Contractor's 'Claim Management' Offer After Hailstorm
Following an April hailstorm in Gwinnett County, a roofing contractor knocks on Dana's door and offers to "handle the whole insurance claim" for 15% of whatever the insurer pays. The contractor gives a repair estimate, asks Dana to sign a one-page "Authorization to Negotiate and Settle" and a contingency agreement assigning insurance proceeds to the contractor, and says its estimator "used to be an adjuster." Dana signs. The insurer later questions the arrangement and delays the claim. Dana calls a licensed Georgia public adjuster for help. The contractor has no Georgia adjuster license and has not been appointed by any insurer. The contractor has not performed repairs yet. Dana's policy has a $1,000 deductible and a mortgage clause; the mortgage company is named on the check. The contractor demands its 15% before any repairs begin.
1. Does the contractor's conduct require a Georgia public adjuster license? Explain the distinction between a contractor's estimate and negotiating a claim.
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Yes. Georgia requires a public adjuster license for a person who, for compensation, solicits, investigates, or negotiates the settlement of a first-party property claim on behalf of an insured. The contractor is not merely supplying a repair bid. It is charging a percentage of the insurance payment, asking for authority to "negotiate and settle," and taking an assignment of proceeds. Those facts point to claim negotiation and settlement activity, not construction work. A contractor may inspect, prepare a detailed repair estimate, provide photographs, and contract to perform repairs for a fixed price. It may not negotiate coverage or the claim amount with the insurer for a contingent fee. The statement that its estimator "used to be an adjuster" does not cure the problem; the license must be active and held by the person or entity doing the adjusting. A power of attorney or assignment does not convert unlicensed adjusting into a permitted activity.
2. What should the licensed public adjuster advise Dana to do about the authorization, the assignment, and the contractor's 15% demand?
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The adjuster should tell Dana to cancel the claim-handling authorization in writing immediately and to demand return of any signed assignment. She should not pay 15% of the claim proceeds. If the contractor performed emergency mitigation or repairs, Dana should require a written invoice for actual work performed and pay only for that work, not a percentage of insurance proceeds. She should check the authorization for any cancellation or rescission clause and send the cancellation by a method that creates proof of delivery. She should notify the insurer and mortgagee that the contractor has no authority to negotiate or endorse claim payments. If Dana wants representation, she should sign a separate written public adjuster contract that clearly states the fee, scope, duties, and cancellation rights. The public adjuster must not pay the contractor a referral fee or split the adjusting fee with an unlicensed person. The assignment may also conflict with the policy's mortgage clause and the insurer's payment practices, so the mortgage company should be brought into the payment discussion early.
3. What licensing and consumer-protection consequences may follow for the contractor?
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The contractor faces exposure for unlicensed public adjusting. The Georgia Commissioner of Insurance may investigate, issue a cease-and-desist order, impose fines, and refer the matter for further action. Because the contractor held itself out as able to negotiate and settle a claim for a contingent fee, the claim-handling agreement may be unenforceable or voidable, and the insurer may refuse to recognize the contractor's authority. The conduct may also be treated as an unfair or deceptive practice under Georgia consumer-protection law, particularly because the homeowner was led to believe the contractor could do work that requires a separate license. If the contractor obtained an assignment of proceeds without complying with policy conditions or mortgagee requirements, payment may be delayed or the assignment rejected. The contractor can still be paid for actual repair work under a proper construction contract, but it cannot collect an adjusting fee. The adjuster should document the solicitation, preserve the signed documents, and advise Dana that licensing complaints are handled separately from the claim.