hold off on obtaining counsel and filing suit and requested that we provide him with our claim package. The client submitted our claim package to the owner of the building and is in the process of trying to settle directly with the owner.

    I believe the client’s efforts will not lead to a settlement and he will eventually have to file suit against the GL carrier. I rather not get involved with the processing of third party claims when theories of liability include; determining the at fault party, understanding rules of evidence and interpretation of a contract between two other parties (of which we do not represent).

    Regarding the law that regulates PAs; I find it ironic that interpretation of the FL statutes that regulate our profession can also be considered the practice of law. I rather have an attorney provide me with his opinion pertaining to the legality of addressing claim issues that would jeopardize my license. Does anyone know of an attorney that specializes in law that regulates our profession? I would be willing to compensate an attorney for his legal advice regarding this matter.

    Best of luck and much success!

  • Chip Merlin

    Florida Public Adjuster,

    I have provided my legal opinion. It is accurate.

    However, the foremost authority on public adjusters ethics and the unathorized practice of law is probably Brian Goodman in Maryland.

    Public adjusters can be retained to provide estimates of damage in third party situations. Your example just shows why it should only be under the direction of legal counsel. Your estimate would not be admissable because it was based on a contingent fee. Expert testimony on damages in third party case cannot be paid for on a contingent basis.

    Further, the manner of determining damages in a third party case often have different rules and vary significantly between the states. Public adjusters are not trained on these matters.

  • FL PA


    Thank you for your response. If the estimate would not be permissible because of the contingency ‘fee; the PA can be retained as an expert in exchange for a fee. The fee can be based on an hourly fee or flat rate, correct?

    Also, the attorney pursuing the Liability claim would need to submit an estimate of the damages before the case goes to trial. It seems the PA can legally assist in a third party claim; especially if the PA obtains the business. That is, if the PA is considered an expert at all. I know there are rules regarding experts and whether not the individual qualifies is determined by the Judge or jury, correct?

    Let’s say the PA is considered a damage expert and is trained to prepare the estimate as required by the law. Can the PA legally and effectively (by providing an assessment that would benefit the client in court) assist in the handling of a third part claim? Furthermore, let’s say the PA’s first party claim is rightfully denied. Can the PA legally get involved with the third party claim as an expert? The contract for the first party claim can be terminated, therefore eliminating any collectable contingency fee.

    I look forward to your response.

  • Kabir Drummond

    I had an oil spill at my home. It’s now a third party claim. I’m using my own license contractors to do the work in cleaning the soil up. My insurance company kept trying to force me to use their contractor. But I refused. Now they want their contractor to watch over my professional contractor. I don’t think this is right. Say if I use their contractor then who watches over them.

  • Steve Friedman


    I know this is an old blog post but hopefully you still monitor this.

    What are your thoughts on a public adjusters handling a loss from a third party’s action but the homeowner was named as an additional insured on the contractor’s general liability insurance. Does the fact that they are named on the policy make this a first party claim and therefore acceptable or is it still considered a third party claim since it involves a contractor’s general liability policy?


  • Belinda Barnes

    I had a house fire have a pa. He refuses to sign the check because i will not sign a third party agreement. Is this legal