Massachusetts Insurance Law and Public Adjuster Regulation
This domain tests Massachusetts-specific licensing and conduct rules for public adjusters: who must be licensed, what a contract must contain, how compensation is limited, and what the Division of Insurance can enforce. The exam asks whether a specific adjuster practice is permitted, not for a general insurance-law essay.
Licensing and contract rules
- A person who solicits, negotiates, or settles a first-party claim for compensation on behalf of an insured must hold a Massachusetts public adjuster license from the Commissioner of Insurance.
- The contract must be written, signed by the insured, identify the claim and the fee, and disclose the insured's right to cancel within three business days.
- Massachusetts caps public adjuster compensation at 10% of the insurance settlement amount under M.G.L. c. 175, § 172; a term above the cap is unenforceable.
- Licensees must complete continuing education, including ethics hours, and keep claim and contract records available for examination.
- The Commissioner may investigate, fine, suspend, or revoke a license for violations, misrepresentation, or unlicensed activity.
- A public adjuster may not delegate negotiation to an unlicensed person or share fees with a person who is not licensed where the law requires a license.
Worked example
A public adjuster signs a homeowner to a 15% contingent-fee contract the day after a fire. The insurer later pays $120,000. The maximum enforceable fee is $12,000, not $18,000. The adjuster must correct the contract and refund or credit $6,000; the excess term is void. The fee is measured against the settlement amount paid by the insurer, not against the adjuster's own repair estimate or the insured's mortgage payoff.
Traps that cost marks
- Applying the fee to the adjuster's estimate rather than the actual settlement.
- Omitting the three-day cancellation notice.
- Using an unlicensed solicitor or contractor to negotiate.
- Assuming a license from another state authorizes Massachusetts work.