Curbside Contract After a Named Storm
Thirty-six hours after a named hurricane makes landfall in Terrebonne Parish, a public adjuster licensed only in Texas knocks on Dana's door. The street is still under a boil-water advisory and the roof is covered with a blue tarp. The adjuster says, 'I'm licensed and I handle hurricane claims every day,' and hands Dana a one-page contract. The contract sets the fee at 12% of 'all insurance proceeds, including flood,' names the adjuster as Dana's exclusive representative, and has no cancellation notice. To 'cover the inconvenience,' the adjuster gives Dana a $500 gift card and asks her to sign immediately so he can 'get ahead of the insurer.' Dana signs. A week later, a neighbor tells her Louisiana requires a separate license. The adjuster has already emailed the insurer, demanded the full policy limit, and told Dana not to speak with the insurer directly.
1. Identify the licensing and contract-compliance problems in this scenario. Is the contract likely enforceable?
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The adjuster's Texas license does not authorize public adjusting in Louisiana. Louisiana requires a public adjuster license before a person solicits, negotiates, or enters into a public adjuster contract with an insured. The adjuster has therefore engaged in unlicensed activity, and the contract is at serious risk of being void or voidable.
The contract has additional defects. Public adjuster contracts must be in writing, signed by the insured, clearly disclose the compensation method, and include the cancellation rights required by statute. This contract lacks a cancellation notice and charges a percentage of 'all insurance proceeds, including flood,' which may improperly reach proceeds the adjuster did not recover or exceed any statutory fee limitation. The $500 gift card and the immediate signing at the loss scene are also red flags for prohibited inducements and improper solicitation during a declared emergency. The 'do not speak to the insurer' instruction aggravates the control problem.
Enforceability is not the adjuster's only exposure. Unlicensed activity can support a cease-and-desist order, fines, license denial or revocation, and criminal penalties. Dana should be advised to cancel in writing, preserve the gift card and contract, and report the conduct to the Louisiana Department of Insurance.
2. What should the adjuster have done before meeting Dana or signing any contract?
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Before any solicitation or negotiation, the adjuster should have verified whether Louisiana offers a nonresident public adjuster license and applied for and obtained it. A Texas resident license is not a substitute. The adjuster should also have reviewed the current Louisiana public adjuster statute and regulations on solicitation during a state of emergency, contract content, cancellation rights, fee disclosure, and prohibited inducements.
At the meeting, the adjuster should have avoided approaching Dana at the damaged property during the emergency response period if that is restricted, refrained from offering a gift card, and given Dana time to read the contract. The contract should have identified the insured and the property, described the services, stated the exact fee and how it is calculated, disclosed that flood claims may be handled separately under an NFIP policy, and included the statutory right to cancel. The adjuster should have explained that Dana may communicate with her insurer and is free to choose her own contractors. If the adjuster was not yet licensed, the only proper step was to decline the engagement and refer Dana to a Louisiana-licensed public adjuster.