Homeowners Insurance Adjusting in Florida

By Michael Lustig

Homeowners Insurance Adjusting in Florida will educate Florida Public Adjusters on homeowners policies, their legal and ethical obligations to achieve satisfactory claim settlements. Major subjects covered include: The Common Law of Agency; the Insurance Contract; Homeowners Policy Overview; Proper Maintenance of the Insured Property; Preparing and Submitting the Estimate; Special Considerations for Natural Disaster Claims; Ethics in the Insurance Business; Public Adjuster Liability; the Insurance Adjusters Law; and Public Adjuster Qualifications.

• Language: English
• Publisher: Michael Lustig
• Release date: Aug 1, 2011
• ISBN: 9781933891651

Michael Lustig

Michael Lustig is a graduate of the University of San Diego, California and a former Professor at California State University at Pomona and Immaculate Heart College (Los Angeles). He has been a California Real Estate Broker and the Owner and President of Real Estate License Services, a California real estate and insurance licence school, since 1978, offering state-approved license courses in 47 states and the District of Columbia. He is the author of 35 books on real estate and insurance topics.

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HOMEOWNERS INSURANCE ADJUSTING IN FLORIDA

Prepared by Michael Lustig

Contributing Editor: Denise Iona

Smashwords Edition

Distributed by:

Real Estate License Services

5059 Newport Ave. #209

San Diego, CA 92107

Phone Toll-Free 1-800-877-5445

© Copyright 2009-1983 by Real Estate License Services, Inc. Copyright registered. All rights reserved. All contents protected by laws of copyright. No portion of this book may be reprinted, reproduced, transmitted, stored in a retrieval system, or otherwise utilized, in any form or by any means, electronic, mechanical or otherwise, including photocopying or recording, now existing or hereinafter invented, including the Internet, nor may any part of this book be used for teaching, without the prior written permission of Real Estate License Services, Inc.

CONTENTS

INTRODUCTION

CHAPTER ONE: INSURANCE CONCEPTS

INTRODUCTION

THE COMMON LAW OF AGENCY

CREATING THE AGENCY RELATIONSHIP - AUTHORITY OF AGENT - AN AGENT’S OBLIGATIONS

LOSS

RISK

MANAGING RISK - INSURABLE AND UNINSURABLE RISKS

THE LAW OF LARGE NUMBERS

PERIL VS. HAZARD

PERIL - HAZARD

ADVERSE SELECTION

THE PRINCIPLE OF INDEMNITY

INSURABLE INTEREST

UNDERWRITING

CONSTRUCTION CLASSIFICATION - ROOF TYPE AND CONDITION - ELECTRICAL WIRING - PLUMBING - GEOGRAPHICAL LOCATION - FOUNDATION - SWIMMING POOLS - CREDIT SCORING - THE AGE OF A HOME - CLAIMS HISTORY - OTHER LIABILITIES

THE INSURANCE CONTRACT

RESERVES

FACTORS AFFECTING RESERVES - WHY RESERVES ARE IMPORTANT TO PUBLIC ADJUSTERS

WRITTEN ASSIGNMENT 1

CHAPTER TWO: HOMEOWNERS COVERAGE

INTRODUCTION

HOMEOWNERS POLICY OVERVIEW

ISO FORMS

THE HO 2000 PROGRAM - COVERED PERILS AND LIMITATIONS

THE HO-1 BASIC FORM

THE HO-2 BROAD FORM

THE HO-3 SPECIAL BROAD FORM

THE HO-4 CONTENTS BROAD FORM

THE HO-5 COMPREHENSIVE FORM

THE HO-6 UNIT OWNERS FORM

THE HO-8 MODIFIED COVERAGE FORM

SECTION I – PROPERTY COVERAGES

COVERAGE A – DWELLING - COVERAGE B – OTHER STRUCTURES - COVERAGE C – PERSONAL PROPERTY - COVERAGE D – LOSS OF USE - ADDITIONAL COVERAGES

