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>A friend, ....., had a fire in her building at .... in New York
City. She is insured. She was given the name of an insurance adjuster, who
sent a contract for insurance adjustment along with a construction contract.
She is now sure what to do. Advise please.
The best advice when considering signing a contract, is to read it thoroughly beforehand....the business of signing a construction contract before knowing the estimated cost or scope of repair is not advisable. Here are some references that may help better understand the adjuster/policyholder relationship:
The business of a public adjuster is to sell to a policyholder the service of representing the policyholder in settling with the insurance company, the policyholder's claim for loss. Public adjusters and public adjuster contracts are subject to regulation under both the Public Adjuster Law and the Consumer Protection Law and a policyholder may bring a private cause of action. The fact that public adjuster contracts necessarily require prompt action to minimize loss suffered by the policyholders and because of the emergency nature of the situation, the policyholder does not have the usual three day cancellation period for cancellation of a "door to door" contract: Culbreth v. Lawrence J. Miller, Inc., 477 A. 2d 491, 328 Pa. Super. 374.
The public adjuster contract was unenforceable due to the public adjuster failing to provide the policyholder with a written acknowledgment of the policyholder's right to cancel (reasonable value of services rendered was allowed): Willis v. Ohio Casualty Co., Kreiler, 428 N.E. 1061, 1981, 101 Ill. App. 3d 1099, 57 Ill. Dec. 381.
The company adjuster allegedly pressured the policyholder to have damages repaired by a particular construction company that later defaulted on the repairs. The court found that the policyholder could not recover from the company adjuster because there was no contract between that adjuster and the policyholder. The court also found that the policyholder had endorsed the insurance draft (type of check) that had been made payable to the policyholder, mortgagee and the construction company. The draft contained release language that became enacted once it was endorsed. The policyholder claimed $10,500 in damage that was not repaired by the construction company, $25,000 for loss of use of the property, $8,000 legal fees, and all without a remedy for the policyholder: Larkin v. First of Georgia Underwriter's, 466 So. 2d 655, 1985.
The policyholder sued an independent adjuster (company hired adjuster) for a breach of fiduciary duty. The court held that the adjuster had a fiduciary duty (founded upon a trust or confidence and relied upon by one party in the integrity and fidelity of another) to the insurance company, not to the policyholder: Thompson v. Cannon 224 CA Ap3 1413 274 CaR 608, 1990.
The expertise of a professional public adjuster, acting on behalf of the policyholder, should benefit more than its cost. They are paid from a percentage of the settlement so they usually only handle larger claims to make their time worthwhile. For smaller claims policyholders are on their own...acting as their own adjuster or capitulating.
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