Contractors Adjusting Insurance Claims

Insurance claims and contractors can be a dangerous combination in Florida

Contractors are licensed by the state of Florida through the Department of Business and Professional Regulation (DBPR) and their license allows them to perform construction services. By nature of that qualification, they are also allowed to prepare estimates. Contractors cannot, however, adjust insurance claims, and even offering limited assistance to their customers may be considered unlicensed adjusting, which is a felony in Florida.

General Contractor Public Adjuster

Only a licensed public adjuster or attorney is permitted to handle your insurance claim in the state of Florida. VIP Adjusting is staffed by licensed public adjusters (and an attorney) and represent homeowners and business owners throughout Florida, primarily in the treasure coast, including Martin County, St. Lucie County, and Indian River County.

Florida’s Public Adjuster Statute

Florida Statute 626.854 defines a public adjuster as any person who, for money or any other thing of value, prepares, completes, or files an insurance claim form for an insured, aids in any manner on behalf of an insured in negotiating or effecting the settlement of a claim, or advertises or solicits for employment as an adjuster of such claims. 

Attorneys are exempt from this statute, because they are permitted to handle these types of evaluations and negotiations under an insurance contract. 

Florida’s Chief Financial Officer and the Department of Financial Services, who regulate public adjusters in Florida have explicitly said that “securing a contract for repairs” would constitute “any other thing of value” when it comes to the definition of a public adjuster. 

Of course, Contractors can prepare estimates

Fla. Stat. 626.854 was recently amended to say “the term [public adjuster] does not include...a person performing duties under another professional license, if such person does not otherwise solicit, adjust, investigate, or negotiated for, or attempt to effect the settlement of a claim.”

This clarified what was supposed to be the obvious. Contractors, as professionals who are authorized to perform construction services are also permitted to evaluate repairs and prepare estimates. Beyond that, though, it’s dangerous territory as it pertains to insurance claims for property damage.

A homeowner can submit the contractor’s estimate to the insurance company directly, but from there would need to discuss the merits of the estimate and negotiate with the insurance company directly on their own, without the assistance of the contractor who wrote the estimate. 

An insurance company might get the contractor’s estimate, either from the homeowner or the contractor directly, and attempt to negotiate directly with the contractor. This is a huge no-no. Discussions between a contractor and the insurance company may constitute unlicensed adjusting. 

Only the homeowner, a licensed public adjuster, or an attorney may adjust an insurance claim on that homeowner’s behalf, and that especially includes negotiating settlements

Illegal Construction Contracts

Some contractors think they’re slick. They know a homeowner with an insurance claim may try to use their estimate to leverage a higher insurance settlement, and then dump the contractor now that they have a pile of cash to go negotiate a better deal for repair. Most contractors are wise to this possibility from a homeowner making an insurance claim who haven’t hired a public adjuster. Some contractors try to beat an insured to the punch who might be trying to get free insurance claim help.

VIP Adjusting has seen numerous construction contracts that contemplate an insurance claim where a homeowner tries to use the contractors estimate and makes the penalty for termination of the “construction contract” a percentage of the insurance proceeds. Often, this percentage penalty matches the standard amount of a public adjusting contract. In reality, this “construction contract” is just a public adjusting contract if the homeowner elects not to proceed with repairs.

Make no mistake, this is an illegal contract, and documents the contractor’s felony in writing.

The Department of Financial Services has taken action against licensed contractors for illegally acting as a public adjuster or advertising the services performed by a public adjuster without being license, including recently in the aftermath of Hurricane Michael

Conflicts of Interest

Sometimes, individuals may hold more than one license. Someone may be both a licensed public adjuster and a licensed general contractor. This is legal, but Fla. Stat. 626.8795 says you cannot enter into a contract to do both the public adjusting and construction work on the same property. 

The law reads that a

“public adjuster may not participate, directly or indirectly, in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the licensee, may not engage in any other activities that may be reasonably construed as a conflict of interest, including soliciting, or accepting any remuneration from, of any kind or nature, directly or indirectly, and may not have a financial interest in any salvage, repair, or any other business entity that obtains business in connection with any claim that the public adjuster has a contract or agreement to adjust.”

There’s a lot of information contained in that paragraph, but it makes clear, a public adjuster cannot participate in the construction and a contractor cannot participate in the public adjusting in connection with the same claim or damage. Beyond that, the public adjuster must do nothing that permits any fee to exceed the statutory cap on public adjusting fees. No kickbacks. No ownership interest in businesses. 

The public adjuster gets paid only what the contract between the insured and the public adjuster says, and there is no appearance of impropriety beyond that contract. The public adjuster is supposed to do the best job they can for the homeowner to get them the proper payment for the damages, and beyond that, have no hand in the repairs aside from providing advice to the homeowner. 

Where does VIP Adjusting stand on ethics?

VIP Adjusting’s public adjusters pride themselves in holding themselves to the highest in ethical standards. The profession of public adjusting engages the public trust and in addition to our own personal and business reputations, it’s our goal to make sure no client who has communicated with VIP Adjusting believes that public adjusters are akin to ambulance chasers. 

It is our goal to meet or exceed your expectations, even if your insurance company doesn’t come close to that same standard. If you’ve had damage to your home from plumbing leaks, fire, sinkhole, or any other type of sudden and accidental damage, contact VIP Adjusting today for a free consultation.

You may also be interested in:

Why you should hire a public adjuster

More about insurance claims for hurricane damage (the most likely time for contractors to take advantage)

Fire damage claims that require large remodels are also ripe for contractors to overstep

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Homeowners Insurance Claim Supplements in Florida