Rescission Window vs. 'We Already Started Work'
A homeowner with a 2019 HO-3 signed your public adjuster contract on March 4 for a kitchen fire loss. The contract states a 20% fee, identifies the insured and the policy, and contains the required right-to-rescind notice. On March 6 - two business days later - the insured emails: "I'm cancelling. My brother-in-law is a contractor and he says the insurer will pay anyway." By then you had spent 14 hours documenting the loss and had already paid an origin-and-cause engineer $1,200. You have submitted nothing to the carrier. The carrier later pays $58,000 on Coverage A. You tell the insured the cancellation came too late because performance had begun, and you invoice 20% of $58,000 plus $1,200 in engineering costs.
1. Was the insured's cancellation effective, and what are you obligated to do with the contract, the file, and the claim of 'we already started work'?
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The cancellation controls. Florida's public adjuster statute requires the written contract to give the insured a right to rescind within three business days after signing, exercisable by written notice. March 4 to March 6 is two business days. Your contract cannot shorten the statutory window, and no language you added can convert it into a longer one.
What follows:
- Stop all work, void or return the contract, and confirm the rescission in writing with the date you received it.
- Do not hold the file or the insured's documents hostage as leverage; deliver what belongs to the insured.
- Notify the carrier in writing that you no longer represent the insured.
- "Performance had begun" is not an exception. Work performed inside the rescission window is at your own risk - that is exactly the risk the window is designed to allocate to the adjuster, not the consumer.
Note also the sequence: nothing had been submitted to the carrier, so the insured received no benefit that could arguably justify a fee.
2. Assume the rescission had instead arrived on March 12, outside the window. Is the $11,600 plus $1,200 invoice collectible as written?
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No - not as written. Two problems:
- The statutory ceiling. Compensation may not exceed 20% of the amount of the insurance settlement claim paid by the insurer. 20% × $58,000 = $11,600, so the percentage is already at the absolute maximum. Adding a $1,200 'reimbursement' on top is compensation in substance, whatever it is labeled; expenses cannot be used to climb over the cap. Ordinary operating costs - engineers, photographs, time - are the adjuster's cost of doing business and are built into the percentage.
- The base. The fee is measured by what the insurer actually pays on the claim, not by gross estimates, not by the deductible, and not by line items the carrier has rejected. Any invoice that computes the fee on a number other than settlement proceeds is vulnerable to a licensing complaint and an unfair trade practice allegation.
A defensible contract says the fee is a stated percentage of the settlement amount, is paid from claim proceeds, and that the adjuster absorbs ordinary expenses.
3. Same facts, but the fire occurred during a Governor-declared state of emergency. How does the fee analysis change?
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The cap drops. For claims arising from a declared state of emergency, the statutory maximum falls to 10% during the one-year period following the declaration. Here that is 10% × $58,000 = $5,800, not $11,600.
Consequences:
- The 20% clause is unenforceable to the extent it exceeds the emergency cap.
- Collecting or attempting to collect the excess is exposure under Florida's unfair trade practice and public adjuster conduct rules, independent of the contract language.
- The correct move is proactive: amend the fee in writing, disclose the cap to the insured, and refund anything collected above it.
- Verify the declaration date and whether the loss is one 'arising from' the emergency - the timing window and the causal link both matter, and a loss that predates the declaration by months is analyzed differently.