Law and Ethics (Act 21 of 2012)
What this domain tests
Act 21 of 2012 is Pennsylvania's public adjuster statute. It supplies the licensing, contracting, conduct, and discipline rules behind most ethics questions, so treat ethics as statutory duty rather than personal opinion.
Duties the statute imposes
- Written contract only: dated, signed by the insured, stating the fee and its method of calculation, describing the services, and disclosing the insured's right to rescind within three business days. No fee may be collected before the contract is signed and the rescission period has run.
- Compensation limits: fees are capped by statute, with a lower cap when a disaster or catastrophe has been declared. Charging above the cap, or restructuring the fee to evade it, is a violation.
- Solicitation restrictions: no canvassing during a declared state of emergency or in the immediate aftermath of a loss as the statute defines it, and no solicitation at unreasonable hours.
- Fiduciary duty: the insured's interests come first, client funds must be accounted for, and the adjuster may not represent the insurer on the same claim. Affiliated repair businesses require written disclosure.
- Truthfulness: no misrepresentation of the policy, the claim, or the adjuster's authority, and no false statements to the insurer. Inflating a claim can be insurance fraud as well as a licensing violation.
Worked example
After a governor-declared disaster, an adjuster canvasses damaged homes and signs three contracts at 22% fees, none containing a rescission notice. That is three violations: solicitation during a declared emergency, a fee above the statutory cap, and omitted contract content. Discipline can include fines, suspension or revocation, and restitution, and the contracts are unenforceable.
Traps that cost marks
- Charging a "consulting" fee outside the written contract.
- Assuming a rescission request is ineffective once three business days pass without checking the statute.
- Ignoring recordkeeping and accounting duties.
- Overlooking solicitation limits in declared emergencies.