Some states seem to be indicating that public adjusters act as fiduciaries for their policyholder clients. For example, Kentucky states that all adjusters “shall act in a fiduciary capacity on behalf of his or her principal.”1 Florida case law refers to public adjusters as a fiduciary.2 I made reference to the apparent fiduciary capacity being placed upon public adjusters at a recent public adjuster ethics presentation I made in California at the CAPIA Annual meeting. Many public adjusters might wonder—“What does it mean to act as a fiduciary?”

Fiduciaries hold a critical role in various contexts, such as legal, financial, and trust-related matters. The law regarding fiduciary duties varies between each state. The exact duties of a public adjuster acting as a fiduciary may not be defined by regulation or thoroughly examined by the law, but their typical duties, which are grounded in trust and ethical conduct, include:

Duty of Loyalty: This is perhaps the most fundamental duty of a fiduciary. It requires the fiduciary to act solely in the best interests of the policyholder client, above their own interests or the interests of third parties. This means avoiding conflicts of interest and not profiting from their position as a public adjuster at the expense of the policyholder.

Duty of Care: A fiduciary must exercise a high standard of care in managing the assets or affairs of the beneficiary. This involves making informed and prudent decisions, like how a reasonably cautious person would manage their own affairs. It includes conducting thorough research and due diligence before making decisions.

Duty to Act in Good Faith: Fiduciaries are required to act honestly and in good faith when dealing with policyholder clients. This means being transparent, providing accurate information, and not misleading or deceiving the policyholder in any way.

Duty to Provide Information: A fiduciary should keep the beneficiary informed about relevant information concerning their assets or interests. This includes regular updates and reports on the status of the adjustment or any actions taken on their behalf. Public adjusters should not withhold information from their clients gained in the performance of their duties.  

Duty of Confidentiality: Fiduciaries must maintain the confidentiality of information related to the policyholder or their claims. They should not disclose any sensitive information without proper authorization or legal requirement.

Duty to Avoid Conflicts of Interest: A fiduciary must avoid situations where their personal interests conflict with those of the policyholder. If a conflict of interest arises, a fiduciary is typically required to disclose this conflict and, in many cases, recuse themselves from the decision-making process related to the conflict.

Duty to Act According to the Terms of the Fiduciary Agreement: Fiduciaries must adhere to the terms and conditions set forth in the agreement or legal instrument that established the fiduciary relationship. This includes following any specific instructions or guidelines stated in the contract.

Duty to Not Comingle Funds: Public adjusters must keep the beneficiary’s funds and property separate from their own. Commingling of funds can lead to conflicts of interest and mismanagement of assets. A number of states state that a public adjuster must act as a fiduciary only in this capacity. The omission of regulations stating that the duty expands into other areas may suggest that a public adjuster may not be deemed a fiduciary in those jurisdictions.  

Duty to Be Impartial: If a public adjuster serves multiple policyholders, they must treat all fairly and impartially. They should not favor one policyholder over another unless explicitly directed by the terms of the retention agreement.

The journey of a licensed public adjuster is one marked by stringent regulations and high ethical standards. Most states recognize that the work of public adjusting is not just a profession but a solemn commitment to the public trust. This responsibility demands the utmost ethical conduct to ensure that the work is done correctly and legally.

There is, indeed, no higher calling than upholding a fiduciary duty. It is a role that requires not just expertise but a steadfast commitment to integrity and fairness. Public adjusters must, therefore, establish business practices that are in strict alignment with these lofty standards.

The path of a public adjuster is challenging and laden with responsibilities that go beyond the ordinary. It is a role that demands not just skill but a deep sense of duty and a commitment to doing what is right, even when it is not easy. This is a path for those willing to shoulder the weight of trust placed in them by the public. To be a public adjuster is to be at the forefront of advocating for those in need, to be a beacon of hope and fairness in the often complex world of insurance claims. It is a chance to make a real difference, to stand up for justice, and to guide those who are lost in the maze of policies and procedures. In embracing these challenges and the corresponding ethical duties, public adjusters can find a sense of accomplishment and purpose that goes beyond the ordinary. It is a journey that is not just about navigating the intricacies of insurance claims but about upholding the principles of trust and integrity. It is hard work, undoubtedly, but it is also work that has the power to change lives and make a lasting impact.

So, to those who choose this path, remember: your role is crucial, your responsibilities great, but the opportunity to make a meaningful difference is even greater. Embrace the challenge with integrity and courage, and let your work be a testament to the trust placed in you.

Thought For The Day

A leader is one who knows the way, goes the way, and shows the way.

—John C. Maxwell

1 806 Ky. Admin. Regs. 9:030 (“A licensed adjuster shall act in a fiduciary capacity on behalf of his or her principal”).

2 State Farm Fla. Ins. Co. v. Sanders, 327 So.3d 342 (Fla. 3rd DCA 2020).