Public adjusting firm, Golub & Associates, was successful in its action against State Farm for payment of fees earned in connection with a fire loss claim. Here is a short recitation of the facts:

  • 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.