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Contractors inspecting on behalf of carriers ???????

by swink_d on 07/06/2010 5:41 PM

NC Statute is below. How do they work around this having contractors  go examine losses and submit photos and and estimates?
 
58‑3‑130.� Agent, adjuster, etc., acting without a license or violating insurance law. If any person shall assume to act either as principal, agent, broker, limited representative, adjuster or motor vehicle damage appraiser without license as is required by law or, pretending to be a principal, agent, broker, limited representative, adjuster or licensed motor vehicle damage appraiser, shall solicit, examine or inspect any risk, or shall examine into, adjust, or aid in adjusting any loss, investigate or advise relative to the nature and amount of damages to motor vehicles or the amount necessary to effect repairs thereto, or shall receive, collect, or transmit any premium of insurance, or shall do any other act in the soliciting, making or executing any contract of insurance of any kind otherwise than the law permits, or as principal or agent shall violate any provision of law contained in Articles 1 through 64 of this Chapter, the punishment for which is not elsewhere provided for, he shall be deemed guilty of a Class 1 misdemeanor.

21 Comments for Contractors inspecting on behalf of carriers ???????

Leland
07/06/2010 10:21 PM

North Carolina probably also licenses contractors.

Contractors can legally write estimates for building repairs.

Insurance companies can certainly use experts, including contractors.

If a contractor is asked by a carrier to write a building repair estimate, would that be "adjusting"?

Let's break down the law you quoted, like sentence diagramming in English class. I will label some parts and analyze them below.

If any person

shall assume to act either as

(A) principal, agent, broker, limited representative, adjuster

(B) or motor vehicle damage appraiser

without license as is required by law or,

pretending to be a principal, agent, broker, limited representative, adjuster or licensed motor vehicle damage appraiser,

(C) shall solicit, examine or inspect any risk, or shall examine into, adjust, or aid in adjusting any loss, investigate or advise relative to the nature and amount of damages to motor vehicles or the amount necessary to effect repairs thereto, or shall receive, collect, or transmit any premium of insurance, or shall do any other act in the soliciting, making or executing any contract of insurance of any kind otherwise than the law permits, or as principal or agent shall violate any provision of law contained in Articles 1 through 64 of this Chapter, the punishment for which is not elsewhere provided for,

he shall be deemed guilty of a Class 1 misdemeanor

To analyze this section of law let's refer to (A) and (B) as the roles or positions that a person could have. Any person with such a role or position (or who pretends they have such a position), who doesn't have a license in those cases where a license is required, is committing a small crime (a misdemeanor) if they do the activities listed in (C).

So here are some examples

IF:

[pick any one of these 4]

1) An executive of an insurance company [a principal]
2) An owner of an insurance company [a principal]
3) The guy who sells the policy [an agent]
4) The guy who inspects the loss and analyzes coverage [the adjuster]

DOESN'T HAVE A LICENSE THAT THE LAW SAYS HE IS SUPPOSED TO HAVE... AND

[pick any one of these 4]

1) inspects the loss
2) investigates the loss
3) picks up the premium check
4) convinces a customer to buy insurance

THEN THAT PERSON HAS COMMITTED A MISDEAMENOR.

So a contractor who is NOT a principal, NOT an agent, NOT an adjuster, and doesn't need a license to look at damaged buildings can provide an estimate to the insurance company without breaking the law.

Here's some more examples of people who are not violating the North Carolina law in my opinion:

A CPA goes to the burned house and makes a list of the burned personal property. He is investigating the loss for the insured.

An attorney speaks to the ex-husband, thinking the ex burned the house down.

A detective walks through the burned house, looking for evidence.

The restoration contractor looks up the previous roofer and gets a copy of the old bid, to help him write an estimate for the roof on a burned house.

And the one you asked about-

A contractor writes an estimate for an insurance company.

In contrast here's two examples where a contractor might be violating the law:

* The contractor is an employee (agent) of the carrier and adjusts the claim.

* The contractor does more than just write an estimate- he makes the decision whether the claim is covered under the policy.

