KY Public Adjuster cheat sheet

Kentucky insurance regulation is administered by the Kentucky Department of Insurance, headed by the Commissioner of Insurance; the Commissioner is appointed by the Governor and administers KRS Chapter 304.

A public adjuster is licensed under KRS 304.9 and must be appointed by the insurer, contracted by the insured, or acting as a salaried employee of a licensed public adjuster firm; a license is required before soliciting, negotiating, or settling a first-party claim for compensation.

Public adjuster license applicants must be at least 18, complete prelicensing education, pass the state exam, submit fingerprints for a criminal background check, and pay the required fees; licenses must be renewed and continuing education completed per regulation.

A public adjuster may not be licensed as a company or independent adjuster representing insurers for the same claim, and may not represent both the insured and the insurer on the same loss - a conflict that triggers license discipline.

Compensation is limited to a reasonable fee stated in a written contract; Kentucky caps public adjuster fees on claims arising from a declared disaster or emergency at 10% of the claim amount, and the fee must be disclosed in writing.

Unfair trade practices under KRS 304.12 include misrepresentation, false advertising, boycott, coercion, intimidation, unfair claim settlement practices, and failure to maintain complaint records; violations support fines, license suspension, or revocation.

Solicitation is restricted: a public adjuster may not solicit a contract at the scene of a loss before 48 hours have passed, may not use false or misleading representations, and may not pay or accept referral fees to unlicensed persons for claim referrals.

Licensees must report administrative actions, criminal convictions, and changes of name or address to the Department within the timeframes set by regulation; failure to report is itself grounds for discipline.

Insurable interest requires a financial stake in the preservation of the property or life insured; in property insurance it must exist at the time of loss, while in life insurance it must exist at policy inception.

Indemnity means restoring the insured to approximately the pre-loss financial position, no better and no worse; valued policies, replacement cost coverage, and agreed-value policies are exceptions that can exceed strict indemnity.

Utmost good faith imposes duties of disclosure on both parties; a material misrepresentation on the application, whether innocent or intentional, can allow rescission of the contract.

A warranty is a condition the insured promises is true; a breach can void coverage, whereas a representation is a statement believed true that only voids the policy if material and relied upon.

Adhesion and ambiguity: insurance is a contract of adhesion drafted by the insurer, so ambiguities are construed against the drafter (contra proferentem) and reasonable expectations of the insured may be honored.

Subrogation transfers the insured's right of recovery against a third party to the insurer after payment, preventing double recovery; the insured must not impair that right by releasing the tortfeasor.

Coinsurance, deductibles, and other insurance clauses allocate loss; pro rata other-insurance sharing divides loss by the ratio each policy's limit bears to total applicable limits.

Aleatory contract: performance depends on an uncertain event; the premium is paid for a contingent promise, not an equal exchange, which is why unearned premium is refundable on cancellation.

The declarations page identifies insureds, covered locations, policy period, limits, deductibles, and forms; the insuring agreement states the promise to pay, and the conditions state the duties of each party.

Coverage A (Dwelling) and Coverage B (Other Structures) are usually valued at replacement cost; Coverage C (Personal Property) is often valued at actual cash value, which is replacement cost minus depreciation.

Actual cash value = replacement cost − depreciation; replacement cost pays the cost to repair or replace with new property of like kind and quality, subject to policy limits.

Deductibles come in flat-dollar, percentage-of-limit, and wind/hail or named-storm percentage forms; a percentage deductible applies to the Coverage A limit, not to the loss amount.

Loss settlement clauses may use functional replacement cost, agreed value, or market value; the policy pays the least of these calculations and the applicable limit.

The appraisal provision allows either party to demand appraisal when the amount of loss is disputed; each selects a competent appraiser, and an umpire resolves differences - coverage disputes are not appraisable.

The mortgage clause protects the lender's interest; the lender receives loss payment to the extent of its interest, may pay premium, and is entitled to notice of cancellation or nonrenewal.

Pair-and-set, ordinance-or-law, and debris removal are common endorsements or additional coverages that extend or limit recovery beyond the base form; ordinance-or-law typically limits to 10% of Coverage A unless endorsed higher.

Vacancy and unoccupancy conditions reduce or suspend coverage; a building vacant for more than 60 consecutive days generally limits coverage to specified perils and caps loss payment.

HO-3 covers the dwelling and other structures on an open-peril (risk of direct physical loss) basis and personal property on a named-peril basis; HO-5 covers both on an open-peril basis; HO-2 is broad named peril; HO-8 is for older homes with functional replacement cost.

HO-4 (renters) and HO-6 (condo/co-op) cover personal property and liability but not the building; the HO-6 includes limited building-items coverage such as fixtures, cabinets, and appliances.

Coverage A limit is the dwelling; Coverage B is typically 10% of Coverage A; Coverage C is typically 50-70% of Coverage A; Coverage D (loss of use) is typically 20-30% of Coverage A.

Coverage D pays additional living expense - the increase in living costs needed to maintain a normal standard of living - plus fair rental value for rented portions, for the time reasonably needed to repair or relocate.

Coverage E (personal liability) and Coverage F (medical payments to others) respond to third-party claims; medical payments are paid without regard to fault, subject to a small limit per person.

Section I perils include fire, lightning, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, and volcanic eruption; earth movement, flood, and nuclear hazard are excluded.

Homeowners exclusions include ordinance or law, earth movement, water damage from flood or sewer backup, neglect, intentional loss, governmental action, and power failure originating off the residence premises.

Loss of use, trees/shrubs (typically 5% of Coverage A with a per-item cap), and debris removal are additional coverages; credit card and forgery coverage are typically $500 each.

The duties after loss include prompt notice, protection of property from further damage, cooperation, proof of loss, and submission to examination under oath; failure can prejudice the claim.

