The Occupancy Question and the Pool Table
A public adjuster is retained on a $310,000 dwelling fire claim. In his recorded statement the insured said the house was occupied at the time of the fire. A neighbor tells the adjuster the property had been empty since a tenant was evicted five months earlier, and the policy contains a condition voiding coverage where the dwelling has been vacant or unoccupied beyond 60 consecutive days. Separately, the insured asks the adjuster to add a $14,000 pool table to the contents schedule. The table was never in the house; the insured says, "the adjuster won't know, and the company builds padding into every settlement anyway." The insured also asks the adjuster not to mention a 2021 water loss at another property he owns.
1. How should the adjuster respond to the request to include the pool table and to omit the prior loss?
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Refuse both, clearly and in writing. Submitting a contents item that was not in the dwelling is a false claim; submitting it through a licensed representative makes the adjuster a participant, exposing him to license discipline and to insurance fraud liability. Omitting a known prior loss in response to a direct question is the same problem in reverse.
The "padding" rationale cuts the wrong way: inflating a schedule to absorb expected negotiation is exactly the conduct that turns ordinary claim negotiation into fraud, and it contaminates the legitimate parts of the claim - the carrier can reasonably question everything else in the file.
The adjuster should explain the consequences to the client - voidance under the policy's concealment and misrepresentation condition, denial of the entire claim, and potential criminal referral - and record the refusal and the client's instruction in the file. If the client insists, the adjuster must withdraw rather than sign a false proof of loss.
2. What are the adjuster's obligations regarding the suspected vacancy misrepresentation?
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The adjuster represents the insured and owes a fiduciary duty of loyalty and diligence, but that duty never authorizes concealment or a false statement to the carrier. The adjuster may not repeat the occupancy statement as true, may not coach the insured to repeat it, and may not suppress the neighbor's information.
Practical steps: (1) verify occupancy independently - utility records, mail, tenant history, neighbor statements, photographs; (2) if the facts support vacancy, advise the client in writing of the coverage risk created by the 60-day condition and of the insured's duty of candor; (3) advocate on the legal question rather than the facts - for example, whether the dwelling was "unoccupied" versus merely vacant, whether the condition applies, and whether the carrier must show an increase in hazard; (4) do not let the client's misstatement be repeated in a sworn proof of loss the adjuster handles. The adjuster can argue coverage; he cannot manufacture facts.
3. At what point should the adjuster withdraw, and what must the withdrawal include?
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Withdraw when the client insists on presenting information the adjuster knows to be false - on the occupancy statement, on the contents schedule, or on the prior loss - after being advised of the consequences. Withdrawal for that reason is not abandonment of the insured; remaining and transmitting the false submission is the greater wrong.
A defensible withdrawal includes: a written notice of termination to the client stating the effective date and the reason in neutral terms; return of the file materials the client is entitled to; written notice to the carrier that the adjuster no longer represents the insured and that no further submissions will come from the adjuster; a final internal memorandum recording the dates, the client's instructions, the refusals, and the advice given; and, where warranted by clear evidence of intentional false statements, a report to the carrier's special investigation unit and the appropriate fraud authority.
After withdrawal the adjuster must not use or disclose the client's confidences beyond what the law and the fraud-reporting obligation require. The contingent fee structure is no defense for staying in the file - the fee is earned on legitimate recovery, not on the size of a false claim.