A Florida appeals court decided this month that public adjusters cannot also work as an appraiser in disputes over claims when their total fees are more than the statutory limit.
Under Section 626.854 of the Florida Statutes, the cap is 10% of a settlement on public adjusters’ fees for up to a year after a declared state of emergency and more than 20% in cases not involving declared states of emergency.
“To have the same party that's getting paid by the policyholder also making the determination of estimated costs is in our eyes a very clear conflict of interest,” said Mark Friedlander, director of corporate communications for the Insurance Information Institute (III). “If they're working for the policy holder or the insured under a contingency fee agreement, they're not a disinterested party, meaning clearly, they can't be objective.”
Friedlander
| III
In Monarch Claims Consultants vs. Fleming and Universal Property & Casualty Insurance, the First District Court of Appeals upheld the trial court’s conclusion that the venue selection clause was unenforceable because the entire Service Agreement was void.
“Because the Service Agreement is void for violating Florida law, there is no enforceable venue selection clause,” the Sept. 6 opinion states. “We affirm the trial court’s order denying the motion to dismiss or transfer venue.”
As previously reported in the Insurance Journal, Cliff and Jane Fleming hired a public adjuster, Monarch Claims Consultants, to handle their insurance claim after their house was damaged by Hurricane Michael. The Flemings eventually sued that adjuster, who moved to transfer venue based on their contract’s venue selection clause. The agreement provided that the homeowners would also appoint Monarch as an appraiser if the loss amount was disputed and went to appraisal.
“It is clearly a broad problem in the state of Florida,” Friedlander told the Florida Record. “It does happen quite regularly. We know that for a fact. Most states do not allow this at all but Florida statutes are sometimes different as we've learned over the years and you need to be very careful about what's in the statute and what's not. But in general, the best practice is that these should be two separate functions.”
In a similar 2018 case, the Third District Court of Appeals determined in Gables Insurance Recovery vs. Citizens Property Insurance Corp that even as an assignee of benefits, the statutory cap applies.
"Clearly, it's been an ongoing situation for many years and it has resulted in conflicts in specific claims but once again I believe the court actions were driven by insurance companies filing actions against these adjusters," Friedlander added.