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

Eliot Spitzer
Governor

Louis Pietroluongo
Acting Superintendent

The Office of General Counsel issued the following informal opinion on January 18, 2007, representing the position of the New York State Insurance Department.

Re: Fee Dispute with an Insurance Adjuster with a felonious background

Question:

After executing a compensation agreement with a public adjuster, may an insured refuse to pay for services rendered pursuant to the agreement because, subsequent to execution of the agreement, the public adjuster is convicted of a felony for actions not related to the contract?

Conclusion:

No. Nothing in the New York Insurance Law would preclude a properly licensed public adjuster from being compensated for adjusting a loss pursuant to a compensation agreement because the public adjuster had been subsequently convicted of a felony that was unrelated to the compensation agreement. Any possible civil causes of action, and/or defenses to such causes of action arising under the compensation agreement, would be controlled by contract law.

Facts:

The inquirer is a partner in a law firm. A client of one of the inquirer’s firm’s partners employed the services of a corporate public adjuster to adjust a claimed loss of a piece of Tiffany glass that was returned damaged after being on loan to an exhibit of glass objects. For reasons that the inquirer did not state, the public adjuster was not able to adjust the claim. Although the inquirer’s facts are unclear on this point, it appears that the insured brought a legal action against the corporate public adjuster, and/or against individual adjuster. Again, the inquirer’s facts are unclear, but it appears that during trial, the case was settled, and as part of that settlement, the individual public adjuster agreed to reduce his adjustment fee, and that currently the inquirer is holding funds equal to the fee of the public adjuster in escrow.

The inquirer further stated that the above events took place during a period of time ranging from 1991, when the insurance adjustment contract was initially executed, to the time of trial in September, 2006. During this time period, in 1995 or 1996, the public adjuster pleaded guilty to various felonies arising from his insurance adjusting practice, and surrendered his insurance adjuster’s license, at some point. Although the inquirer did not clarify this point, it appears that the underlying facts of the felonies were not in any way related to the public adjuster’s work for the inquirer’s firm’s client. Based on the felony conviction and surrendered license, the inquirer wants to know whether the individual and/or the corporate public adjuster, is still entitled to be compensated pursuant to the compensation agreement that the inquirer’s firm’s client executed.

Analysis:

Nothing in the New York Insurance Law would preclude a properly licensed public adjuster from being compensated for adjusting a loss pursuant to a compensation agreement because the public adjuster had been subsequently convicted of a felony that was unrelated to the compensation agreement. Any possible civil causes of action, and/or defenses to such causes of action arising under the insurance adjustment contract, would be controlled by contract law.

For further information one may contact Senior Attorney Susan A. Dess at the New York City Office.