Storm-Chasing Contract and a Contractor Rebate
Nashua, NH. After a declared windstorm, a New Hampshire-licensed public adjuster meets a homeowner at 9:15 p.m. at her kitchen table. He presents a one-page contract: 18% of 'gross insurance proceeds, including deductible,' no cancellation notice, and a line saying the homeowner must not contact the insurer directly. She signs. The next morning, within 24 hours, she calls to cancel. The adjuster says he already emailed the insurer, so the three-day cancellation right does not apply and he has earned the fee. He also recommends a roofing contractor who has agreed to pay the adjuster $1,500 for each signed job. The homeowner's policy has a $2,000 deductible and the claim is still under investigation.
1. Identify the contract and conduct problems under New Hampshire public adjuster law and ethics.
Read the worked answer
Several problems stand out. First, New Hampshire gives the insured a limited right to rescind a public adjuster contract, commonly three business days, and the contract must disclose that right. A one-page contract with no cancellation notice is deficient. Second, the adjuster cannot defeat the cancellation right by claiming that emailing the insurer means work began; merely opening a file or notifying the carrier is not the kind of substantial performance that extinguishes the statutory rescission right. Third, an 18% fee on gross proceeds, including the deductible, exceeds New Hampshire's statutory compensation cap and improperly treats the insured's retention as recoverable proceeds. Fourth, the clause barring direct contact with the insurer interferes with the insured's rights and is at least an unfair contract term. Fifth, the $1,500 per-job payment from a contractor is an unlawful rebate or referral fee and creates a conflict of interest. The late-night, high-pressure solicitation also raises undue-influence concerns.
2. What must the adjuster do when the homeowner cancels, and can he keep any fee?
Read the worked answer
Because the homeowner cancelled within the rescission period, the adjuster must treat the contract as rescinded. He should stop claim activity, confirm the cancellation in writing, return any signed documents or authorization forms, and refund any fee or deposit already collected. He cannot keep a fee for emailing the insurer or opening a file; the rescission right exists precisely to let the insured change her mind before being bound. The adjuster should also correct any impression that the insurer will be left without notice-the homeowner remains free to deal with the carrier directly. If the adjuster had already performed emergency mitigation at the homeowner's separate request, that is a different transaction, but it must be documented and cannot be used as a pretext to retain a contingent fee. The professional response is to honor the cancellation promptly and avoid any communication that discourages the insured from exercising her rights.
3. Rewrite the fee and referral terms so the agreement would be defensible.
Read the worked answer
A defensible agreement would state the adjuster's name, business address, New Hampshire license number, and the services to be performed; disclose that the adjuster represents the insured, not the insurer; state the fee as a percentage of the net claim proceeds actually paid by the insurer, within the statutory cap; exclude the deductible and any nonrecoverable amounts from the fee base; explain that the fee is contingent on recovery; include the three-business-day cancellation notice with a clear method for cancelling; and state that the insured may contact the insurer and may terminate the agreement as provided by law. The contractor referral should be disclosed in writing, and the adjuster should accept no payment, discount, or thing of value from the contractor. If the adjuster recommends a contractor, the insured should be free to choose any licensed contractor. Any fee should be explained orally and in writing before signing, with a copy given to the homeowner at the time of signing.