The Lapsed Bond, Expired License, and the 'State Certified' Ad
On March 31, Omar's Colorado public adjuster license expired because he did not complete his required continuing education. His $20,000 surety bond had been canceled on February 1 for nonpayment; he did not tell the Division. On April 5 he signed a contract to represent a Lakewood homeowner on a $60,000 sewer backup claim. His advertisement says 'State Certified Public Adjuster - License #PA-12345' and 'We guarantee at least 30% more than the insurer's first offer, or our fee is free.' He tells the homeowner that his 'license is active' and that the bond is 'just a formality.' He negotiates with the insurer on April 20 and settles for $48,000, charging 15%. The homeowner later discovers the license lapsed and complains to the Division. Omar says the claim was handled well and no one was harmed.
1. Identify Omar's violations and the possible consequences.
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Omar committed multiple violations. His license expired March 31, so he was unlicensed when he signed the April 5 contract and negotiated the April 20 settlement. The surety bond was canceled February 1, and he failed to notify the Division as required. His advertisement falsely says 'State Certified' and guarantees at least 30% more than the first offer; public adjusters are licensed, not 'certified,' and a guaranteed outcome is deceptive. Telling the homeowner the license was active and the bond was a formality is a material misrepresentation. 'No one was harmed' is not a defense; the statute prohibits unlicensed adjusting regardless of outcome. Consequences can include fines, cease-and-desist orders, license denial or revocation, restitution, and referral for criminal prosecution.
2. Is the contract enforceable, and can Omar keep the 15% fee?
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The contract is likely void or unenforceable because it was signed and performed while Omar was unlicensed and unbonded. He should not collect the 15% fee; if he already collected it, he should refund it. A court or the Division may also find the fee unreasonable or order restitution. The insured's claim against the insurer is not automatically void, but Omar's right to compensation is compromised. Omar cannot cure the violation retroactively by renewing the license; the relevant time is when the acts occurred. The false advertising and guarantee provide independent grounds for discipline and may support a consumer claim.
3. What should Omar have done, and what should he do now?
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Omar should immediately stop adjusting, complete the required continuing education, obtain a new surety bond, apply for reinstatement, and notify the Division of the lapse, bond cancellation, and the claim he handled. He should send the homeowner a written disclosure, refund the fee, and cooperate with any investigation. He should pull the false advertisement and replace it with accurate license information. He should not contact the insurer as the insured's representative until licensed again. Going forward, he should calendar continuing education and bond renewals and report material changes promptly.