MD Public Adjuster cheat sheet

Risk transfer vs. retention: insurance transfers a defined financial consequence of loss to an insurer for a premium; deductibles, self-insured retentions, and uncovered exposures are the portion the insured retains.

Insurable interest: for property coverage the insured must hold a lawful interest in the property at the time of loss (ownership, leasehold, or direct pecuniary exposure); a policyholder with no interest at loss has no recoverable claim.

Indemnity principle: a property recovery may not exceed the insured's actual financial loss, which is why policy limits, coinsurance, and deductibles constrain payment even on a total loss.

Utmost good faith: the applicant must disclose material facts and must not conceal or misrepresent; a material misrepresentation on the application can void the policy or support rescission.

Pooling and ratio math: loss ratio = incurred losses ÷ earned premium; expense ratio = expenses ÷ written premium; combined ratio = loss ratio + expense ratio, and a combined ratio above 100% is an underwriting loss.

Subrogation: after paying a loss the insurer steps into the insured's legal rights against the responsible third party; the insured must not impair those rights, for example by signing a release in favor of the tortfeasor.

Other insurance and contribution: pro rata, excess, and primary/noncontributory clauses decide which policy pays first and how remaining amounts are shared among policies covering the same loss.

Hazard types: moral hazard is a dishonest exposure (intentional loss, overinsurance); morale hazard is indifference to loss because insurance exists; physical hazard is a condition of the property itself.

Form differences: HO-2 is named peril on dwelling and contents, HO-3 is open peril on the dwelling and named peril on personal property, and HO-5 is open peril on both; HO-4 covers renters' contents and HO-6 covers condo unit interiors.

Coverage structure: A Dwelling, B Other Structures (commonly 10% of A), C Personal Property (commonly 50–70% of A), D Loss of Use, E Personal Liability, F Medical Payments to Others.

Loss settlement: actual cash value = replacement cost minus depreciation. To collect full replacement cost on the dwelling, most homeowners forms require the limit carried at the time of loss to equal at least 80% of the dwelling's full replacement cost.

Coinsurance formula: payment = (limit carried ÷ limit required) × loss, capped at the policy limit; limit required = coinsurance percentage × replacement cost at time of loss.

Core exclusions: flood and surface water, earth movement, ordinance or law, neglect, intentional loss, wear and tear, and mold except as limited. Flood requires a separate NFIP or private flood policy; NFIP residential maximums are $250,000 building and $100,000 contents.

Deductibles: fixed dollar deductibles apply per loss; percentage windstorm or hurricane deductibles apply a percentage to the Coverage A limit and can substantially exceed a flat dollar deductible.

Valuation conditions: the appraisal provision resolves disputes over the amount of loss (each side picks a competent appraiser, who together choose an umpire); appraisal does not decide whether coverage exists.

Mortgage and loss payable clauses protect a lender's interest in the property; the lender can receive loss proceeds to the extent of its interest even when the borrower's conduct would otherwise defeat the claim.

CGL Coverage A pays sums the insured becomes legally obligated to pay as damages for bodily injury or property damage caused by an occurrence within the coverage territory during the policy period.

CGL Coverage B covers personal and advertising injury (libel, slander, wrongful eviction, infringement in an advertisement); Coverage C medical payments pays reasonable medical expenses without a liability determination and within a short time limit.

Occurrence vs. claims-made: an occurrence form responds to injury or damage during the policy period whenever the claim is later made; a claims-made form responds to claims first made during the period, limited by the retroactive date and any extended reporting endorsement.

Limit architecture: per-occurrence limit, general aggregate (applies to Coverages A, B, and C), products-completed operations aggregate, damage-to-premises limit, and per-person medical payments limit.

Personal auto policy parts: Part A liability, Part B medical payments or PIP, Part C uninsured/underinsured motorists, Part D damage to your auto (collision and other than collision).

Maryland auto requirements: minimum liability of $30,000 per person / $60,000 per accident / $15,000 property damage; uninsured motorist coverage must be offered at the liability limits; PIP minimum is $2,500 and may be waived for the insured and family members 16 and older.

Negligence elements: duty, breach of duty, actual and proximate causation, and damages. Maryland uses pure contributory negligence, so any negligence by the claimant that contributed to the injury bars recovery entirely.

Workers' compensation: statutory benefits are the employee's exclusive remedy against the employer (Part One), with employer's liability (Part Two) for certain third-party situations; the compensation carrier holds a lien on third-party recoveries.

Claim sequence: notice of loss, coverage analysis under the policy in force on the date of loss, investigation, valuation, negotiation, and payment or a written denial stating the policy basis.

