Disaster-Scene Contract, Out-of-State License, and a 20% Fee

The first issue is licensure. Hawaii requires a public adjuster to be licensed in Hawaii before soliciting, negotiating, or contracting to adjust a claim in the state. A public adjuster license from another state does not authorize Hawaii activity. The contract is also deficient on its face. A compliant public adjuster contract must be in writing, clearly describe the services and the fee calculation, identify the licensee and license number, and include the statutory cancellation or rescission notice. This agreement has no cancellation right and no fee explanation. Calling himself a public adjuster without a Hawaii license is misleading. The $2,500 retainer collected before any disclosed earned fee raises a fee-accounting problem and should be refunded or credited. The request for an assignment of all policy rights is a serious conflict: a public adjuster may represent the insured, but should not take ownership of the claim or become the claimant. That assignment can interfere with the insurer's payment obligations and may be unenforceable. Advise the client that the contract is vulnerable to rescission and that no fee should be paid until the licensing and contract issues are resolved.

Even if the adjuster were properly licensed, the 20% fee on all proceeds is not automatically valid. The fee must be disclosed, reasonable, and tied to the services actually provided. Charging a percentage of the $25,000 emergency advance, which the carrier paid before the adjuster did any work, is difficult to justify. The same is true of undisputed dwelling payments that the carrier would have paid without the adjuster's efforts. A more defensible approach is to calculate the fee on additional covered proceeds the adjuster obtains through negotiation or documentation, and to exclude amounts already committed by the carrier. Hawaii law also imposes statutory limits and reasonableness requirements on public adjuster compensation; a 20% fee on a residential fire claim should be tested against those limits and against the actual work performed. If the fee exceeds the lawful or reasonable amount, the excess is unenforceable. The $2,500 retainer must be accounted for. Ask for a time and expense record, the carrier's payment log, and a written explanation of how the 20% is applied to each payment.

Do not sign the assignment. The client should send written notice rescinding any assignment and demanding return of the retainer. If the adjuster has already contacted the carrier, the client should notify the carrier in writing that the assignment is revoked and that the client is the insured. Preserve the contract, the check, the assignment document, and all communications. Because the adjuster appears to be acting without a Hawaii license, the client may report the conduct to the Hawaii Insurance Division. The daughter should not use her producer authority to help the unlicensed adjuster; she should document what she observed and avoid any referral or compensation arrangement with him. If the carrier has already paid the adjuster or issued a check jointly, request a payment ledger and confirm that no policy proceeds were diverted. The practical goal is to unwind the defective contract, protect the claim, and put the client in a position to hire a Hawaii-licensed public adjuster or proceed directly with the carrier.