Three-Business-Day Cancellation and the Pre-Existing Offer
On Friday, September 13, 2024, a Wilmington homeowner signed a written public adjuster contract at 4:30 p.m. for wind and rain damage from a named storm. The contract states a 12% fee on “all insurance proceeds” and says the insured may cancel within three business days. Before signing, the insurer had already offered $18,000 for undisputed dwelling repairs. The adjuster spent six hours documenting additional damage and obtained a revised offer of $25,000. On Tuesday, September 17, at 10:00 a.m., the homeowner emailed a signed cancellation notice and asked for the file. The adjuster replied that cancellation was too late because two full business days had passed and that the 12% fee applied to the entire $25,000. No holiday occurred that week. The homeowner has not cashed or deposited any check, and the insurer has not issued the supplemental payment. The adjuster has not yet provided a copy of the contract or the cancellation notice.
1. Was the homeowner’s cancellation timely? Explain how the three-business-day period is counted.
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Timely cancellation. Friday is not counted as a business day after the signing; the first business day is Monday, the second is Tuesday, and the third is Wednesday. A written cancellation delivered Tuesday at 10:00 a.m. is therefore within the three-business-day period. The adjuster’s statement that two days had passed is wrong and cannot shorten the statutory right.
2. Can the adjuster collect 12% on the $18,000 the insurer offered before the contract and on the $7,000 supplemental offer?
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Fee. The 12% clause cannot be applied to the $18,000 the insurer offered before the contract. The adjuster did not produce that recovery, and charging a contingency fee on an undisputed pre-existing offer is an unfair consumer-protection practice. The adjuster may seek a reasonable fee only for the additional $7,000, and only if the contract and disclosure were compliant and the fee is earned. Because cancellation was timely, the adjuster should stop work, provide the file and a copy of the contract, account for any fee already collected, and refund unearned amounts. It should not threaten to hold the file or collect on the full $25,000.
3. What immediate compliance steps should the adjuster take after receiving the cancellation?
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The adjuster should acknowledge the cancellation in writing, date-stamp the email, stop all claim activity, and deliver the complete claim file to the homeowner. It must provide a copy of the signed contract and the cancellation notice if not already given. Any fee already taken should be placed in trust or refunded pending an accounting. The adjuster should not communicate with the insurer as the homeowner’s representative after cancellation unless the homeowner gives new written authorization. Finally, the adjuster should document the time spent on the $7,000 supplemental recovery and send a written fee statement limited to that amount, with a clear explanation of the calculation and the homeowner’s right to dispute it.