The Office of General Counsel issued the following opinion on September 23, 2003 representing the position of the New York State Insurance Department.
Re: Public Adjusters Fee Check
Question Presented:
May an insurer issue a settlement check payable to the insured, the public adjuster and the loss payee in an amount greater than the public adjusters fee, as indicated in the written compensation agreement?
Conclusion:
No. The public adjuster may not be included on any check greater than the amount of the fee indicated in the written compensation agreement filed with the insurer.
Facts:
After arriving at a settlement amount acceptable to all parties, and upon the insureds written direction to issue the settlement check payable to the named insureds, the loss payees and the public adjuster, the insurer refused to issue the settlement draft as directed, stating that, pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 25.12 (1995) (Reg. 10), no check, which includes the public adjuster as a named payee, may be written in an amount higher than the fee specified in the compensation agreement. The inquirer asks whether this is a correct interpretation of Section 25.12 of Regulation 10.
Analysis:
The insurer is correct in its interpretation. N.Y. Comp. Codes R. & Regs. tit. 11, § 25.12 (1995) (Reg. 10) provides:
When a claim is settled where the insured is represented by a public adjuster, upon the request of the insured, the insurers check may be made payable to both the public adjuster and the insured or to the public adjuster named as a payee, but not in excess of the amount of the public adjusters fee, as indicated in the written compensation agreement signed by the insured and filed with the insurer. The balance of the proceeds shall be payable to the insured or loss payee, or both, whichever is appropriate.
A public adjuster may not be included on a check that is in an amount greater than his or her fee, as computed in accordance with the written and filed public adjusters compensation agreement. Thus, if, at the time of settlement, the insured requests that the public adjuster be named as a payee, the insurer must issue separate checks. One would be in the amount of the public adjusters fee, computed in accordance with the written and filed compensation agreement, and made payable, in accordance with the insureds instructions, to either the public adjuster or to both the public adjuster and the insured. The second check would be for the balance of the proceeds and would be made payable to the insured or the loss payee, or both, whichever is appropriate. See Circular Letter 1993-17, Office of General Counsel Opinions dated October 1, 1986 and May 15, 1986 (copies attached).
For further information you may contact Supervising Attorney Joan Siegel at the New York City Office.