The Restoration Referral and the Undisclosed Ownership Interest

Denise has a fiduciary-like duty to the insured and must disclose any financial interest that could affect her advice. Her 40% ownership of QuickDry and her 10% referral fee are material conflicts that should have been disclosed in writing before the contract was signed. Requiring the insured to use QuickDry as a condition of representation improperly ties her adjusting fee to a vendor and undermines the insured's freedom to choose. Submitting only the affiliated bid while disparaging the lower independent bid may be misrepresentation or unfair dealing, especially if the scope was comparable. Accepting a referral fee from a restoration contractor while being paid by the insured is a secret profit and may violate Delaware's public adjuster statutes and unfair trade practice rules. Coordinating repairs is not itself unlawful, but acting as a contractor without a license is. The contract's mandatory-vendor clause and the undisclosed conflict make the agreement vulnerable to rescission.

Assuming Delaware's public adjuster fee cap is 10% of the claim proceeds, the maximum fee on $180,000 is $18,000. Denise's 10% contract rate equals that cap, so the percentage itself is not the main problem; the base and the conflicts are. The fee should be computed on amounts actually paid or recovered for the insured's claim, not on inflated or uncollected estimates. If the insurer paid $150,000 dwelling plus $30,000 contents, $180,000 is the paid amount, but if any part was for the contractor's unlicensed work or was not collected, it should be excluded. The secret 10% referral fee from QuickDry is an additional undisclosed compensation that must be disgorged; it cannot be layered on top of the public adjuster fee. The Hendersons may be entitled to rescind the contract, recover the referral fee, and challenge any fee attributable to the conflicted recommendation.

The Hendersons should demand a written accounting, copies of all bids, and disclosure of the ownership and referral arrangements. They should file a complaint with the Delaware Department of Insurance and consider consulting an attorney about rescission, restitution, and any fraud claim. They should not sign a release or pay the fee until the accounting is resolved. Denise should have disclosed her ownership interest and referral fee in writing before contracting, avoided any requirement to use QuickDry, presented both bids with an objective scope comparison, and declined any contractor referral fee. If she wanted to coordinate repairs, she should have used a separate written agreement with clear disclosures and confirmed the contractor's licensure. The adjuster's duty is to advocate for the insured's recovery, not to profit from the repair vendor.