The Out-of-State Adjuster and the Wilmington Storm
On July 3, a windstorm damaged 62 homes in a Wilmington subdivision. A public adjuster licensed only in New Jersey arrives, rents a hotel conference room, and signs a contract with retiree Gloria M. The contract is one page, states a '15% contingency fee on all insurance money,' and has no cancellation clause. The adjuster's assistant, who is not licensed in any state, inspects Gloria's roof, meets the insurer's adjuster, and negotiates a $48,000 settlement. Gloria had already paid a $2,500 'retainer' before any inspection. The adjuster tells her that Delaware recognizes his New Jersey license under reciprocity and that the retainer is nonrefundable. Gloria's policy has a $5,000 deductible and her claim is for wind damage to roof, siding, and interior. She calls the Delaware Department of Insurance after a neighbor says the contract is invalid.
1. May the adjuster lawfully solicit and negotiate Gloria's claim using his New Jersey public adjuster license? Explain the licensing path and the status of the unlicensed assistant.
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No. Delaware requires a person who solicits, investigates, or negotiates a first-party property claim for compensation to hold a Delaware public adjuster license. A New Jersey public adjuster license does not by itself authorize activity in Delaware; a nonresident may seek a Delaware nonresident public adjuster license, but the license must be issued before solicitation or negotiation. Reciprocity, if available, is an application pathway, not automatic authority. The assistant is separately problematic: inspecting damage, meeting the insurer, and negotiating are public adjusting functions. An unlicensed assistant may perform clerical or administrative work only and may not negotiate or advise on coverage. Because the contract was signed and the claim negotiated before Delaware licensure, the conduct is unlicensed adjusting. The Department can order the adjuster to cease and desist, impose fines, and pursue other remedies, and the contract may be unenforceable.
2. Identify the contract and fee problems, and calculate the maximum lawful fee if the settlement is $48,000. State any assumption you make about Delaware's fee cap.
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The contract fails basic public adjuster contract requirements: it is not a clear written agreement with the required disclosures, it lacks the insured's right to rescind within three business days, and it does not explain how the fee is computed. The 15% contingency is also suspect because Delaware limits public adjuster compensation; assuming the statutory maximum is 10% of the claim proceeds, the maximum fee would be 10% x $48,000 = $4,800. The contract's 15% would produce $7,200, an excess of $2,400. The $2,500 retainer is also problematic: collecting a nonrefundable advance before any work, and before the insurer has paid, is inconsistent with a contingency fee and with the rescission right. If the retainer was an advance against the fee, it must be credited and any excess refunded. If it was a separate fee, it must be disclosed and lawful. Gloria should not treat the retainer as forfeited merely because the adjuster says so.
3. What should Gloria and the Department do next, and what penalties or remedies may follow?
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Gloria should send a written rescission and demand for refund, citing the missing three-day cancellation notice and the unlicensed activity. She should keep copies of the contract, the $2,500 payment proof, the adjuster's flyer, and any texts or emails. She should file a complaint with the Delaware Department of Insurance and ask whether the settlement can be reopened or whether the insurer should deal directly with her. The Department can investigate unlicensed adjusting, issue a cease-and-desist order, impose civil penalties, and refer for criminal prosecution if warranted. Because the contract may be void or voidable, the adjuster may have to disgorge fees and may lose any claimed fee. The insurer should be put on notice that the public adjuster's authority is disputed. If the settlement was procured through an unlicensed person, Gloria may also have a private civil claim, but she should consult a Delaware attorney because the Department does not award damages.