New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on August 2, 2006 representing the position of the New York State Insurance Department.

Re: Repair cost estimate of physical damage to heavy equipment on behalf of insurers and insureds

Questions Presented

(1) Would a person who, on behalf of an insurer, estimates the monetary cost of repairing heavy equipment, including motor vehicles, be acting as an independent adjuster and be required to be so licensed?

(2) Would a person who, on behalf of an insured, estimates the monetary cost of repairing heavy equipment, including motor vehicles, be acting as a public adjuster and be required to be so licensed?

Conclusions

(1) A person that merely provides an estimate to an insurer of the cost of repairs to property would not be acting as an independent adjuster under N.Y. Ins. Law § 2101(g)(1) (McKinney 2006) and would not have to be so licensed except: (A) with respect to a motor vehicle, if the person is an auto body repair estimator as defined in N.Y. Ins. Law § 2101(j) (McKinney 2006) or; (B) the person inspects the damaged motor vehicle under first-party motor vehicle physical damage insurance claims.

(2) A person that merely provides an estimate to an insured of the cost of repairs to property would not be acting as a public adjuster under N.Y. Ins. Law § 2101(g)(2) (McKinney 2006) and would not have to be so licensed.

Facts

The inquirer acts on behalf of insurer and insured clients in other States to estimate the monetary cost of repairing physical damage to heavy equipment, which are tractors, trailers, emergency equipment, cranes, construction equipment and other off-the-road equipment. The inquirer stated that the tractors and trailers sometimes travel on a public highway to transport a product to another location. It is not clear if these tractors or trailers are used exclusively for agricultural purposes. The inquirer excluded automobiles from his activity but he did not define this term. The inquirer’s activity on behalf of insurers involves both first-party and third-party claims. It appears that the heavy equipment is limited to commercial use.

The inquirer is compensated by the hour plus expenses and he does not share his compensation with other insurance licensees. The inquirer is not an officer, director or regular salaried employee of an authorized insurer or of any adjustment bureau or association owned and maintained by insurers.

The inquirer asks whether he must have any New York State Insurance Department license to do the same activity in New York State on behalf of insurers and insureds.

Analysis

Independent Adjuster

N.Y. Ins. Law § 2101(g)(1) (McKinney 2006) states:

(1) The term "independent adjuster" means any person, firm, association or corporation who, or which, for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster, except that such term shall not include:

(A) any officer, director or regular salaried employee of an authorized insurer or entity licensed pursuant to article forty-four of the public health law providing comprehensive health service plans (as used in this paragraph, a "health maintenance organization"), or any manager thereof, individual or corporate, or the manager, agent or general agent of any department thereof, individual or corporate, or attorney in fact of any reciprocal insurer or Lloyds underwriter, or marine underwriting office, unless acting as an auto body repair estimator as defined in subjection (j) of this section; . . . .

None of the other exceptions are relevant.

Note that pursuant to N.Y. Ins. Law § 2101(g)(1)(A) (McKinney 2006) an "auto body repair estimator" as defined by N.Y. Ins. Law § 2101(j) (McKinney 2006) is required to be licensed as an independent adjuster. Section 2101(j) states:

(j) In this article, "auto body repair estimator" means any officer, director or regular salaried employee of an authorized insurer or of any adjustment bureau or association owned and maintained by insurers, who writes, or who directly supervises the writing of, any motor vehicle body repair estimate in this state, on behalf of such insurer in the work of diagnosing or estimating motor vehicle repair costs or procedures relative to appraising, investigating or adjusting claims for motor vehicle body repair work pursuant to an insurance contract.

With respect to the inquirer’s activity on behalf of insurers, he would not be an "auto body repair estimator" because, under the facts presented, he is not an officer, director or regular salaried employee of an authorized insurer or of any adjustment bureau or association owned and maintained by insurers.

