The Office of General Counsel issued the following opinion on July 26, 2005, representing the position of the New York State Insurance Department.
Re: Public Adjusters
Questions Presented:
May a public adjuster be shown as a payee on a check for more than its fee?
Does N.Y. Comp. Codes R. & Regs. tit. 11, Part 25 (2005) (Regulation 10), stipulate when a mortgagee, loss payee, or other lien holders may not be included in the public adjusters fee check?
When there are multiple insureds named on a property, will the signature of one insured on the public adjuster compensation agreement be binding on all the named insureds on that property?
Conclusion:
No, a public adjuster may not be named as a payee for an amount in excess of the public adjusters fee as indicated in the written compensation agreement.
Yes, a public adjuster's fee check may be issued solely to the public adjuster only if the insured makes such a request of the insurer.
No, for the agreement to be binding on all the insureds, each of the named insureds must sign the public adjuster compensation agreement.
Facts:
Since this was a general inquiry, no additional facts were furnished.
Analysis:
N.Y. Comp. Codes R. & Regs. tit. 11, Part 25.12 (Payment of Losses) (2005) (Regulation 10), in pertinent part, states:
When a claim is settled where the insured is represented by a public adjuster, upon the request of the insured, the insurer's 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 adjuster's fee, as indicated in the written compensation agreement signed by the insured and filed with the insurer. The balance of the proceeds shall be made payable to the insured or loss payee, or both, whichever is appropriate.
In accordance with this provision, upon the request of the insured, the insurers check may be made payable to the public adjuster as the payee. However, a public adjuster cannot be shown as a payee on a check for more than the public adjusters fee. This fee is indicated in the written compensation agreement signed by the insured and filed with the insurer. A second check containing the balance of the proceeds may then be made to the insured, the loss payee, or both, whichever is appropriate.
Furthermore, a public adjusters fee check may be issued solely to the public adjuster only if the insured, in accordance with § 25.12 of Regulation 10, has made such a request of the insurer. However, a mortgagees, loss payees, or any other lien holders interest must still be satisfied by issuing a second check for the balance of the claim proceeds.
In addition, N.Y. Comp. Codes R. & Regs. tit. 11, Part 25.6 (Compensation Agreement) (2005) (Regulation 10), in pertinent part, states:
(a) A public adjuster may be compensated by an insured for or on account of services rendered to such insured by the public adjuster solely as provided for by a written compensation agreement obtained by the public adjuster . . . .
(b) Every such compensation agreement shall contain the names and addresses of the public adjuster and the insured . . . .
(c) Every such compensation agreement shall be signed by the public adjuster . . . and by the insured . . . .
Unless by operation of law or by agreement between insureds that gives one insured the authority to bind the other, the signature of one insured on a compensation agreement would only be binding on that insured. The public adjuster therefore should have each named insured on the policy sign the compensation agreement.
For further information please contact Principal Attorney Paul A. Zuckerman at the New York City Office.