New Jersey public adjusters face an Insurance Commission that will closely look for every “T” to be crossed and “I” to be dotted when it comes to analyzing a public adjuster contract. The Insurance Commission has fined public adjusters hundreds of thousands of dollars for very “picky” issues. For any public adjusters doing business in New Jersey, be sure to follow the spirit and fine lines of the law.
A recent New Jersey appellate court decision1 regarding the requirements of a New Jersey public adjuster contract upheld provisions requiring a detailed explanation of the services to be provided and the exact time the contract was signed. The court overruled the Insurance Commissioner’s attempt to require a contract provision allowing a policyholder to cancel a contract at any time.
Regarding the list of services, it is not enough for a public adjuster contract to simply state that the public adjuster is retained “to advise and assist in the adjustment of the insurance claim.” The court noted:
N.J.A.C. 11:1-37.13(b)(3)(ii)’s mandate that all contracts contain a list of services to be rendered was deliberated by DOBI prior to adoption. Requiring a list is protective of consumers and consistent with PALA. The regulation represents a proper exercise of the legislative mandate to inform consumers of the services provided by a public adjuster. Therefore, the finding that Diviney’s contracts violated the regulation was neither arbitrary nor capricious and was not reversible error.
The contract must specify the exact time the contract was signed:
PALA prohibits public adjusters from “solicit[ing] . . . between the hours of six p.m. and eight a.m. during the [twenty-four] hours after the loss has occurred”; and “enter[ing] into any agreement . . . with an insured to negotiate or settle claims for loss or damage occurring in this State” during the quiet period. N.J.S.A. 17:22B-13(a) and (b). Therefore, N.J.A.C. 11:1-37.13(b)(3)(iii)’s requirement that each insurance adjustment contract contain “[t]he time and date of execution of the contract (day, month, year) by each party” is neither contrary to nor an unreasonable interpretation of the statute’s purpose. the time requirement appropriately forces adjusters to show proof of compliance with the prohibition on solicitation contained in the statute.
The appellate court reversed the commissioner’s requirement that the policyholder could cancel a contract at any time:
PALA’s legislative history does not convince us the Legislature intended public adjuster contracts must contain provisions for cancellation at any time. Indeed, the legislative history shows the Legislature deleted a provision permitting insureds to unilaterally cancel a contract with a public adjuster within three days of entering the contract. A. 1548 (1992) (third reprint) (deleting previously proposed § 14). However, there is no evidence this translated into legislative authorization for promulgation of a regulation permitting cancellation at any time.
Last month, in Public Adjuster Warning—Do Not Make Illegal Contracts, I provided an example of the consequences of illegal contracts. I suggest all public adjusters take to heart the concern I have if you are found to have an illegal contract. Please do whatever you can to avoid the situation. I suggested seeking an attorney who discusses these issues with regulators and reviews public adjuster contracts for a living. Holly Soffer is the attorney I suggest public adjusters contact.
The Professional Public Adjuster Association of New Jersey (PPAANJ) is the only public adjuster-operated and controlled association for public adjusters in New Jersey. Past NAPIA President Les Knox of Andrew K. Knox and Company had the vision for starting this organization. Its 2023 Fall Conference will take place on Wednesday, November 15th, 2023. The conference will be held at the American Hotel in Freehold, New Jersey.
There will be a number of wonderful presentations at the conference. American Policyholder Association President Doug Quinn’s presentation will be about Insurance Regulators’ Role in Uncovering Insurer Fraud. Merlin Law Group attorney Dan Ballard from our Red Bank, New Jersey office will give a presentation on Everything Jersey. Dan’s presentation will provide attendees with a New Jersey-focused guide on first-party property insurance issues and how New Jersey courts have ruled on the issues.
Steven Bush and Dan Ballard hope to see you at this conference.
A Thought For The Day From New Jersey
Success is falling nine times and getting up ten.
—Jon Bon Jovi