Unlicensed Storm Solicitor and a Defective Public Adjuster Contract
After a June hailstorm, Derek visits homeowners in a storm-damaged neighborhood and offers to handle their insurance paperwork for a 15% fee. His business card reads Storm Claim Consultants, his shirt carries a logo resembling a national insurer’s, and he tells 78-year-old Ruth that he is licensed by the state and that she must sign tonight or lose her claim. At 9:15 p.m. in Ruth’s kitchen, she signs a one-page agreement that says only 15% of whatever we get. It has no cancellation notice, no description of services, and no statement that Derek is not an insurer representative. Derek then calls Ruth’s insurer, disputes the scope, and tells Ruth not to speak with the adjuster. Ruth’s daughter asks a licensed public adjuster to review the agreement and the claim. The hail damage is $38,000 replacement cost, and the insurer has issued a $9,000 ACV check.
1. Determine whether Derek’s conduct requires a Pennsylvania public adjuster license and identify at least four compliance problems in his solicitation and contract.
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Yes. Derek is negotiating and advising on a first-party claim for a fee, which is public adjusting. A Pennsylvania public adjuster license is required before soliciting, negotiating, or settling the claim. Compliance problems include: (1) unlicensed adjusting; (2) using a business name and logo that imply insurer affiliation; (3) falsely stating he is licensed by the state; (4) high-pressure solicitation of an elderly homeowner at 9:15 p.m. with a same-night deadline; (5) a contract missing required disclosures, including the right to rescind, a description of services, the compensation basis, and a statement that he is not an insurer representative; and (6) telling Ruth not to speak with the insurer’s adjuster. The PA should also check whether Derek solicited at the loss scene in violation of solicitation restrictions.
2. Analyze whether Ruth can rescind the agreement and what the PA should do with the $9,000 ACV check and the 15% fee claim.
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Ruth has strong grounds to rescind. The agreement is missing required consumer disclosures, was obtained through misrepresentation, and was signed under pressure. An unlicensed person generally cannot enforce a public adjusting fee, and any fee taken should be refunded. The $9,000 ACV check is payable to Ruth and her mortgagee if the policy requires; Derek has no right to endorse it.
The PA should have Ruth send a written cancellation and demand for refund, preserve the original contract and business card, and notify the insurer in writing that Derek is not authorized to act for her. If Derek already received a fee from the claim proceeds, the PA should document the amount and ask for a full accounting. The PA should not pay Derek or agree to split the fee.
3. Outline the steps the PA should take to protect Ruth’s claim and report the conduct without overstepping.
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The PA should obtain a signed public adjuster agreement that complies with Act 21, including a clear fee, services, and cancellation notice. Then send the insurer a representation letter, request a certified copy of the policy and claim file, inspect the roof, photograph the damage, prepare an independent estimate, and submit a supplement for the difference between the $38,000 replacement cost and the $9,000 ACV payment.
The PA should advise Ruth of her right to cancel and should not give legal advice. Report Derek’s unlicensed activity and misleading solicitation to the Pennsylvania Insurance Department with the contract, card, and a timeline. Keep Ruth’s claim moving; the report should not delay the supplement.