Dog-Bite Liability Claim Outside the Public Adjuster License
A Bozeman homeowner calls a Montana-licensed public adjuster after his dog bites a delivery driver. The driver's attorney demands $95,000, claiming lost wages and a scar. The homeowner's policy has a $300,000 liability limit and a $1,000 medical payments limit. The insurer has sent a reservation-of-rights letter and asked for a recorded statement. The homeowner wants the public adjuster to 'handle everything' and to write a demand letter to his own insurer for the liability claim, saying the adjuster will charge 10% of whatever the insurer pays. The public adjuster's license is a public adjuster license; he has no attorney license. The driver has not sued yet, but the demand letter gives 30 days and threatens a lawsuit.
1. May the public adjuster handle this liability claim? Explain the scope and the risk.
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No, not as a liability claim. A Montana public adjuster license is for first-party property claims; it does not authorize representing an insured in a third-party liability claim or writing a demand against the insured's own liability insurer for a fee. Liability claims involve the insurer's duty to defend, coverage defenses, and the claimant's rights; handling them can amount to unauthorized practice of law. The 10% contingency also creates a conflict because the adjuster would be paid from liability proceeds that may belong to the claimant or be subject to policy limits. The adjuster should decline the liability representation, explain the license limit in writing, and refer the homeowner to defense counsel and the insurer. The adjuster may separately handle any first-party property damage from the same incident, such as a broken door, but must keep the files separate.
2. What should the adjuster tell the homeowner about the reservation-of-rights letter and the recorded statement?
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A reservation-of-rights letter is not a denial. It means the insurer will defend or investigate while preserving coverage defenses. The homeowner should request a copy and ask the insurer to identify the specific policy provisions at issue. On the recorded statement, the insured generally must cooperate, but he should be truthful and should consider counsel if the facts could support an exclusion or a claim against him personally. The public adjuster should not coach the insured to shade the facts, and should not give legal advice about liability. The insurer's duty to defend is broader than its duty to indemnify, so the homeowner should not assume the insurer will pay the demand. The adjuster should document the referral and keep any property claim separate.