AZ Public Adjuster cheat sheet

Arizona Department of Insurance regulates licensing, market conduct, and rate filing; adjusters must hold a valid Arizona license and carry it when acting on a claim.

A public adjuster contract must be in writing, signed by the insured, and disclose the fee or percentage before work begins; the fee is typically capped as a percentage of the settled claim amount.

Arizona requires public adjusters to provide a written contract with a right to rescind within a stated period after signing; no fee may be charged before the rescission window ends.

Solicitation rules prohibit a public adjuster from soliciting a claimant between the hours of 6 p.m. and 8 a.m., and from representing both the insurer and the insured on the same claim.

Unfair claim settlement practices include misrepresenting policy provisions, failing to acknowledge communications, and offering substantially less than the amount ultimately recovered.

Licensing exemptions exist for attorneys, licensed insurance producers acting within their authority, and persons adjusting only their own property.

Records of each claim transaction must be retained for the period set by statute and made available to the Department on request.

Continuing education and license renewal are required on a recurring cycle; lapsed licenses cannot lawfully negotiate or settle claims for compensation.

Insurable interest requires a pecuniary relationship such that the insured suffers actual loss from the destruction of the property.

Indemnity principle: the insured should be restored to approximately the pre-loss financial position, not placed in a better one.

Utmost good faith imposes duties of disclosure and honesty on both parties; concealment or material misrepresentation can void coverage.

Law of large numbers lets insurers predict aggregate losses from many similar exposure units, which underpins ratemaking.

Adverse selection occurs when high-risk insureds disproportionately buy coverage; underwriting and pricing controls manage it.

Moral hazard is a behavioral change caused by insurance; morale hazard is carelessness or indifference caused by the presence of coverage.

Subrogation transfers the insured's recovery rights against a negligent third party to the insurer after payment, preventing double recovery.

Coinsurance shares risk: the insured agrees to carry a limit equal to a stated percentage of value and accepts a penalty if underinsured.

Peril is a cause of loss (fire, wind, theft); hazard is a condition that increases the chance or severity of loss; risk is uncertainty of loss.

Direct loss is physical damage to covered property; indirect or consequential loss includes lost income, extra expense, and business interruption.

Actual cash value equals replacement cost minus depreciation; replacement cost is the cost to repair or replace with new property of like kind and quality.

Named-peril policies cover only listed causes of loss; open-peril (special form) policies cover all risks of direct physical loss except those excluded.

The policy limit is the maximum payable; the deductible is subtracted before payment, and most policies pay the lesser of limit or covered loss minus deductible.

Other insurance clauses (pro rata, primary/excess, non-contribution) determine how multiple policies respond to the same loss.

Duties after loss typically include prompt notice, proof of loss, protection of property from further damage, and cooperation with the investigation.

Negligence elements: duty, breach, proximate cause, and damages; liability coverage pays sums the insured is legally obligated to pay.

Dwelling policies (DP-1, DP-2, DP-3) insure the dwelling and contents but exclude liability, which must be added by endorsement.

Homeowners policies (HO-2, HO-3, HO-5, HO-8) package property and liability coverage for owner-occupied residences.

HO-4 covers tenants' personal property and loss of use; HO-6 covers condominium unit owners' property and building items.

Commercial property forms include the Building and Personal Property Coverage Form (CP 00 10) and the Causes of Loss forms (basic, broad, special).

Business income coverage replaces lost net income and continuing expenses during the period of restoration; extra expense pays costs to resume operations.

Inland marine covers property in transit and movable property; ocean marine covers vessels, cargo, and freight.

Flood is excluded on standard property forms and is written separately through the National Flood Insurance Program or private markets.

Equipment breakdown covers mechanical and electrical breakdown, which standard property forms exclude.

Declarations identify the insured, the property, the limits, the deductible, and the policy period; the insuring agreement states the promise to pay.

Conditions set obligations of both parties, including notice, proof of loss, appraisal, and suit-against-the-insurer time limits.

