Public Adjuster Duties, Contracts, and Compensation
Contract formalities
Minnesota requires a written public adjuster contract, signed by the insured, before the adjuster performs adjusting services for compensation. The contract must identify the public adjuster and license number, describe the claim and services, state compensation clearly, and include the insured’s cancellation rights. The insured must receive a copy. Fees should not be left to an oral side deal.
Compensation and cancellation
Public adjusters are normally paid a contingency fee-a percentage of the amount recovered through their efforts. The fee should be calculated only on amounts attributable to the adjusting work, not on undisputed funds already owed. If the insured cancels within the statutory cancellation window-commonly three business days-the adjuster may not charge for the canceled contract. After the window, the contract terms govern. Fees may not be split with contractors, and the adjuster may not accept compensation from the insurer on the same claim.
Worked example
A homeowner signs a 10% contract. The insurer had already issued a $20,000 undisputed payment; the adjuster later obtains an additional $80,000. The fee base is the $80,000 obtained through the adjuster’s work, so the fee is $8,000, not $10,000 on the entire $100,000. If the homeowner cancels on business day two, no fee is owed, even if the adjuster inspected the roof.
Traps
Oral contracts, blank fee terms, and fees collected before signing are recurring failures. Do not charge on money the insurer was already going to pay. Do not let a contractor promise to “cover the deductible” through an inflated scope; that is a conflict and potentially fraud. Keep signed contracts and cancellation notices in the claim file.