Contracts, Compensation and Consumer Protection
What this domain tests
The business side of public adjusting: what the contract must contain, how the adjuster may be paid, and the consumer-protection rules that govern marketing and service.
Contract and compensation rules
- Written, dated, and signed by the insured, showing the adjuster's license number, a description of services, the fee and how it is computed, and the insured's right to rescind within three business days.
- The fee is contingent on recovery, capped by statute, and may not be taken on amounts the insured recovers without the adjuster's services unless the contract and statute allow it.
- No fee splitting with unlicensed persons and no payment to a contractor, roofer, or referral source for sending a claim.
- Consumer protection: Pennsylvania's Unfair Trade Practices and Consumer Protection Law reaches deceptive marketing; do-not-call and solicitation rules apply; the insured gets copies of everything and records are retained.
Worked example
An insured signs a contract at a 25% fee two days after a fire. The adjuster never delivered the rescission notice and later deducts the fee from the emergency advance. Three problems: the fee exceeds the cap, a required notice is missing, and the fee is collected contrary to the contract. The insured may rescind, and the adjuster faces discipline plus restitution. The contract is a consumer contract; each required element is a condition of enforceability.
Traps that cost marks
- Verbal agreements or a bare "letter of representation."
- Charging a fee on the undisputed portion of a claim.
- Failing to deliver a signed copy to the insured.
- Ignoring anti-kickback rules when a contractor brings the client.
- Marketing with promises of a specific settlement amount.