Hurricane Laura:  Public/Private Adjusters & Contingency Fee Contracts

October 5, 2020 Announcements and Law Updates

Hurricane Laura:  Public/Private Adjusters & Contingency Fee Contracts

By now, the vast majority of the business owners and homeowners who sustained damage during Hurricane Laura have filed claims with their commercial or homeowners’ insurers.  Of those people, many have received reports from the insurance company providing explanations of their coverage decision and, if coverage exists, a valuation of their property damage claim.  In some instances, those reports seem unfavorable, leading the business owner or homeowner to seek the expertise of a public adjuster (also known as a “private adjuster”).  As we continue to represent property owners in their insurance claims, we have noticed that many out-of-state public adjusters are engaging insureds in contingency fee contracts.  We offer this short blog post with the intention to educate our fellow Louisiana residents and business owners on Louisiana’s prohibition against these contingency fee contracts.

Public adjusting is the business of “[i]nvestigating, appraising, or evaluating and reporting to an insured in relation to a first-party claim for which coverage is provided by an insurance contract that insures the property of the insured … .  Public adjusting does not include any activities which may constitute the unauthorized practice of law.”  La. R.S. 22:1692(8)(a)

The Louisiana Public Adjuster Act, La. R.S. 22:1691 et seq, was enacted to govern the qualifications and procedures for the licensing of public adjusters.  LSBA v. Carr & Assocs., Inc., 2008-2114 (La.App. 1 Cir. 5/8/09), 15 So.3d 158, 169, n. 9, writ denied, 2009-1627 (La. 10/30/09), 21 So.3d 292.  The LPAA also specifies the duties of, and restrictions on, public adjusters, including “limiting their licensure to assisting insureds in first-party claims in a manner which avoids the unauthorized practice of law … .”  La. R.S. 22:1691.  Additionally, the LPAA provides clear fee limitations for contracts between public adjusters and insureds:

  1. A public adjuster may charge the insured a reasonable fee.  A public adjuster shall not solicit for or enter into any contract or arrangement between an insured and a public adjuster which provides for payment of a fee to the public adjuster which is contingent upon, or calculated as a percentage of, the amount of any claim or claimspaid to or on behalf of an insured by the insurer and any such contract shall be against public policy and is null and void.

La. R.S. 22:1703.  In addition, La. R.S. 22:1704 provides:

  1. A public adjuster contract may not contain any contract term that:

(1) Allows the public adjuster’s fee to be collected when money is due from an insurance company, but not paid, or that allows a public adjuster to collect the entire fee from the first check issued by an insurance company, rather than as a percentage of each check issued by an insurance company.

(3) Imposes collection costs or late fees.

(4) Precludes the insured from pursuing civil or judicial remedies.

In a simple summary of the above, public adjusters (also known as “private adjusters”) cannot engage a business owner or homeowner on a contingency fee basis.  Almost without exclusion, Louisiana public adjusters are aware of, and fully comply with, these laws and are extremely helpful in pursuing payment and coverage for property damage.  However, if you are presented with a proposal for such an agreement, we suggest that you contact an attorney to ensure that you are properly represented and protected against this prohibited practice.

Mansfield Melancon Attorneys can Help: Call Today!

If you have any questions about your insurance claim, contact the Louisiana insurance attorneys at Mansfield, Melancon, Cranmer & Dick LLC. We have proven experience with many types of Insurance claims and have helped many Louisiana citizens receive the compensation to which they were entitled. If you found our “Hurricane Laura:  Public/Private Adjusters & Contingency Fee Contracts” blog post helpful then contact us by phone by calling one of our offices: New Orleans at (504) 500-1108, Baton Rouge at (225) 612-0800, or Lafayette at (337) 409-0003. You can also request a consultation by using our “Contact Us” page.