Cancellation of a Public Adjuster Contract After a Windstorm
A June windstorm damages the roof and siding of a homeowner’s house in New Haven. At 7:30 a.m. the next day, a public adjuster knocks on the door and tells the homeowner that the insurer will likely underpay the claim. The homeowner signs a one-page contract giving the public adjuster a 15% fee and a power of attorney. The contract does not show the adjuster’s Connecticut license number, does not describe the right to cancel, and does not list the fee in the form required for public adjuster contracts. The homeowner signed on Tuesday, June 2. On Friday, June 5, the homeowner sends a written cancellation email and asks for the return of all documents. The public adjuster has spent six hours on the file and has paid $1,200 for an engineer’s report. He tells the homeowner that cancellation is too late and that he will keep the fee and the report.
1. Was the homeowner’s cancellation timely, and what effect does the missing cancellation notice have?
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The cancellation was timely. Connecticut public adjuster contracts must be in writing and must give the insured a three-business-day right to cancel. Counting business days after Tuesday, June 2, Wednesday, Thursday, and Friday are the three business days. The Friday email is within the period. The missing cancellation notice is independently serious. A contract that omits required disclosures, including the licence number, fee terms, and cancellation right, may be unenforceable and exposes the public adjuster to regulatory discipline. The adjuster should not treat the absence of a notice as a way to shorten the cancellation period. The safe and ethical response is to honor the cancellation, stop work, return the power of attorney and any client documents, and confirm the cancellation in writing.
2. Can the public adjuster collect the $1,200 engineering fee or 15% of any future settlement?
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No. The fee provision is part of the public adjuster contract. If the contract is cancelled within the cancellation period, or is unenforceable because required disclosures are missing, the adjuster should not collect the 15% fee. The $1,200 engineering cost is a cost the adjuster incurred to develop the file before cancellation. Absent a valid, disclosed, and enforceable cost-reimbursement term, the adjuster should treat it as a business expense, not as a charge imposed on a cancelling homeowner. The adjuster also should not hold the report or documents hostage. A public adjuster may not use a power of attorney after cancellation. If the adjuster believes a fee is owed, the dispute should be resolved under the contract and Connecticut requirements, not by refusing to release the client’s papers.
3. Identify the Connecticut regulatory and ethical issues raised by the solicitation and contract.
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The adjuster must be licensed in Connecticut and must not misrepresent the insurer’s likely conduct to pressure a signature. A statement that the insurer will underpay, made without facts, is a sales tactic, not an adjustment opinion. The contract must be written, identify the adjuster and licence number, state the fee clearly, and disclose the cancellation right. The adjuster should keep a copy of the signed contract and give the insured a copy. The early-morning door knock the day after a loss raises a high-pressure solicitation concern; the adjuster should not exploit the homeowner’s stress or imply false urgency. The adjuster owes a fiduciary duty to the insured, which includes explaining the contract and not using the power of attorney for unrelated purposes. The adjuster should preserve records of the solicitation and contract because a complaint to the Connecticut Insurance Department is foreseeable.