OGC Op. No. 10-12-07
The Office of General Counsel issued the following opinion on December 6, 2010, representing the position of the New York State Insurance Department.
RE: New York Independent Adjuster’s License
Must an appraiser who works in the New York offices of a national corporate automobile body repair estimator be licensed as an independent adjuster where, on occasion, the appraiser negotiates the cost of repairs with the vehicle owner’s chosen repair shop on behalf of the insurer?
Yes. An appraiser who, in New York negotiates, on behalf of an insurer, with a body shop selected by an insured, to settle upon the cost of repair, must be licensed as an independent insurance adjuster.
The inquirer reported that his company is the nation’s largest independent appraisal company, and operates on a franchise business model basis, with over 260 independently owned offices, including twelve in New York.
It was also reported that his appraisers are retained by various insurers to prepare written estimates of damages to vehicles that are submitted to insurers or their third-party administrators. The appraisers are not officers, directors or regular salaried employees of an authorized insurer or adjustment bureau. Occasionally, if the vehicle owner wants the vehicle repaired at a particular repair shop, a company appraiser may negotiate on behalf of the insurer with the repair shop to settle upon an agreed cost of repairs. The inquirer stated to me that his company’s New York appraisers are licensed in this state as independent adjusters.
N.Y. Ins. Law § 2101(g)(1) (McKinney Supp. 2010) is relevant to the inquiry. It defines an “independent adjuster” as follows:
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 . . .
Merely performing an appraisal does not amount to the negotiating, investigating and adjusting of claims. However, the function of an adjuster may encompass the appraisal of claims. See OGC Opinion No. 01-02-09 (Feb. 13, 2001). Here, the company’s New York appraisers do more than merely appraise the value of losses when they negotiate the cost of repairs on behalf of insurers, with the repair shop chosen by the insureds.
The December 19, 2007 OGC opinion letter that the inquirer cited was written in response to another franchise of his company, this one in Vermont, that inquired whether a body damage estimator in New York who worked for the company must also be licensed as an independent adjuster in New York. The facts presented at that time were that the company appraisers did not negotiate with body shops or vehicle owners. Those facts were quite different from those in the current inquiry and the 2007 opinion was limited to the facts then presented.
The company appraisers that the inquirer described negotiate and in doing so exercise discretion on behalf of insurers in the settlement of claims. Therefore, they are adjusting insurance claims, requiring that they be licensed in New York as independent adjusters.
For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.