License Lapse and Unlicensed Negotiation
Dana holds a Missouri public adjuster license and owns a small adjusting firm. Her renewal was due March 31; she completed only 12 of the required 24 continuing-education hours and did not renew. On May 12 she signed a contract with a homeowner for a $48,000 kitchen fire claim. Dana assigned Marcus, an unlicensed marketing representative, to inspect the loss, negotiate with the insurer, and sign a settlement agreement. Marcus collected a 12% fee, deposited it in Dana's business account, and told the homeowner that Dana was 'fully licensed and bonded.' The insurer paid $46,000 on the dwelling and $2,000 for contents. The homeowner later checked the license and complained. Dana says Marcus only 'helped with paperwork' and that she supervised by phone. Marcus has no adjuster license and has never taken the exam.
1. Identify the licensing violations and analyze whether the public adjuster contract and the 12% fee are enforceable.
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Dana's license lapsed before she signed the May 12 contract, so she was not authorized to act as a public adjuster when she took the assignment. Marcus crossed the line from clerical support into adjusting when he inspected the loss, negotiated with the insurer, and signed a settlement agreement. Phone supervision does not cure unlicensed activity; the core functions of adjusting must be performed by a licensed adjuster. The statement that Dana was 'fully licensed and bonded' is also a misrepresentation if her renewal had not been completed.
On enforceability, a contract made by an unlicensed adjuster is vulnerable to rescission and may be treated as unenforceable. Even if a court did not void the contract, the fee is at serious risk because it was earned through prohibited activity. The 12% fee equals $5,760 on the $48,000 claim. Dana should not treat that money as earned until the licensing issue is resolved. She should place the fee in a segregated account, review the file for any work a licensed adjuster could lawfully complete after reinstatement, and be prepared to refund it. The insurer's $48,000 payment does not legitimize the contract.
2. What should Dana do immediately, and what administrative consequences should she anticipate?
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Dana should stop all adjusting activity, including negotiations and settlement discussions, until her license is reinstated. She should notify the homeowner in writing that her license lapsed, explain the status of the claim, and offer to transfer the file to a properly licensed public adjuster or let the insured proceed directly with the insurer. She should refund or hold the unearned fee and give the insured a written accounting. Marcus must stop any claim-related contact and should not sign or negotiate anything.
Dana should complete the missing continuing-education hours, apply for reinstatement or a new license as directed by the Missouri Department of Commerce and Insurance, and cooperate fully with any inquiry. Likely consequences include a cease-and-desist order, administrative fines, license suspension or revocation, restitution, and referral of the unlicensed activity for further enforcement. The misrepresentation about being 'fully licensed and bonded' increases exposure. A prompt self-report, refund, and remediation plan may mitigate but will not erase the violation.
3. How should a compliant public adjuster firm use unlicensed staff?
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Unlicensed staff may perform clerical, scheduling, marketing, and routine administrative work. They may not inspect and evaluate damage for the purpose of advising the insured, negotiate with the insurer, interpret policy coverage, sign a public adjuster contract, bind settlement, or hold themselves out as adjusters. The licensed public adjuster should personally handle substantive claim decisions and communications with the insurer.
A compliant firm should have written role descriptions, a license-verification log, and a rule that every claim file has a named licensed adjuster. Marketing representatives may collect contact information and schedule inspections, but they should disclose that they are not adjusters and should not discuss fees or coverage. The licensed adjuster should review and approve all written submissions and settlement recommendations. If the firm uses independent contractors, it should confirm their licenses independently rather than relying on representations.