SECTION I – PERILS INSURED AGAINST COVERAGE A AND COVERAGE B

LOSSES NOT COVERED - COLLAPSE - FREEZING OR DISCHARGE - FREEZING, THAWING, OR PRESSURE OR WEIGHT OF WATER OR ICE - THEFT TO A DWELLING UNDER CONSTRUCTION - VANDALISM AND MALICIOUS MISCHIEF IN A VACANT BUILDING - MOLD, FUNGUS, AND WET ROT - OTHER

SECTION I – PERILS INSURED AGAINST COVERAGE C

SECTION I –EXCLUSIONS

GENERAL EXCLUSIONS – PARTS A, B, AND C - EXCLUDED LOSSES UNDER COVERAGE PARTS A AND B ONLY

SECTION II – LIABILITY COVERAGES

PART E – PERSONAL LIABILITY - PART F – MEDICAL PAYMENTS TO OTHERS - ADDITIONAL COVERAGES

ENDORSEMENTS

WRITTEN ASSIGNMENT 2

CHAPTER THREE: ADJUSTING LOSSES

INTRODUCTION

PROPER MAINTENANCE OF THE INSURED PROPERTY

SECTION I – CONDITIONS

INSURABLE INTEREST AND LIMIT OF LIABILITY - DUTIES AFTER LOSS - LOSS SETTLEMENT - LOSS TO A PAIR OR SET - APPRAISAL - OTHER INSURANCE AND SERVICE AGREEMENT - SUIT AGAINST THE COMPANY - INSURER OPTION - LOSS PAYMENT - ABANDONMENT OF PROPERTY - MORTGAGEE CLAUSE - NO BENEFIT TO BAILEE - NUCLEAR HAZARD CLAUSE - RECOVERED PROPERTY - VOLCANIC ERUPTION PERIOD - POLICY PERIOD - CONCEALMENT OR FRAUD - LOSS PAYABLE CLAUSE

PREPARING AND SUBMITTING THE ESTIMATE

SPECIAL CONSIDERATIONS FOR NATURAL DISASTER CLAIMS

A NATURAL DISASTER IS… - FLORIDA CLIMATE

HURRICANES

HURRICANE HAZARDS - HURRICANE WATCH VS. HURRICANE WARNING - THE SAFFIR-SIMPSON HURRICANE SCALE - THE HIGH COST OF HURRICANES

NATURAL DISASTERS – SPECIAL CHALLENGES TO PUBLIC ADJUSTING

PERSONAL ORGANIZATION AND MULTI-TASKING - PUBLIC HEALTH - PUBLIC SERVICES - ENVIRONMENTAL DAMAGE - INFRASTRUCTURE - TELECOMMUNICATIONS ISSUES - ENERGY ISSUES - LOGISTICAL ISSUES - COORDINATION OF SERVICES - PSYCHOLOGICAL AFTERMATH OF A CATASTROPHIC EVENT ON INSUREDS

HURRICANE DAMAGE MITIGATION

THE MY SAFE FLORIDA HOME (MSFH) PROGRAM - THE FLORIDA COMPREHENSIVE HURRICANE DAMAGE MITIGATION PROGRAM - HAZARD MITIGATION - EFFECTIVE MITIGATION DEVICES - MITIGATION DISCOUNTS

