OGC Opinion No. 08-04-28
The Office of General Counsel issued the following opinion on April 22, 2008, representing the position of the New York State Insurance Department.
RE: Construction Company Acting as a Public Adjuster
Does ABC Construction, Inc. (“ABC”) engage in activities that require licensure as a public adjuster by the Department?
No. As discussed below, ABC does not engage in activities that require licensure as a public adjuster by the Department.
The inquirer reports that he represents ABC Construction, Inc., a New York corporation engaged in the business of roof repair and replacement. The inquirer states that ABC is a roofing contractor that specializes in catastrophic claims arising from wind, ice, or other storm damage. In the course of estimating its work, ABC offers the insured an opinion as to whether the roof damage is from a storm or other incident normally covered by the insured’s homeowners’ insurance. ABC does not file a claim on behalf of the insured, but, where appropriate, recommends that the insured do so. ABC also provides the insured with a signed estimate of repair, which the customer may submit to its insurer.
The inquirer further states that ABC is, when requested by the insured, present when the representative of the insurer comes to inspect the damage. While ABC answers the representative’s questions, ABC does not negotiate with the insurer, and does not charge the insured any fees for dealing with the insurer. ABC reviews its estimate and the insurer’s estimate, and points out any discrepancies to the insured. If the discrepancies are significant, then ABC recommends that the insured contact the insurer and ask for a reinspection.
Furthermore, the inquirer states that if the insurer issues a check, it does so directly to the insured, and the insured typically pays ABC from the insurance claim proceeds the insured receives. Moreover, if the insured elects to contest the insurance award through mediation, arbitration, or litigation, ABC will agree to testify and stand behind its estimate and opinion regarding the damage.
The inquirer states that based upon the aforementioned activities, ABC is concerned that it may fall under a broad definition of “public adjuster.”
Insurance Law § 2101(g)(2) defines “public adjuster” in relevant part as:
(2) “Public adjuster” means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for, or effecting, the settlement of a claim or claims for loss or damage to property of the insured in this state caused by, or resulting from, any of the risks as enumerated in paragraphs four, five, six, seven, eight, nine and ten and subparagraphs (B) and (C) of paragraph twenty of subsection (a) of section one thousand one hundred thirteen of this chapter, not including loss or damage to persons under subparagraph (B) of paragraph twenty of subsection (a) of such section or who, or which, advertises for, or solicits employment as an adjuster of such claims, and shall also include any person who, for money, commission or any other thing of value, solicits, investigates, or adjusts such claims on behalf of any such public adjuster, except that such term shall not include….(Emphasis added.)
Thus, any person, including a corporation, is a public adjuster if it acts on behalf of an insured in negotiating for, or effecting the settlement of, a claim for loss of, or damage to, property for money, a commission, or any other thing of value.1
In the present situation, ABC does not appear to engage in activities that require licensure as a public adjuster by the Department. The inquirer states that while ABC answers questions posed by the insurer’s representative, ABC does not negotiate with the representative. The inquirer further states that the insured typically pays ABC for its construction work from the insured’s insurance claim proceeds, and that ABC does not charge the insured a separate fee for dealing with the insurer. Thus, ABC does not appear to negotiate or effect the settlement of a claim for money, a commission, or any other thing of value pursuant to Insurance Law § 2101(g)(2), and therefore need not be licensed by the Department as a public adjuster. However, ABC must limit any communications between ABC and the insurer to responding to questions posed by the insurer with regard to the damage to the home. ABC may not advocate on behalf of the insured.
This opinion is limited to the facts as specified herein.
For further information, you may contact Assistant Attorney Joana Lucashuk at the New York City office.
1 None of the exceptions set forth in Insurance Law § 2101(g)(2) applies here.