Three-Day Cancellation After a Kitchen Fire
On March 4 at 9:15 p.m., a Portland homeowner signs a one-page public adjuster contract at her kitchen table while firefighters are still rolling hose. The contract states a fee of "15% of all money recovered, including recoverable depreciation, code upgrades, and interest." It does not contain a rescission notice, a statement that the adjuster represents the insured, or a place for the insured to acknowledge receipt of a copy. The adjuster leaves no copy. He arranges for a friend's crew to tarp the roof for $2,800 and tells the homeowner the 15% applies to that payment too. On March 6, she emails to cancel because her brother-in-law, a licensed independent adjuster, will handle the claim. By then the public adjuster has obtained the policy and inspected the attic. He invoices $1,500 for the inspection plus 15% of the $2,800 tarp charge. The homeowner refuses to pay.
1. Is the public adjuster contract enforceable, and what terms does Maine law require in a public adjuster contract?
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The contract is likely unenforceable as written. Maine's public adjuster statute requires a written contract that is dated, signed by the insured, identifies the insured and the loss, states the compensation clearly, and discloses that the public adjuster represents the insured rather than the insurer. It must also give the insured a right to rescind within three business days and provide a copy at signing. These are not technicalities: they let the insured make an informed choice before handing over claim control. A one-page contract that omits the rescission right and the representation statement, and that was signed at the loss scene without a copy, fails those requirements. The vague 15% formula also fails the clarity requirement because it sweeps in recoverable depreciation, code upgrades, interest, and emergency vendor payments without explanation. The adjuster cannot cure the defect after the insured has cancelled.
2. Can the adjuster charge the $1,500 inspection fee and 15% of the $2,800 tarp payment?
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No. The inspection fee is not owed because it was not a valid, disclosed contract term. A public adjuster may not invent a separate charge after the fact to punish a cancellation. The tarp charge is more nuanced. Emergency mitigation is part of the claim, but the adjuster did not perform the work; his friend's crew did. A public adjuster may not act as a contractor or share in a contractor's charge unless licensed and clearly disclosed. At most, the adjuster could claim a fee on the reasonable, documented mitigation payment if the contract validly covered it, which this one does not. The 15% clause is too broad and undisclosed as to vendor payments. Charging both amounts would create an unauthorized penalty for exercising the rescission right and could support a licensing complaint.
3. What should the adjuster do now that the homeowner has cancelled in writing?
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The adjuster should stop work immediately, confirm the cancellation in writing, return or account for all documents and information obtained from the insured, and send a final invoice only for compensation clearly authorized by an enforceable contract. Because the contract omitted required disclosures and no copy was provided, the safest and most defensible position is to waive the 15% fee and the inspection charge. He should not contact the insurer to withdraw the claim or to characterize the insured as breaching. If he believes the emergency tarp payment is owed, he should direct the vendor to bill the insured or insurer directly and disclose any relationship with the vendor. He should also review his contract template and office practices, because a pattern of signing at loss scenes without copies and without rescission notices invites discipline by the Maine Bureau of Insurance.