MI Public Adjuster cheat sheet

Public adjusters are licensed under the Michigan Insurance Code (Chapter 12, adjusters), MCL 500.1201 et seq., and regulated by the Department of Insurance and Financial Services (DIFS).

A public adjuster represents the insured for compensation; a company or independent adjuster represents the insurer. The same person may not act for both sides on the same claim.

Written contract requirement: the public adjuster agreement must be in writing, signed by the insured, specify the fee or percentage, and disclose that the adjuster represents the insured, not the insurer.

Fee caps: Michigan limits public adjuster compensation on claims arising from a declared emergency or catastrophe; ordinary claims are governed by the contract's stated percentage, which must be disclosed before signing.

Cancellation right: the insured may rescind the public adjuster contract within a statutory cooling-off period (commonly 3 business days after signing) by written notice, and no fee may be charged for work before rescission.

Solicitation limits: public adjusters may not solicit business at a loss scene, in a hospital, or during the first hours after a loss in a manner prohibited by DIFS rules; unsolicited door-to-door contact immediately after a disaster is restricted.

Trust handling: funds received on behalf of an insured (such as claim drafts) must be handled as fiduciary funds, kept separate, and accounted for promptly; commingling with the adjuster's own funds is prohibited.

Recordkeeping: adjusters must maintain claim files, contracts, and financial records for the period DIFS requires (generally at least 5 years) and produce them on examination.

DIFS enforcement: violations may result in fines, license suspension or revocation, and referral for criminal prosecution where fraud or theft is involved.

License type: a Michigan public adjuster license (often issued as an adjuster license with a public adjuster designation) is required before negotiating, soliciting, or settling claims for an insured for compensation.

Pre-licensing education: applicants must complete DIFS-approved pre-licensing coursework (commonly 40 hours for adjusters) covering policy, law, and claims practice.

Examination: applicants must pass the Michigan adjuster licensing exam; a fingerprint-based criminal background check and identity verification are also required.

Good character and fitness: applicants must disclose felony convictions and administrative actions; DIFS may deny licensure for fraud, dishonest dealing, or license revocation in another state.

Bond or surety: public adjusters must maintain a surety bond or equivalent financial responsibility as a condition of licensure, protecting insureds against misappropriation.

Continuing education: licensees must complete DIFS-required CE hours each renewal cycle (commonly 24 hours every 2 years, including ethics and law), with records retained and auditable.

Renewal and lapse: licenses renew on a fixed cycle; operating on a lapsed license is unlicensed activity subject to penalty, and reinstatement may require late fees and CE.

Reciprocal and nonresident licensing: nonresident public adjusters must hold a home-state license in good standing and apply through DIFS; Michigan grants reciprocal treatment where the home state does.

DIFS authority: DIFS may examine books and records, issue cease-and-desist orders, impose civil fines, and revoke licenses; hearing and appeal rights follow the Administrative Procedures Act.

Fiduciary duty: the public adjuster owes loyalty to the insured, must act in the insured's best interest, and must not accept compensation from an insurer, contractor, or vendor on the same claim without full written disclosure and consent.

Prohibited misrepresentation: it is unlawful to misstate policy coverage, exaggerate the scope or value of damage, or imply that the adjuster is affiliated with or acting for the insurer or a government agency.

Fee disclosure: the compensation percentage, any additional charges, and the method of calculation must be disclosed in writing before the contract is signed; hidden or contingent kickbacks are prohibited.

Conflict of interest: an adjuster may not steer the insured to a contractor, appraiser, or attorney in which the adjuster has a financial interest without written disclosure and the insured's consent.

No advance fees for unearned work: charging or collecting a fee before performing services, or charging a fee on a claim that is denied without any recovery, is restricted or prohibited.

Solicitation ethics: no contact with an insured known to be represented by counsel, no solicitation during a declared emergency's restricted period, and no pressure tactics or false urgency.

Fraud prohibition: knowingly presenting false claim information, inflating estimates, or assisting an insured in fabricating damage is insurance fraud under Michigan law and grounds for license revocation.

Confidentiality: personal and financial information obtained in the claim must be safeguarded and used only for the claim, consistent with privacy requirements.

Documentation duty: every material communication, estimate, and payment must be documented in the claim file; refusing to provide the insured a copy of the contract or records on request is a violation.

Policy reading order: identify the insured property, covered perils, exclusions, conditions (notice, proof of loss, suit limitation), deductibles, and any endorsements before estimating.

Replacement cost vs. actual cash value: ACV = replacement cost minus depreciation (age, condition, useful life); RCV pays the full repair cost up to policy limits, often after repair is completed.

Coinsurance formula: required insurance = coinsurance % × replacement cost; recovery = (carried insurance ÷ required insurance) × covered loss, capped at the policy limit.

Deductible application: the deductible is subtracted once per occurrence (or per building, per policy terms), not per line item; percentage deductibles apply to the dwelling limit.

Proof of loss: a sworn, itemized statement of the amount claimed, usually due within 60 days of the insurer's request; failure to submit may bar the claim.

Michigan suit limitation: the standard fire policy and most homeowners policies require suit within one year of the loss, but Michigan law and policy language may extend this; check the specific policy and any tolling.

Estimation method: measure affected areas, apply unit pricing (Xactimate-style line items), add overhead and profit where multiple trades are required, and separate non-covered betterment or code upgrades.

Additional living expenses and loss of use: payable when the dwelling is uninhabitable due to a covered peril, typically for the shortest reasonable time to repair or relocate, subject to a stated limit.

Claim process: notice of loss, insurer inspection, adjuster estimate, proof of loss, payment or denial, and appraisal or civil remedy if the amount is disputed.