HANDLING FLOOD CLAIMS

THE NATIONAL FLOOD INSURANCE PROGRAM (NFIP) - NFIP COVERAGE- LOSSES COVERED

LAND SUBSIDENCE

EXCLUSIONS

REPLACEMENT COST AND ACTUAL CASH VALUE

ADDITIONAL LIVING EXPENSES

FILING A CLAIM FOR FLOOD LOSS

WRITTEN ASSIGNMENT 3

CHAPTER FOUR: PUBLIC ADJUSTER ETHICS

INTRODUCTION

ETHICS IN THE INSURANCE BUSINESS

THE FOCUS OF BUSINESS ETHICS - DENYING ETHICAL RESPONSIBILITY

ETHICS CAN BE TAUGHT

KNOWING RIGHT FROM WRONG - A FORUM FOR ETHICS DISCUSSIONS

ETHICS MUST TAKE HIGH PRIORITY

COMPLEX ETHICAL DILEMMAS THAT CHALLENGE PUBLIC ADJUSTERS

THE PRESSURE IS ON - THE ETHICS OF THE MARKETPLACE - ACCURATE AND QUALITY INFORMATION - ETHICAL ISSUES OF INDEMNIFICATION - INSURANCE FRAUD - SELECTING INDEPENDENT EXPERTS - TIMEFRAMES FOR FAIR CLAIMS SETTLEMENT - NEGOTIATING IN GOOD FAITH

LEGAL VS. ETHICAL REQUIREMENTS

THE LEGAL REQUIREMENTS - THE ETHICAL REQUIREMENTS

UNETHICAL CONDUCT MAY LEAD TO BAD FAITH CLAIMS

PUBLIC ADJUSTER LIABILITY

PERSPECTIVE ON THE UNAUTHORIZED PRACTICE OF LAW

COMPETING INTERESTS OF THE INSURANCE AND LEGAL PROFESSIONS - WHAT CONSTITUTES THE PRACTICE OF LAW? - LEGAL KNOWLEDGE - PROHIBITIONS

ADJUSTER CODE OF ETHICS

RULE 69B-220.201 OF THE FLORIDA ADMINISTRATIVE CODE - ETHICAL REQUIREMENTS

WRITTEN ASSIGNMENT 4

CHAPTER FIVE: PUBLIC ADJUSTERS AND THE FLORIDA INSURANCE CODE

INSURANCE REGULATION IN FLORIDA

THE INSURANCE ADJUSTERS LAW

§§ 626.851 OF THE FLORIDA INSURANCE CODE - PUBLIC ADJUSTER DEFINED -PUBLIC ADJUSTER PROHIBITIONS - PUBLIC ADJUSTER APPRENTICE - NONRESIDENT PUBLIC ADJUSTER - CATASTROPHE OR EMERGENCY ADJUSTER - LICENSING EXCEPTION FOR ATTORNEYS - ADJUSTMENTS BY AGENT - ADJUSTER LICENSE TYPES - PUBLIC ADJUSTER QUALIFICATIONS - PUBLIC ADJUSTER BOND - PUBLIC ADJUSTER EXAMINATION - PUBLIC ADJUSTER APPRENTICE LICENSE QUALIFICATIONS - PUBLIC ADJUSTER APPRENTICE BOND - EMPLOYMENT UNDER SUPERVISION - NO MORE THAN 12 PUBLIC ADJUSTER APPRENTICES - PUBLIC ADJUSTER APPRENTICE LICENSE EFFECTIVE 18 MONTHS - PUBLIC ADJUSTER APPRENTICE APPLICATION FOR PUBLIC ADJUSTER LICENSE - PUBLIC ADJUSTER APPRENTICE AUTHORITY - PUBLIC ADJUSTER CONTINUING EDUCATION - PRIMARY ADJUSTER - DISCIPLINARY GUIDELINES FOR PUBLIC ADJUSTERS AND PUBLIC ADJUSTER - APPRENTICES - REAPPOINTMENT AFTER MILITARY SERVICE - NONRESIDENT PUBLIC ADJUSTER’S QUALIFICATIONS - NONRESIDENT PUBLIC ADJUSTER BOND - NONRESIDENT PUBLIC ADJUSTER RECORDKEEPING - NONRESIDENT PUBLIC ADJUSTER ANNUAL SUBMISSION OF AFFIDAVIT - VERIFICATION OF NONRESIDENT PUBLIC ADJUSTER LICENSE STATUS - NONRESIDENT INDEPENDENT OR PUBLIC ADJUSTERS; SERVICE OF PROCESS - NONRESIDENT ADJUSTERS; RETALIATORY PROVISION - PENALTY FOR VIOLATION - OFFICE AND RECORDS - EXCLUSIVE EMPLOYMENT - ADJUSTMENTS MUST COMPLY WITH INSURANCE CONTRACTS AND LAW - CODE OF ETHICS - PROHIBITION OF CONFLICT OF INTEREST - PUBLIC ADJUSTER CONTRACTS FRAUD STATEMENT - PROOF OF LOSS FRAUD STATEMENT