Exclusions remove coverage; common exclusions include ordinance or law, earth movement, flood, neglect, intentional loss, and wear and tear.

Mortgage clause: the lender receives loss payment to the extent of its interest and must be notified of cancellation or nonrenewal.

Appraisal is the dispute-resolution method for the amount of loss; each party selects an appraiser, and an umpire resolves disagreement.

Salvage is property remaining after a loss that the insurer may take; abandonment of property to the insurer is prohibited.

Liberalization clause extends broader coverage later added to the form to existing policies without additional premium during the policy period.

Vacancy and unoccupancy conditions reduce or eliminate coverage when the building is empty beyond the stated number of days.

DP-1 covers basic perils (fire, lightning, internal explosion, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism).

DP-2 broadens coverage to include falling objects, weight of ice snow or sleet, and accidental discharge of water or steam.

DP-3 is the special form: open perils on the dwelling, named perils on personal property.

Dwelling coverage applies to the structure, structures attached to it, and materials on the premises intended for construction.

Fair rental value covers lost rent; additional living expense covers increased living costs when the dwelling is uninhabitable.

Replacement cost on the dwelling requires insurance to at least 80 percent of full replacement cost to avoid a settlement penalty.

Dwelling policies do not include personal liability or medical payments unless added by endorsement.

Theft coverage on a dwelling policy is limited and typically applies only when the dwelling is occupied by the insured.

Coverage A is the dwelling, B other structures, C personal property, D loss of use, E personal liability, and F medical payments to others.

HO-3 covers the dwelling on an open-peril basis and personal property on a named-peril basis; HO-5 covers both on an open-peril basis.

Section I conditions include the 80 percent replacement cost requirement for the dwelling and a deductible applied per occurrence.

Special limits cap coverage for categories such as money, jewelry theft, firearms theft, silverware theft, and business property on premises.

Coverage D loss of use pays additional living expense and fair rental value for the shortest reasonable time to repair or relocate.

Section II coverage E defends and pays sums the insured is legally obligated to pay for bodily injury or property damage; F pays medical expenses without regard to fault.

Loss assessment coverage pays the insured's share of a homeowners association assessment for a covered loss to common property.

The policy is not designed for rental dwellings, business occupancy, or vacant property; endorsements or different forms are required.

The Building and Personal Property Coverage Form (CP 00 10) insures building, business personal property, and personal property of others.

Business personal property includes furniture, fixtures, machinery, stock, and leased improvements; coverage extends to newly acquired property for a limited period.

Coinsurance percentage options (80, 90, 100) determine the required limit; the formula is (limit carried divided by limit required) times loss, capped at the limit.

Causes of Loss forms: Basic (CP 10 10), Broad (CP 10 20), and Special (CP 10 30), which is open peril with listed exclusions.

Business income and extra expense coverage (CP 00 30) requires a coinsurance calculation based on projected annual net income plus continuing expenses.

Agreed value is an optional endorsement that suspends the coinsurance penalty when the insured submits a statement of values.

The value reporting form adjusts premium to actual values and avoids coinsurance penalties for fluctuating inventory.

Spoilage, equipment breakdown, and earthquake are excluded or limited on the standard form and require endorsements.

A public adjuster represents the insured, not the insurer; the duty of loyalty runs to the policyholder who signed the contract.

The adjuster prepares the claim: document damage, photograph and inventory contents, obtain repair estimates, and assemble the proof of loss.

Damage documentation should establish cause of loss, extent of damage, and cost of repair using itemized, verifiable estimates.

Scope disputes are resolved through the policy's appraisal provision, negotiation with the insurer, or litigation; the adjuster should not guarantee outcomes.

Fee agreements must be written, disclose the percentage and method of calculation, and be explained before signing.

Conflicts of interest must be avoided; an adjuster may not accept compensation from a contractor, vendor, or insurer on the same claim.

Claim funds and settlement drafts must be handled transparently; the adjuster should not commingle client funds with personal or business funds.

Ethical conduct requires accurate documentation, no exaggeration of damages, confidentiality of client information, and compliance with state licensing law.