Ethical and Fiduciary Responsibilities
This domain tests the duties that come with holding someone else's claim in your hands: loyalty, honesty, confidentiality, and the discipline to refuse business that creates a conflict.
Fiduciary core
Claim proceeds you handle, client documents, and client information belong to the insured. Hold client funds separately, never commingle them with operating funds, and account for them promptly. Do not borrow from a client's claim proceeds under any arrangement.
Conflicts and disclosure
You cannot serve two masters. Do not represent the insurer on the same loss, take an ownership interest in the claim, or steer repairs to a company you own without full written disclosure and the client's informed consent. Disclose family or business relationships with vendors. Referral fees to contractors, consultants, or public officials are prohibited.
Honesty in the claim
Present only what the evidence supports. Inflating a claim to create negotiating room is fraud under N.J.S.A. 17:33A, and it destroys credibility with both the carrier and the Department. Sign only your own name; never sign for the insured.
Competence and confidentiality
Know the policy and the trade. When a loss involves structural engineering, mold, or accounting, retain qualified experts. Protect client information and do not post loss photos or claim details publicly.
Worked example
A restoration company offers 10% of your fee for each referral. Accepting is compensation-sharing with an unlicensed entity and a conflict of interest, because your repair scope recommendation would be tainted. Decline in writing, keep the referral at arm's length, and let the insured select the contractor.
Traps
- Taking a broad assignment of the claim or power of attorney beyond what is needed.
- Promising a specific settlement figure to win the contract.
- Withholding the carrier's estimate from the client.
- Mixing client funds with business expenses.