THE UNFAIR INSURANCE TRADE PRACTICES ACT

MISREPRESENTATIONS AND FALSE ADVERTISING OF INSURANCE POLICIES - FALSE INFORMATION AND ADVERTISING GENERALLY - DEFAMATION - BOYCOTT, COERCION, OR INTIMIDATION - FALSE STATEMENTS AND ENTRIES - STOCK OPERATIONS AND ADVISORY BOARD CONTRACTS - UNFAIR DISCRIMINATION - UNLAWFUL REBATES - UNFAIR CLAIM SETTLEMENT PRACTICES - FAILURE TO MAINTAIN COMPLAINT HANDLING PROCEDURES - MISREPRESENTATION IN INSURANCE APPLICATIONS - ADVERTISING GIFTS PERMITTED - FREE INSURANCE PROHIBITED - ILLEGAL DEALINGS IN PREMIUMS - INSURANCE COST SPECIFIED IN PRICE PACKAGE - CERTAIN INSURANCE TRANSACTIONS THROUGH CREDIT CARD FACILITIES PROHIBITED - INTERLOCKING OWNERSHIP AND MANAGEMENT - FALSE CLAIMS; OBTAINING OR RETAINING MONEY DISHONESTLY - SOLICITING OR ACCEPTING NEW OR RENEWAL INSURANCE RISKS BY INSOLVENT OR IMPAIRED INSURER - REFUSAL TO INSURE - POWERS OF ATTORNEY - SLIDING - DECEPTIVE USE OF NAME - FRAUDULENT SIGNATURES ON AN APPLICATION OR POLICY RELATED DOCUMENT

THE FLORIDA ADMINISTRATIVE CODE

CONDUCT OF PUBLIC ADJUSTERS

RULE NO. 69B-220.051 OF THE FLORIDA ADMINISTRATIVE CODE - PURPOSE AND SCOPE - COMMUNICATIONS CONCERNING PUBLIC ADJUSTER SERVICES - ADVERTISING - DUTY TO SUPERVISE - REQUIRED CONTRACT TERMS - CONTRACTS TO BE IN WRITING - SETTLEMENT MUST BE APPROVED BY THE INSURED

FAILURE TO ACKNOWLEDGE COMMUNICATIONS AND ACT PROMPTLY

RULE 69B-166.024 OF THE FLORIDA ADMINISTRATIVE CODE

MEDIATION OF RESIDENTIAL PROPERTY INSURANCE CLAIMS

RULE 69J-166.031 OF THE FLORIDA ADMINISTRATIVE CODE - PURPOSE AND SCOPE - DEFINITION - COMPUTATION OF TIME - CLAIM SETTLEMENT - REJECTION OF MEDIATION - MEDIATION COSTS - MEDIATORS - MEDIATION CONFERENCE - POST-MEDIATION

AUTHORITY AND ENFORCEMENT

HEARING - CEASE AND DESIST ORDERS - ADMINISTRATIVE FINES - NONWILLFUL VIOLATIONS - WILLFUL VIOLATIONS - CIVIL LIABILITY

WRITTEN ASSIGNMENT 5

ANSWERS TO CHAPTER QUIZZES

INTRODUCTION

Public adjusters have a very important role in carrying out the business of insurance. They protect the public by acting on its behalf as consumer advocates. Unlike company adjusters or independent adjusters, public adjusters serve the best interests of insureds.

The role of the public adjuster is often misunderstood. Insurance companies are frequently biased against public adjusters, speaking of them with the same disdain as they hold for personal injury attorneys who specialize in representing accident victims. The fact is that once a public adjuster is involved in a claim, the insurer loses some control. With the help of a public adjuster, companies are sometimes compelled by fairness to pay insureds more for a claim than they would have if a public adjuster were not involved.