However, Section 216.7 of N.Y. Comp. Codes R. & Regs. tit. 11, Part 216 (2003) (Regulation 64) applies to adjustment of first-party claims regarding partial and total losses arising under motor vehicle collision and comprehensive coverages. Section 216.7(b)(3) of Regulation 64 states in relevant part:

(3) The person inspecting the damaged vehicle on behalf of the insurer must be licensed or authorized, under article 21 of the Insurance Law, to negotiate the loss with the insured or the insured's designated representative. At the time of initial inspection, the person chosen by the insurer to inspect damages must attempt to enter into negotiations, involving the extent of damages, manner of repair and number of hours to repair the damaged vehicle, with the designated representative or, if no designated representative, the insured, in accordance with the following procedures:

(i) at the time of inspection, the insurer shall furnish a copy of its estimate, which at a minimum, must indicate the extent of known damages and manner of repair; or

(ii) if the insurer utilizes electronic data processing equipment to generate its repair estimate the insurer shall furnish, at the time of inspection, its estimate or a copy of its worksheet, which at a minimum, must indicate the extent of known damages and manner of repair or, in the alternative, such insurer may hand-deliver to the insured's designated representative or, if no designated representative, the insured, no later than 24 hours following the inspection, a copy of the insurer's detailed written estimate of the cost of repairing the damages resulting from the loss, specifying all appropriate deductions . . . .

To the extent that the inquirer’s inspection of first-party claims regarding losses to heavy equipment on behalf of insurers includes motor vehicles, Section 216.7(b)(3) of Regulation 64 requires that a person inspecting a motor vehicle must negotiate the loss with the insured or the insured's designated representative and be licensed or authorized under N.Y. Ins. Law Article 21 (McKinney 2006) to negotiate the loss as well. Accordingly, if the inquirer were to engage in such conduct, he would be acting as an independent adjuster under N.Y. Ins. Law § 2101(g)(1) (McKinney 2006) and must be licensed as an independent adjuster under N.Y. Ins. Law § 2108 (McKinney 2006).

Section 216.7(a)(3) defines the term motor vehicle for use in Section 216.7 of Regulation 64 and it states: "Motor vehicle shall have the meaning ascribed in Section 311 of the Vehicle and Traffic Law."

N.Y. Veh. & Traf. Law § 311(2) (McKinney 2005) states:

2. The term "motor vehicle" shall be defined as in section one hundred twenty-five of this chapter, except that it shall also include trailers, semi-trailers and tractors other than tractors used exclusively for agricultural purposes, and shall exclude fire and police vehicles, farm equipment, including self-propelled machines used exclusively in growing, harvesting or handling farm produce, tractors used exclusively for agricultural purposes, or for snow plowing other than for hire, and self-propelled caterpillar or crawler-type equipment while being operated on the contract site.

N.Y. Veh. & Traf. Law § 125 (McKinney 2005) defines "motor vehicle" to mean:

Every vehicle operated or driven upon a public highway which is propelled by any power other than muscular power, except (a) electrically-driven mobility assistance devices operated or driven by a person with a disability, (b) vehicles which run only upon rails or tracks, (c) snowmobiles as defined in article forty-seven of this chapter, and (d) all terrain vehicles as defined in article forty-eight-B of this chapter. For the purposes of title four, the term motor vehicle shall exclude fire and police vehicles other than ambulances. For the purposes of titles four and five the term motor vehicles shall exclude farm type tractors and all terrain type vehicles used exclusively for agricultural purposes, or for snow plowing, other than for hire, farm equipment, including self-propelled machines used exclusively in growing, harvesting or handling farm produce, and self-propelled caterpillar or crawler type equipment while being operated on the contract site.

Public Adjuster

N.Y. Ins. Law § 2101(g)(2) (McKinney 2006) defines public adjuster:

(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 . . . .

None of the exceptions are relevant. If the inquirer would merely estimate the monetary cost of repairing physical damage to heavy equipment on behalf of an insured, his activity would not constitute adjusting. Under such circumstances, the inquirer would not be acting as a public adjuster under Section 2101(g)(2) and accordingly, he would not be required to have a public adjuster license under Section 2108.1

If the inquirer acts on behalf of a motor vehicle repair shop, we refer the inquirer to N.Y. Veh. & Traf. Law Article 12-A (McKinney 2005) (Motor Vehicle Repair Shop Registration Act) and motor vehicle repair shop regulations contained in N.Y. Comp. Codes R. & Regs. tit. 15, Part 82 (2005).

For further information you may contact Senior Attorney Robert Freedman at the New York City Office.


1    It should further be noted that a public adjuster's license does not authorize the public adjuster to adjust motor vehicle losses.  However, a person who investigates or adjusts such losses may be acting as a private investigator or engaging in the practice of law.  We offer no opinion with respect to such conduct.