The Roofer Who Wanted 12%
On April 12, a hail storm damages the roof of a 1970s brick ranch in Gwinnett County. The insured, Ms. Patel, files a claim under an HO-3 policy with a $4,500 deductible and a $350,000 dwelling limit. You are the company adjuster. Your inspection supports $31,000 in covered roof and gutter damage. Two days later, a roofing contractor named Dalton calls you. He says Ms. Patel signed a 'claims handling agreement' giving him 12% of 'all insurance proceeds obtained' and authorizing him to negotiate with you; he demands $48,000, including upgrades and his fee. Dalton is not licensed as a public adjuster. Ms. Patel has not called you herself. Your estimate does not include the upgrades, and the policy has no ordinance-or-law coverage. Dalton threatens to 'bring in a lawyer and report you' if you do not respond within 24 hours.
1. Does Dalton's arrangement require a Georgia public adjuster license? What should you do before discussing any settlement figure with him?
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Yes. Georgia requires a public adjuster license for a person who, for compensation, solicits, investigates, negotiates, or settles a first-party claim on behalf of an insured. A contractor may provide a repair estimate, explain scope, and discuss construction issues. Dalton crossed the line when he contracted for a percentage of insurance proceeds in exchange for handling the claim with the insurer.
Before discussing numbers, confirm the insured's authorization directly with Ms. Patel. Ask whether she understands the agreement and whether she wants Dalton to represent her. Do not treat Dalton as her representative merely because he says so. You may discuss the scope of repairs with him, but do not negotiate settlement, disclose claim valuations, or accept a demand from him as if he were a licensed public adjuster. Document the call, the unsigned or unverified agreement, and your attempts to reach the insured. If Dalton continues to negotiate for compensation, escalate to your compliance or special-investigation unit; an unlicensed person engaging in public adjusting is a regulatory issue, not just a customer-service problem.
2. Can you include Dalton's 12% fee in the claim payment or pay him directly? Explain the coverage and payment issues.
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No. The policy pays for covered direct physical damage, not for a contractor's or representative's fee. A 'claims handling agreement' fee is not damage to the dwelling and is not an ordinance-or-law cost. Including the fee in the loss would inflate the claim beyond the policy's coverage grant.
Paying Dalton directly is a separate problem. The insurer's obligation runs to the named insured, subject to mortgagee and loss-payee terms. A direct payment to a contractor can be made only with the insured's clear written direction and appropriate lien protection, and it should not include an unlicensed claim-negotiation fee. The proper approach is to settle the covered loss with Ms. Patel, explain the $31,000 scope and the $4,500 deductible, and leave her private arrangement with Dalton to her and her own advisor. If she directs payment to Dalton for completed repairs, follow your company's written authorization and lien-waiver procedure. Document the coverage basis for excluding the fee.
3. What regulatory and professional risks arise if you negotiate a settlement with Dalton anyway?
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You would be treating an unlicensed person as an authorized claim representative and potentially helping him collect compensation for activity that requires a public adjuster license. That undermines the licensing scheme and creates a record that the insurer recognized and dealt with an unlicensed adjuster. It also increases the risk that the insured later claims she did not authorize the settlement or did not understand the 12% deduction.
Your own exposure includes licensing-discipline risk for aiding unlicensed adjusting, bad-faith or unfair-claim-practice allegations, and internal audit findings. The safer course is to communicate with the insured, confirm her wishes in writing, and keep any contractor discussion limited to repair scope and cost. If Dalton threatens to report you, do not react by making concessions; preserve the call log and emails and let compliance respond. A regulator is more likely to ask why you negotiated with an unlicensed negotiator than why you refused to do so.