Note: This guest blog post is by Holly Soffer, Esq., a policyholder attorney and General Counsel to the American Association of Public Insurance Adjusters.
Great food, friendly people, charm, and character all combine to make Louisiana wonderfully unique. What also makes Louisiana unique is its set of laws. Historically, Louisiana law is largely based upon the Napoleonic Code, instead of the English common law, as is the rest of the U.S. The public adjuster law is no exception.
Sadly, a major storm is threatening Louisiana right now. If you intend to work there after the storm, here’s the minimum of what you must know about the public adjuster law:
• The law does not allow you to negotiate the claim: The definition of public adjuster does not include “negotiating for or effecting the settlement of a claim” which are the words that allow you as public adjusters to represent your clients in most states. Instead, the law defines public adjusting as: “(a) Investigating, appraising, or evaluating and reporting to an insured in relation to a first-party claim.” §22:1692
Note that the law says, “reporting to an insured,” not an insurer. Negotiating settlements and directly contacting insurers to discuss and evaluate the merits of claims have been found to be the unauthorized practice of law. Are these provisions always enforced? No, not consistently. The coming storm will bring heightened scrutiny, though, so beware and think about every communication carefully.
• You cannot charge a percentage fee: The law provides that: “A public adjuster may charge the insured a reasonable fee. A public adjuster shall not solicit for or enter into any contract or arrangement between an insured and a public adjuster which provides for payment of a fee to the public adjuster which is contingent upon, or calculated as a percentage of, the amount of any claim or claims paid to or on behalf of an insured by the insurer and any such contract shall be against public policy and is null and void.” §22:1703
In your contract, you can use an hourly rate or a flat fee for your services but remember that such fee must be “reasonable,” which is decided on a case by case basis.
• Ban on solicitation during a loss producing event: This provision is more common, but worth noting. Wait until the storm has completely passed, even if weather conditions improve.
Diversity makes our country great, but diversity in state laws can make the life of a public adjuster very difficult. Know the law before you go.
In the spirt of the blog, I’ll leave you with a quotation: “Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.” —Miles Kington
Be wise and stay safe.
Holly K. Soffer, Esq.