The Borrowed License and the 15% Contract
A Prince George's County public adjuster licensed in Maryland hires an unlicensed assistant to meet with homeowners, negotiate with insurers, and sign contracts. The assistant tells a homeowner whose townhouse burned: Do not worry, we will get your $2,500 deductible back and charge you only 15% of the settlement. The contract is a one-page form with no cancellation notice and no description of the fee calculation. The licensed adjuster also lets a friend who failed the licensing exam use his license number for $2,000 a month and pays the assistant a 20% commission on each signed contract. Six hours after the fire, the assistant visits the homeowner at 9 p.m. at a hotel and pressures her to sign. The homeowner later asks another adjuster to review the contract.
1. Identify the Maryland public adjuster law and ethics violations in this file and the likely regulatory consequences.
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The unlicensed assistant is negotiating and signing contracts, which is unlicensed public adjusting, and the licensed adjuster is aiding that violation. The 15% fee exceeds Maryland's 10% cap on public adjuster compensation. The contract lacks the required written disclosures and the three-business-day right to cancel. Promising to get the deductible back misrepresents the policy: the deductible is the insured's responsibility and cannot be recovered unless another party is liable. Letting a friend use the license number and paying a 20% commission to an unlicensed assistant are prohibited license-sharing and fee-splitting arrangements. The 9 p.m. visit after a fire raises solicitation and undue-pressure concerns. These are unfair trade practices and grounds for the Commissioner to suspend or revoke the license, impose fines, and order restitution; the contracts may be voidable.
2. What should the second adjuster tell the homeowner to do about the existing contract and the promised deductible?
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The homeowner should cancel the contract in writing within the three-business-day cancellation period, keep proof of delivery, and demand return of any payment. She should not sign a release or a new contract until she sees the fee, the cancellation notice, and the scope of authority. She should report the conduct to the Maryland Insurance Administration with the contract, the 9 p.m. visit details, and the deductible promise. The second adjuster should not take over the claim until the first contract is canceled and should not pay or accept any referral fee. If the first adjuster has already negotiated a settlement, the homeowner should ask for a full accounting and confirm that no fee was taken from the deductible or from unpaid policy proceeds.
3. What should the licensed adjuster have done differently to comply with supervision, fee, and contract requirements?
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The licensed adjuster should have personally supervised and signed off on every contract, used only licensed staff for negotiations, and ensured the contract stated the fee, the 10% cap, the three-business-day cancellation right, and the services to be performed. He should never lend his license, pay commissions to unlicensed persons, or promise a specific claim result. He should keep client funds in a trust account where required, document every contact, and avoid late-night solicitation at the loss scene. If an unlicensed person is handling claims, he should stop the practice immediately and consult Maryland counsel; self-reporting may mitigate but does not cure the violations.