I don't think it is usually going to be a violation for the carrier to have a contractor write an estimate. HOWEVER there may be OTHER VIOLATIONS that happen if the carrier neglects some of the carrier's duties:

If the carrier avoids doing a good faith adjustment (investigation; coverage analysis) because they rely on the contractor, that MIGHT be a violation of some other rule or possibly bad faith.

Just my opinion.

And I'm not saying I agree with carriers using contractors instead of field adjusters- I'm just saying that using the contractor may not be against the law (although NOT using a field adjuster may be wrong for other reasons)






Ray Hall
07/07/2010 1:42 AM

The only time I can recall seeing the word "adjuster" is in the NFIP. It says the adjuster has no authority. I dont think it,s ever been in any other policy that I have read.... possibly a marine form on average adjusters.
 
We are way head of ourselves on what adjusters should do, can do. If the contract is silent then an adjuster does not have to be involved, a field inspection does not have to be made. The insured must permit reasonalable inspections, but the insured must file the claim, present the loss and prove the loss.
Leland
07/07/2010 2:14 AM

Good point, Ray. The carrier doesn't have to send anybody out at all, at least according to the contract.

But there may be case law or fair claims regulations that dictate that the carrier has to properly investigate claims.

And if the carrier DOES send somebody, there can be liability for sending the wrong person. or an incompetent person, or not listening to the person, etc.

Maybe the carrier doesn't have to send an adjuster OR a contractor.

But if they choose to send an adjuster that doesn't know how to write an estimate or a contractor that tries to be an adjuster I'm sure there could be some liability or violations of regs/laws.

As you say, the insured must prove the loss.

But if the insured says it costs X amount of money and the carrier has done zero investigation to prove otherwise, they probably would need to write the check.
Ray Hall
07/07/2010 12:02 PM

I agree 100% all reported losses are not cookie cutter, that's were experience and proper training kicks in.Kinda law or medical school takes several years of school, BEFORE you get a license.
Joeblack
07/09/2010 10:13 PM

The contractor in the above example is not acting as an adjuster. The contractor is simply providing documentation to the adjuster, for the adjuster to use in adjusting the claim. I don't see any problem at all in that example. The contractor is doing what contractors do, and the adjuster is doing what adjusters do.
 
However, how about an adjuster negotiating a settlement with a claimant on behalf of an insured. That is as close to practicing law without a license as it gets.
 
 
ChuckDeaton
07/09/2010 11:22 PM

Joeblack, when does an "adjuster negotiating a settlement with a claimant on behalf of an insured."
stormcrow
07/09/2010 11:43 PM

An obvious lack of knowledge of what an adjusting licence allows. as for contractors, here in the great white north they have been "adjusting" for years. Companies like it and the local authorities fail to notice.
Joeblack
07/11/2010 3:54 PM

Every time an adjuster settles a third party liability claim, whether it is a fender bender, bodily injury claim or whatever, the adjuster is negotiating a settlement on behalf of the insured. It is the insured who is responsible for the "damage", and it is the adjuster who is negotiating the settlement. So, you have one party (the adjuster) negotiating and settling on behalf of  another party (the insured). Some people think that only lawyers can negotiate on behalf of another.
 
Some states don't require adjusters to have licenses, so I don't think an adjuster's license is what gives adjuster's the power to negotiate these settlements.
 
And speaking of bodily injury claims, how many times have we settled BI claims with a plaintiff lawyer's "negotiator", who is not a lawyer, but is, for all practical purposes, negotiating the claim settlement on behalf of the plaintiff.
Ray Hall
07/11/2010 5:36 PM

Nothing wrong with haveing a contractor inspect a loss for an insurance company, if it moves the claim foward at less cost in payment or investigation cost, this is the duty of management to the stock holders
Ray Hall
07/11/2010 5:44 PM

I was kinda surprised that property adjusters did not realize the main job of a bodily injury adjusters is negotiation with 3rd party claimants or their attorneys on the final settlement amount.The London Underwriters are now looking for these type adjusters with this background to work their claims, instead of leaving it up to defense lawyers.
ChuckDeaton
07/11/2010 10:21 PM

Most of my work at the moment is negotiating and assisting with negotiations on litigated property claims.
carribbeandreams2004
07/12/2010 2:25 AM

Negotiating claim settlements is the job of an adjuster. An adjuster can negotiate any claim settlement before it goes to court. An adjuster is either an employee and/or independent representative  of the company, authorized by the company to represent its interest.  He/she  who has the gold makes the rules.  
 
