MI Public Adjuster flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Public adjuster defined

A licensed person who, for compensation, represents the insured in negotiating, presenting, or settling a first-party property claim with an insurer, rather than representing the insurer.

Governing statute

The Michigan Insurance Code, Chapter 12 (MCL 500.1201 et seq.), governs adjuster licensing and conduct; DIFS administers and enforces these provisions.

Written contract requirement

The public adjuster agreement must be written, signed by the insured, state the fee or percentage, and disclose that the adjuster represents the insured and not the insurer.

Rescission cooling-off period

The insured may cancel the public adjuster contract by written notice within the statutory period after signing, commonly three business days, without owing a fee for prior work.

Loss-scene solicitation limits

Michigan restricts public adjusters from soliciting at a loss scene, hospital, or during a declared emergency's initial period, preventing pressure sales to vulnerable insureds.

Fiduciary fund handling

Claim funds received for an insured must be held separately, accounted for promptly, and never commingled with the adjuster's personal or business operating funds.

Record retention period

Adjusters must keep contracts, claim files, estimates, and financial records for the period DIFS requires, generally at least five years, and produce them on examination.

DIFS enforcement powers

DIFS may examine records, issue cease-and-desist orders, impose civil fines, suspend or revoke licenses, and refer fraud or theft for criminal prosecution.

License required before activity

A person may not solicit, negotiate, or settle an insured's claim for compensation in Michigan without a current public adjuster license issued by DIFS.

Pre-licensing education hours

Applicants must complete DIFS-approved pre-licensing coursework, commonly 40 hours for adjusters, covering insurance law, policy coverage, and claims practice.

Background check requirement

Applicants submit fingerprint-based criminal history checks and must disclose felony convictions and administrative actions; fraud or dishonest dealing may bar licensure.

Surety bond requirement

Public adjusters must maintain a surety bond or equivalent financial responsibility as a licensure condition, protecting insureds from misappropriation of claim funds.

Continuing education cycle

Licensees complete DIFS-required CE hours each renewal cycle, commonly 24 hours every two years including ethics and law, and must retain completion records.

Lapsed license consequences

Acting as a public adjuster after a license lapses is unlicensed activity subject to fines and denial of renewal; reinstatement may require late fees and CE.

Nonresident licensure

A nonresident public adjuster must hold a home-state license in good standing and apply through DIFS, which grants reciprocal treatment where the home state does.

Administrative hearing rights

A licensee facing DIFS discipline is entitled to notice and an administrative hearing with appeal rights under Michigan's Administrative Procedures Act.

Fiduciary duty to insured

The public adjuster must act loyally in the insured's interest and may not accept compensation from an insurer, contractor, or vendor on the same claim without disclosure and consent.

Misrepresentation prohibition

Adjusters may not misstate coverage, exaggerate damage, or imply affiliation with the insurer or a government agency to induce an insured to sign a contract.

Fee disclosure rule

The compensation percentage, additional charges, and calculation method must be disclosed in writing before signing; hidden fees and undisclosed kickbacks are prohibited.

Referral conflict of interest

Steering an insured to a contractor, appraiser, or attorney in which the adjuster has a financial interest requires written disclosure and the insured's informed consent.

Insurance fraud exposure

Knowingly presenting false claim information or inflating estimates is insurance fraud under Michigan law and grounds for license revocation and criminal prosecution.

Confidentiality obligation

Personal and financial information gathered during a claim must be safeguarded and used only for claim purposes, consistent with applicable privacy requirements.

Claim file documentation

Every material communication, estimate, and payment must be recorded in the claim file, and the insured is entitled to copies of the contract and records on request.

Policy reading order

Before estimating, identify insured property, covered perils, exclusions, conditions such as notice and proof of loss, deductibles, and endorsements that modify coverage.

Actual cash value formula

ACV equals replacement cost minus depreciation for age, condition, and useful life; policies may instead pay replacement cost after repairs are completed.

Coinsurance formula

Required insurance equals the coinsurance percentage times replacement cost; recovery equals carried insurance divided by required insurance, times the covered loss, capped at the limit.

Deductible application

The deductible is subtracted once per occurrence or per building as the policy states, 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 written request; failure to submit may bar the claim.

Suit limitation period

Most property policies require suit within one year of the loss, though Michigan law and policy language may extend it; check the policy and any tolling agreement.

Overhead and profit

General contractor overhead and profit is added when three or more trades are required for repairs, covering supervision, permits, and business costs not in trade line items.

Loss of use coverage

Additional living expenses are payable when a covered peril makes the dwelling uninhabitable, for the shortest reasonable time to repair or relocate, up to the stated limit.

Appraisal dispute process

When insurer and insured disagree on the amount of loss, either may demand appraisal; each selects a competent appraiser and the appraisers choose an umpire.