Fire-Scene Solicitation, Fee on Undisputed Funds, and Settlement Authority
At 11 p.m., a public adjuster arrives at the scene of a 12-unit apartment fire while firefighters are still working. The owner is a 74-year-old widow who speaks limited English. The adjuster offers her a $500 gift card to sign a contract immediately. The contract sets a 15% fee on 'all insurance money paid on the claim, including undisputed dwelling coverage,' and states that the adjuster may settle the claim without the owner's approval if the insurer's offer is 'reasonable.' The policy has a $900,000 dwelling limit and $150,000 for contents. Two days later, the insurer voluntarily pays $250,000 for undisputed dwelling damage. The owner's nephew calls and asks whether the contract is enforceable, what fee can be charged on the $250,000, and whether the adjuster can accept a settlement without her aunt's signature.
1. Evaluate the solicitation and gift-card inducement.
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The solicitation is improper. Approaching a vulnerable insured at an active fire scene, offering a gift card, and pressuring an immediate signature undermine the informed consent required for a public adjuster contract. Idaho public adjuster rules and the fiduciary duty prohibit solicitations that exploit an emergency, and a contract obtained that way is vulnerable to rescission and discipline. The limited English issue makes the problem worse. The adjuster should have waited until the emergency ended, provided a written contract with license number and cancellation rights, and used a qualified interpreter. The $500 gift card should not be treated as an enforceable inducement.
2. What fee, if any, may be charged on the $250,000 undisputed payment?
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The contract says 15% of all insurance money, which would be $37,500 on the $250,000 payment. But a fee on an undisputed amount that the insurer paid without the adjuster's work is questionable. The fee must be reasonable and tied to services actually performed. If the $250,000 was already admitted and paid before any negotiation, charging 15% on it likely violates consumer-protection principles and may be unenforceable. The better position is no fee on the undisputed $250,000; fee only on additional proceeds the adjuster obtains. The adjuster should document the timeline and correct the contract.
3. Can the adjuster accept a settlement without the owner's signature?
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The adjuster cannot accept a settlement without the owner's approval. A contract clause allowing the adjuster to settle if the offer is reasonable is void as against public policy because the insured owns the claim. Settlement requires the insured's informed written consent and signature on the release. The adjuster may recommend and explain, but cannot bind the widow. The nephew should demand a written revocation or reformation of that clause. If the adjuster already purported to settle, the insured should notify the insurer in writing that no authority was given.