Public Adjusting Practices and Ethics
Domain overview
Public adjusting practices and ethics test the adjuster’s role as the insured’s advocate, the written-contract rules, compensation limits, and the fiduciary and fair-dealing duties that apply when negotiating a claim.
Core rules
- A public adjuster represents the insured, not the insurer. The adjuster may not represent both sides on the same claim or accept compensation from an insurer for the same loss.
- The contract must be written and signed by the insured, identify the adjuster and claim, state the fee or method, and disclose the right to cancel within the statutory period-New Hampshire uses a 3-business-day right of rescission. Work before a valid contract is signed creates fee disputes.
- Compensation is limited by statute; New Hampshire caps public adjuster fees at 10% of the amount of the claim settlement. Do not charge a percentage of the policy limit or of an unliquidated demand.
- The adjuster owes good faith and fiduciary duties: accurate documentation, prompt communication, no misrepresentation of coverage, no concealment, and no conflicts of interest.
- Public adjusters may explain policy provisions and negotiate, but may not give legal advice or practice law. They should tell insureds to consult counsel on legal rights when needed.
- Keep claim files and records; do not commingle client funds or sign settlement checks without authority.
Worked example
An insured signs a contract with a 10% fee, then cancels in writing two business days later. No settlement has been paid. Because the cancellation is within the 3-business-day rescission period, the adjuster must honor it and may not charge a fee for the cancelled contract. If the insured instead waited and the insurer paid $80,000, the maximum fee would be $8,000-not $12,000.
Traps
Do not solicit at a loss scene in a way that violates emergency rules; do not promise a specific settlement; do not draft legal documents; do not let a contractor or unlicensed person negotiate for a fee. A fee clause that exceeds the statutory cap is a compliance problem even if the insured agrees.