NJ Public Adjuster cheat sheet

Indemnity: the insured is restored to pre-loss financial position, no better and no worse; the principle caps recovery at actual loss and underlies most policy limits and valuation clauses.

Insurable interest must exist at policy inception (property) or at loss (life); without it the contract is a wager and unenforceable in New Jersey.

Utmost good faith binds both parties: the applicant must disclose material facts, and the insurer owes the duty to act fairly and in good faith in claims handling.

Subrogation transfers the insured's right of recovery against a negligent third party to the insurer after payment, preventing double recovery; the insured must not impair that right.

Actual cash value (ACV) = replacement cost minus depreciation; replacement cost value (RCV) pays new-for-old without depreciation deduction, subject to policy terms.

Coinsurance clause: payment = (carried insurance / required insurance) x loss, capped at the policy limit; a coinsurance penalty applies only when the limit is below the requirement.

Peril vs. risk: a peril is the cause of loss (fire, windstorm, theft); risk is the chance of loss. Named-peril policies cover only listed perils, while open-peril (all-risk) covers all except exclusions.

Deductibles apply per occurrence unless the policy states otherwise; a percentage deductible (common for wind) is calculated on the Coverage A limit, not on the loss amount.

Proximate cause links an unbroken chain from peril to damage; concurrent causation rules determine whether a covered or excluded peril set the loss in motion.

Public adjusters represent the insured only and are compensated by the insured, typically as a percentage of the settled claim; company staff adjusters are paid by the insurer.

First notice of loss should be documented with date, time, claim number, and the name of the insurer representative; prompt notice protects against late-notice defenses.

Damage documentation standard: date-stamped photographs and video, room-by-room inventory, receipts, and a written scope of loss itemizing quantities, unit costs, and depreciation.

Proof of loss is a sworn statement of the amount claimed, usually due within 60 days of the insurer's request unless the policy or written agreement extends it.

Replacement cost recovery commonly requires actually repairing or replacing the property within a stated period (often 180 days after loss) and submitting receipts.

Additional Living Expense covers the increase in living costs necessary to maintain the household's normal standard of living during repair; it is not a flat payment and requires receipts.

A claim file should contain the policy, all correspondence, the carrier's estimate, the adjuster's estimate, permits, contractor bids, and a claim diary of every contact.

When the carrier's offer is disputed, the sequence is generally: written demand with supporting documentation, then appraisal or mediation under the policy, then litigation; appraisal resolves amount of loss, not coverage.

New Jersey public adjusters are licensed by the Department of Banking and Insurance (DOBI); a license is required before soliciting, negotiating, or settling a first-party claim for compensation.

License maintenance requires completion of statutorily prescribed prelicensing education and continuing education credits each renewal period, plus timely renewal and fee payment.

A written contract between the public adjuster and insured is required, must be signed by the insured, and must state the compensation rate; the insured may rescind within the statutory cancellation window after signing.

Compensation is limited to a percentage of the amount recovered and cannot exceed the statutory maximum; fees may not be taken from undisputed policy proceeds without the insured's authorization.

Solicitation is restricted: public adjusters may not solicit during a declared state of emergency at the loss scene, and may not misrepresent themselves as insurer representatives or government officials.

Unfair claim settlement practices under New Jersey law include misrepresenting policy provisions, failing to acknowledge communications, unreasonable delay, and offering substantially less than the amount ultimately recovered.

Records of each claim transaction must be maintained for the period required by regulation and made available to DOBI upon examination; commingling client claim funds with personal funds is prohibited.

A public adjuster may not act on a claim in which the adjuster has a financial interest, and must disclose any relationship with contractors or vendors recommended to the insured.

Fiduciary duty: claim funds and settlement drafts handled for the insured are trust property; they must be segregated, accounted for, and disbursed only as authorized.

Full written disclosure is required before engagement: compensation method, any referral fees or contractor relationships, and the fact that the adjuster represents only the insured.

Confidentiality covers claim details, financial information, and personal data; disclosure is permitted only with consent or as required by law or regulator.

Conflicts of interest must be avoided or disclosed in writing; representing both sides of a claim, or steering repairs to an affiliated contractor without disclosure, is prohibited.

Documents submitted to an insurer must be accurate; inflating a scope of loss, altering photographs, or concealing material facts constitutes fraud and exposes the adjuster to license discipline and criminal liability.

Good-faith negotiation requires prompt communication of offers to the insured and no settlement acceptance without the insured's informed authorization.

Competence and diligence: the adjuster must know the policy forms and valuation methods used, and must not accept claims beyond the adjuster's expertise without qualified assistance.

Commingling, undisclosed fee splitting, and unauthorized endorsements of settlement checks are the most common grounds for license suspension or revocation.