If a very wealthy person that is responsible for causing BI or PD and is legally liable and hires me  to negotiate an out of court settlement I do not see that as practicing law.    I see it the same as being a Third Party Administrator for a large self insurance fund just like a risk manager who handles claims for the company.
 
I look forward to your replies.   
ALANJ
07/12/2010 2:27 PM

Your adjuster lic is only good for "Insurance Companies". Once you step out side of that relm you are practicing law, unless you are working directly for an attorney as a "expert" or under their supervision. Funny you posted this. This has been a hot topic between myself and several others over the past few weeks. We even went as far as doing the legal research on this.

BP may have a issue with this as they are not reconized as "self insured" with any state DOI we can find. Several lawsuits have been filed in Alabama over this in State and Federal Court. Guess we all get to see how this plays out in the courts.

We may have another Texas Wind lawsuit war before this is over. Gonne be fun to watch.
Ray Hall
07/12/2010 9:13 PM

Alan this will be another time that a law license cost will be returned with good dividends. The claims are now being looked at as not enough info to make a final offer, but we will finance your suit with an ADVANCE. I think the reserves will blow passed the 20 billion this year. BP may still try to limit the liability exposure with some marine law thinking; or if you will some new international court law like the aircraft industry.Many of the roof thumpers will go home, I think when they get this thing plugged. These 25 claim offices are "show offices", but they will close a few claims.
Joeblack
07/13/2010 1:00 AM

I did a quick google on this topic, and could not find anything one way or another, but I agree with Alan J that working as a TPA for a self-insured is not the same thing as representing an individual in the settlement of a claim, as carribbeandream suggests.
 
BP may not be self-insured, but they probably have a very large self-insured retention. Has anybody on list ever worked a liability claim for BP?
 
 
Leland
07/13/2010 2:29 AM

I could be wrong but it seems to me that a company that is "self insured" simply has no insurance and pays out of their own pocket. When they pay claims out of their own pocket it is not insurance and it is not "adjusting".

Let's say you are the cook for a local taco stand. A customer slips on the salsa and cuts their forehead on the counter. The boss says "Oh no, I have no insurance."

The boss asks you to negotiate with the injured party.

You take your apron off and follow the customer out to the parking lot.

You tell the customer, "Look, we have no insurance for people getting hurt. My boss is sorry but he can only pay $100.00 but he's also willing to give you a free meal."

Would that be "adjusting"?

I don't think so because you would be representing the "principal", ie. you are not a third party (an adjuster representing the restaurant's insurance company to figure out what to pay a claimant) you are the principal (the restaurant itself) offering a settlement directly to the claimant.

See my previous examples, a principal representing his own interests doesn't need to have an adjusting license.
Leland
07/13/2010 2:33 AM

However I could see how it might be different if you have subcontractors working for BP, instead of being actual BP employees.

If you tell the world you are a separate business representing BP that is a situation that might need an adjusting license or law license because now you are no longer the principal but a separate entity.

I don't know the answer.
ALANJ
07/13/2010 12:31 PM

Your adjuster lic allows you to repersent insurance companies "only". Having a adjuster lic does not give you the authority to work for a subcontractor who is repersenting a 3rd party who is not a insurance company or a " non recognized self insurer". As we all know you can register and jump through each state DOI department to be qualified, reconized and regulated as a self insurer. I do not see a problem with being a document gather and submitting the documents to the company and letting their employees make the call on each claim.

The easy answer would be to make everyone a legal assistant and have a bunch of lawyers reviewing and okaying each file. I'm sure we will get to see how all this plays out. This is like watching a NASCAR race. You know there is going to be a big wreck sometime during the race. It's just a matter of time.
claims_ray
07/13/2010 12:56 PM

Yes, but some of us are standing on the track while that wreck is happening.
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