Public adjusters speak the language of the industry. They are able to discern coverage points overlooked by policy holders unfamiliar with the nuances of insurance policy contracts. They are industry insiders with knowledge and experience and the ability to sift through the sometimes enormous task of recovering and rebuilding after a catastrophic event.

Policy holders sometimes do not realize that it is their burden to prove their losses. Insurance policies contain many clauses, provisions, conditions, and stipulations. They are written by insurance companies for insurance companies. It is not surprising that many policy holders have difficulty comprehending their coverage and their responsibilities after a loss, especially when they find their homes blown away or destroyed by fire. Sadly, the failure to abide by policy terms can reduce the amount of settlement or cause the claim to be denied entirely.

Most insureds are also not aware that when a company adjuster or an independent adjuster makes a statement, that statement is not necessary accurate or factual. Company adjusters are not always familiar with their own policy contracts. Some company and independent adjusters are not fully versed on Florida statutes that may influence the claims process. In many instances, insureds need public adjusters to champion their rights.

In the midst of the stress of a fire, flood, hurricane, or other disaster, the task of contacting the insurance company can contribute to the strain the policy holder is already under. Accurately answering the many questions asked and having the levelheadedness to recall and recount details about a loss is not easy under the circumstances. Inaccurate or incomplete documentation or records can impact a fair settlement later.

Public adjusters oversee every detail of a claim. They meticulously examine the insured's coverage. They inspect the site where the loss occurred and analyze the damages. They assist with completing and filing the proper claim forms along with supporting data. They establish replacement costs, and they monitor the claims process to make sure there are no delays in payment.

There is no doubt that an insured’s ability to claim the maximum amount due under a policy is significantly improved with the aid of a public adjuster. However, this is not to say that the positions of the sides are at odds. Public adjusters play a role in mitigating damages by removing carpet and padding that have the potential for mold and making sure that roofs are properly tarped to prevent further damage. These actions can save money for all parties. In watching over a claim, accuracy and completeness are ensured, thereby saving the insurance company time and effort.

The public adjuster’s role may be less familiar to policy holders and the general public, but it can be a vital one from the perspective of an insured. A public adjuster’s professional objective is to recover the maximum dollar amount possible for the insured in the speediest of timeframes.

Note that this course of study speaks to first-party adjusting, the most common arrangement between a public adjuster representing an insured. Although some courts have found third-party adjusting, that is, representing a stranger to the insurance contract on a claim asserted against a tortfeaser,1 to be based upon principles of tort law and thereby constituting the practice of law, third-party adjusting is permitted in Florida.

1 Utah State Bar v. Summerhayes & Haden, 905 P.2d 867, 868 (Utah 1995).

CHAPTER ONE: INSURANCE CONCEPTS

INTRODUCTION

Our first chapter is a review of many insurance concepts and theories that effect the public adjusting process. For many new to the profession, this discussion will be valuable. At the same time, seasoned professionals will find the review helpful.

THE COMMON LAW OF AGENCY

Insurers and the general public regularly use the term agent primarily to describe field personnel selling or placing their products. While this usage is not incorrect, it is not the precise use of the word. An agent is much more than that.

Agent has greater significance, and it reaches further than merely designating a person who sells insurance. The business of insurance is governed by the common law of agency, and the term agent is used to mean the legal representative of a principal within an agency relationship.

Public adjusters and other claims professionals may be regarded as agents within common law and within the context of the agency relationship and, therefore, should have some knowledge of the concept of agency. Similar to the relationship one would have with an attorney in connection with a legal matter, a public adjuster represents the interests of an insured property owner. A public adjuster is the exclusive agent of the insured and works on the insured’s behalf until a satisfactory settlement is reached and the insurance claim is closed.

CREATING THE AGENCY RELATIONSHIP

An agency relationship is created by agreement of two parties that one party (the agent) will act for the benefit of the other (the principal) under the principal’s direction. Relative to our study, the agent is the public adjuster, and the principal is the insured. The agent has a duty to act solely for the