Commercial property forms include the Building and Personal Property Coverage Form (CP 00 10), which covers building, business personal property, and personal property of others at the described premises.

Coinsurance in commercial property is a stated percentage (commonly 80%, 90%, or 100%); the coinsurance penalty formula is (insurance carried ÷ insurance required) × loss, capped at the policy limit, where insurance required = coinsurance % × value at time of loss.

A reporting form or agreed value option replaces the coinsurance condition; a margin clause limits the recovery at a location to a percentage of the values reported for that location.

Business income coverage pays net income loss plus continuing normal operating expenses during the period of restoration, beginning 72 hours after the direct physical loss (per the CP 00 30 waiting period) and ending when the property should be repaired with reasonable speed.

Extra expense coverage pays costs to continue operations and avoid or minimize shutdown, and does not require a suspension of business; it is often paired with business income in a single limit.

The period of restoration ends when the damaged property is repaired, rebuilt, or replaced, or when business is resumed at a new permanent location; it does not include time to comply with ordinance or law unless endorsed.

Civil authority coverage pays business income and extra expense when access to the premises is prohibited by order of a civil authority due to covered damage to nearby property, typically for up to 4 weeks.

Contingent business income covers loss caused by damage to a supplier's or customer's property; service and utility interruption endorsements cover loss of water, power, or communications services from off-premises causes.

Blanket insurance applies one limit across multiple locations and can satisfy coinsurance for all locations combined; a peak-season endorsement adjusts values for seasonal inventory swings.

Commercial general liability (CGL) uses occurrence and claims-made triggers; an occurrence policy covers injury or damage occurring during the policy period, while a claims-made policy covers claims first made during the period, subject to retroactive date and extended reporting period.

CGL Coverage A pays sums the insured is legally obligated to pay as damages because of bodily injury or property damage; Coverage B pays personal and advertising injury; Coverage C pays medical payments regardless of fault.

CGL limits are stated as general aggregate, products-completed operations aggregate, personal and advertising injury limit, each-occurrence limit, damage-to-premises limit, and medical expense limit.

The CGL excludes expected or intended injury, contractual liability (except insured contracts), liquor liability, workers compensation, pollution (with limited exceptions), and damage to the insured's own product or work.

Additional insured status is provided by endorsement, commonly ISO CG 20 10 for ongoing operations and CG 20 37 for completed operations; an additional insured's rights are limited to the scope of the endorsement.

Umbrella and excess policies respond above underlying limits; umbrellas may drop down for gaps in underlying coverage, while excess policies generally follow form and require scheduled underlying coverage.

Personal auto policy parts are liability (A), medical payments (B), uninsured/underinsured motorist (C), damage to your auto (D), and duties after an accident; a business auto policy uses numbered symbols to designate covered autos.

Workers compensation is statutory, providing wage replacement and medical benefits for work-related injury without regard to fault; employers liability (Part Two) responds to third-party suits by employees.

Comparative and contributory negligence rules affect liability recovery; Kentucky uses pure comparative fault, so a claimant's recovery is reduced by the claimant's percentage of fault but is not barred.

Claim handling sequence: acknowledge and record notice, verify coverage and insured status, investigate the loss, document damages, evaluate and reserve, negotiate, and settle or deny with written explanation.

The proof of loss is a sworn statement of the insured's claim; policy conditions set the deadline (commonly 60 days after request), and failure to submit can bar the claim unless the insurer waives the requirement.

Investigation tools include recorded statements, examination under oath, scene inspection, photographs, witness interviews, fire and origin-and-cause reports, and public records such as deeds and prior claims history.

Replacement cost evaluation uses current local pricing (for example, unit-cost databases or contractor bids) for like kind and quality; actual cash value applies depreciation based on age, condition, and expected useful life.

Depreciation methods include straight-line (age ÷ useful life) and observed-condition adjustments; recoverable depreciation is paid after the insured completes repairs and submits receipts, within the policy's time limit.

Business income loss is measured as net income plus continuing expenses minus expenses that ceased, projected from historical financial statements and adjusted for growth trends and mitigation.

Salvage and subrogation affect net claim cost; the insurer may take salvage after paying a total loss, and the insured must not compromise subrogation rights against a responsible third party.

Kentucky's unfair claims settlement practices regulation requires acknowledgment within 10 working days and a decision within a reasonable time; the insured may request a written explanation of a denial.

A claim denial must cite the specific policy provision relied upon; a reservation-of-rights letter preserves the insurer's coverage defenses while investigation continues.

A public adjuster contract must be in writing, signed by the insured, identify the loss and the fee, and disclose that the adjuster represents the insured only; the insured may rescind within a stated period after signing.

Compensation must be a stated percentage or fee disclosed in the contract; the adjuster may not accept compensation from the insurer, a contractor, or any other party on the same claim.

The adjuster must disclose any financial interest in a contractor, restoration firm, or appraisal service recommended to the insured, and may not steer repairs in exchange for compensation.

Unfair or deceptive practices include misrepresenting policy coverage or the adjuster's authority, promising a specific settlement amount, altering documents, and advising the insured to make false statements.

Confidentiality: the adjuster may not disclose the insured's personal or financial information except as needed to adjust the claim or as required by law.

The adjuster must maintain claim files and records available to the Department of Insurance on request, and must remit funds received on behalf of the insured promptly.

Consumer protection: the insured has the right to a copy of the policy, a written denial explanation, and access to the Department's complaint process; retaliatory conduct against a complaining insured is prohibited.

Fiduciary duty requires the adjuster to act in the insured's best interest, document the claim accurately, and never inflate damages; inflation of a claim can constitute insurance fraud under KRS 304.47.

A public adjuster may not act as an appraiser or umpire on the same claim, and may not represent the insured in litigation without separate authorization.