Unlicensed Storm Consultant After Hail Loss
After an April hail storm, retired contractor Dana puts a handwritten sign reading “Storm Claim Help - 5% Fee” at a church coffee hour. She tells three homeowners she will “handle the insurance paperwork” because she knows contractors and can “get the insurer moving.” For one homeowner, Dana reviews the policy, photographs the roof, emails the insurer a scope of loss, and negotiates a $19,400 settlement. She collects $970 and calls herself a “claims consultant,” not a public adjuster. She has no Minnesota public adjuster license and no attorney license. A fourth homeowner, whose claim is still open, asks a licensed public adjuster to take over and wants Dana’s contract canceled. The licensed adjuster also learns Dana visited two homes within 24 hours after the loss and told one owner that signing with her was “the only way to avoid a lowball.” Dana has not placed funds in a trust account and has no written contract with any homeowner.
1. Does Dana need a Minnesota public adjuster license, and does calling herself a claims consultant change the result?
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Yes. A public adjuster license is required when a person, for compensation, prepares, presents, or negotiates an insured’s claim or advises the insured about the claim. The facts show each element: Dana reviewed the policy, photographed damage, submitted a scope, and negotiated a $19,400 settlement for a $970 fee. The label 'claims consultant' does not control; substance controls. Minnesota’s licensing scheme is enforced by the Department of Commerce, and unlicensed adjusting can lead to cease-and-desist orders, fines, and an unenforceable fee contract. Her 24-hour post-loss solicitation and 'only way to avoid a lowball' statement add separate concerns because Minnesota restricts public adjuster solicitation and prohibits misleading statements. A purely clerical role might not require a license, but that is not this case. Because Dana was unlicensed, the fourth homeowner should not assume the contract is valid; the fee paid by the first homeowner is at risk of refund.
2. What should the licensed public adjuster do about Dana’s existing contract and the $970 payment?
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The licensed adjuster should not simply ignore the prior contract. She should obtain the written contract, the payment receipt, and all claim correspondence; confirm whether the homeowner canceled in writing; and document Dana’s license status through the Department. She should explain that an unlicensed person’s contract is generally unenforceable and that the homeowner may demand a refund. If the homeowner wants to proceed, the adjuster should get a written termination and a new disclosure and contract with the homeowner, avoid paying Dana any referral or split fee, and submit the claim on its own scope. She should not ratify Dana’s settlement or use Dana’s scope without independent verification. If the insurer has already relied on the unlicensed work, the adjuster should notify the insurer in writing that she is the licensed representative and request that all future communications go through her. The homeowner should be advised to complain to Commerce if the refund is refused.