Public Adjuster Duties, Ethics, and Fiduciary Responsibilities
This domain tests whether the candidate can act as a loyal representative of the insured while handling money, information, and conflicts of interest. Ethics questions often turn on disclosure and authority rather than technical coverage.
Core fiduciary duties
A public adjuster owes the client loyalty, good faith, competence, confidentiality, and accurate accounting. The adjuster must disclose the fee and any relationship that could affect judgment, avoid representing conflicting interests, and never settle a claim without authorization. Client funds, such as claim payments or deductibles held in trust, must not be commingled with the adjuster's operating funds.
Conflicts and referrals
Referral arrangements with contractors, engineers, or restoration firms are a recurring risk. An undisclosed referral fee or ownership interest creates a conflict because the adjuster may be tempted to inflate scope or steer the insured to a favored vendor. The insured should be told about the relationship and given alternatives; some arrangements are prohibited outright.
Worked example
An adjuster recommends a brother-owned restoration company and receives a 5% referral payment from that company. The adjuster does not disclose the relationship. Even if the restoration work is acceptable, the undisclosed interest breaches the duty of loyalty and creates an appearance that the scope was chosen for the adjuster's benefit. The proper course is to disclose the relationship before any recommendation, avoid the referral payment, and document the client's informed choice among vendors.
Traps
A client's verbal permission does not cure every conflict. Do not use claim funds to pay business expenses. Do not promise a specific settlement amount or sign a settlement release without authority. Keep the distinction between advocacy and misrepresentation clear.