Post-loss duties are conditions precedent: prompt notice, protection of property from further damage, a detailed inventory, cooperation, a sworn proof of loss when requested, and examination under oath where the policy provides for it.

Burden of proof: the insured must show a covered peril caused the loss and prove the amount of damage; the insurer bears the burden of establishing that a specific exclusion or limitation applies.

Depreciation method: for straight-line depreciation, multiply replacement cost by the fraction of useful life consumed (age ÷ expected useful life); actual cash value equals replacement cost minus that depreciation.

Replacement cost holdback: the recoverable depreciation is paid only after the insured repairs or replaces the damaged property within the time period the policy allows, and only up to the limit actually spent.

Contents valuation: quantity × unit price, then apply depreciation for age, condition, and quality; maintain separate replacement cost and actual cash value columns and require proof of ownership or purchase receipts.

Business income valuation: net income plus continuing operating expenses for the period of restoration, plus extra expense; the coinsurance requirement is measured against the annual business income exposure.

Appraisal and dispute mechanics: appraisal addresses only the amount of loss; a coverage dispute is decided by the insurer's coverage position and, if contested, by a court, not by the appraisal panel.

Maryland claim practice standards: unreasonable delay, failure to conduct a reasonable investigation, or failure to explain a denial can constitute an unfair claim settlement practice under Insurance Article Title 27.

Regulator: the Maryland Insurance Administration, headed by the Insurance Commissioner (appointed by the Governor), licenses insurers, producers, and public adjusters and enforces the Insurance Article, including Titles 4, 10, and 27.

Unfair trade and claim practices: Insurance Article §§ 27-303 and 27-304 prohibit misrepresentation, unreasonable delay, and failure to attempt a prompt equitable settlement; remedies include penalties, cease-and-desist orders, and license suspension or revocation after notice and hearing.

Cancellation notice: Maryland generally requires 45 days' written notice of cancellation or nonrenewal, and 10 days' notice when the cancellation is for nonpayment of premium, with the reason stated.

Auto coverage requirements: minimum limits of 30/60/15; uninsured motorist coverage must equal liability limits; personal injury protection minimum of $2,500 with a permitted written waiver for the insured and family members 16 and older.

Residual markets: the Maryland Joint Insurance Association is the state FAIR plan providing basic property coverage when the voluntary market is unavailable; the Maryland Auto Insurance Fund (MAIF) provides auto coverage to drivers who cannot obtain it.

Time limits: Maryland's general civil statute of limitations for actions on a contract, including an insurance policy, is three years (Courts and Judicial Proceedings § 5-101), subject to a valid shorter suit-limitation clause in the policy.

Licensing maintenance: producer and public adjuster licenses run on a two-year term, require continuing education each term (including an ethics component), and obligate the licensee to report administrative actions and criminal convictions to the MIA.

Good faith claims: Insurance Article § 27-1001 creates an administrative complaint process for an insurer's failure to act in good faith on a first-party claim, with a related civil remedy under § 3-1701; Maryland does not recognize a common-law first-party bad faith tort.

Role: a public adjuster represents the insured, not the insurer, and must hold a Maryland public adjuster license before soliciting, negotiating, or settling a first-party property or casualty claim for compensation.

Contract requirement: services require a written agreement signed by the insured before work begins, stating the compensation (percentage of recovery or flat fee), the scope of services, and the insured's right to rescind.

Prohibited conduct: representing both the insured and the insurer on the same claim, advancing money to the insured, acquiring an interest in the claim or salvage, and using a title that implies insurer or Maryland Insurance Administration affiliation.

Solicitation restrictions: no soliciting at the scene of a loss such as a fire scene, no misleading or unsubstantiated advertising, and no promises or guarantees of a specific settlement amount.

Fiduciary duty: settlement funds received on the insured's behalf must be accounted for promptly and held in trust; commingling those funds with the adjuster's own money or failing to remit on request is a licensing violation.

Records and conflicts: retain the contract and claim file, provide the insured copies on request, and disclose any ownership or financial interest in a restoration contractor or vendor recommended to the insured.

Compensation discipline: the fee must match the contract and be reasonable; charging undisclosed fees, or collecting a commission on amounts the insured recovered without the adjuster's assistance, is prohibited.

License maintenance and discipline: biennial renewal with continuing education, prompt reporting of address changes, administrative actions, and criminal convictions; misrepresenting coverage or altering documents is grounds for suspension or revocation.

Conflicting roles: a public adjuster may not serve as the appraiser or umpire on a loss the adjuster handled, because the advocate and neutral roles cannot be combined on the same claim.