Adjuster Ethical Standards and Prohibited Practices
Core duties
The public adjuster owes the insured loyalty, good faith, and full disclosure. The adjuster must explain the contract and fee, avoid conflicts of interest, keep claim information confidential, and never misstate policy coverage or claim value. Recommendations for contractors or vendors must be disclosed in writing, and any compensation from a vendor must not be hidden. The adjuster may not give legal advice or act as the insured's attorney.
Prohibited practices
Common violations include inflating a claim, altering photographs or invoices, charging an undisclosed fee, splitting fees with an unlicensed person, soliciting at a loss scene in a prohibited manner, promising a specific settlement before investigation, and advising an insured to sign away rights without explanation. Waiving or absorbing a deductible to win business is also improper: it misrepresents the loss and the insured's financial responsibility.
Worked example
An adjuster tells a homeowner, "Don't worry, I'll get the deductible waived and we'll replace the whole roof even though only one slope is damaged." That is a coverage promise made before inspection, an inducement to misrepresent the loss, and a potential fraud issue. The ethical response is to inspect, document the damaged slope, explain the policy deductible and matching provisions, and present only supported scope.
Traps
Do not confuse advocacy with exaggeration. Do not accept a contractor's invoice as proof of loss without verification. Do not let a contractor steer the insured while paying the adjuster. Do not discuss another client's claim. Keep the fee transparent and the insured's interests first.