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What source did your definition come from?

Your statement, '...pretty much the same language' is a dangerous assumption. This assumption overlooks a minefield of components that address your question for the state a PA or Consultant works in. Florida's definition of a PA has 17 components not including subsections.

State statutes can guide and limit the method in which PA's are compensated. The answer by each state's Department of Insurance and their statutes is important since they govern insurance and employment activity.

Sometimes, just by changing the method of compensation may allow a person to escape being labeled a PA and operate as a consultant. If these statues are vague, then revised statues are created with the intent to clarify.

Alabama does not license public adjusters, but I know adjusters who work on an hourly rate for Plaintiff Attorneys just to operate as a PA. To operate outside the umbrella of employment by an attorney as an hourly consultant would be a very dangerous thing. In this case, the adjuster ('Consultant') could get nailed for practicing law without a license by both Plaintiff and Defense Attorney's.
 

Missouri does not appear to outline compensation for PA's: Missouri PA.

Florida has very detailed requirements regarding maximum fees, customer contact, etc. by PA's: Florida PA.

I suspect that the method of pay has a lot to do with your quest for the definition of a PA versus Consultant.  There are other factors pertaining to your role in the negotiation process.

12/26/2020 Admin updated link.

Posted By Stormkat on 29 Apr 2013 04:12 PM

There may be a fine line between the "consultant" who represents the insured as their roofing or building consultant.  Since the definition of a PA is:

 “Adjustment or settlement of claims,” the negotiation with an insurer on behalf of an insured as to the amount or extent of a loss covered by a policy of fire or allied lines of insurance and the acts of representing the insured or speaking on behalf of the insured toward any agent or other person granted the authority to adjust claims by an insurer.

How do you determine a legitimate consultant from one who is acting as unlicensed PA?  Many commercial insureds have claims consultants or building/roofing consultants.

 

I would appreciate your insight as I know this comes up somewhat frequently.

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StormKat, this subject is indeed a slippery slope and subject to varying opinions as well as laws. As Jud stated, the Alabama Department of Insurance has a statute that states any public adjuster who represents the insured through negotiating DIRECTLY  with the insurance carrier on behalf of said insured IS GUILTY of practicing law without a license.

When you speak of consultant, are you referring to an unlicensed individual (whether PA/IA) who is let's say: a roofer who offers to represent you and handle all the insurance paperwork to ensure you get a new roof, etc... I believe this to be against the law

An unlicensed individual offering to represent the insured against their insurance carrier (that isn't an attorney or an employee of an attorney) This IS against the law UNLESS said individual is an attorney or an employee of or a contractor retained by an attorney

A licensed IA who is working on an hourly basis for an attorney (licensed to practice law in the specific state that the loss occurred) to assess and document damage ONLY and NOT  to interpret any insurance coverage? This I believe IS lawful and there are many IA's who do this as a : CONSULTANT

As Jud stated, this is a heated issue and opinions will vary wildly

Posted By Stormkat on 29 Apr 2013 04:12 PM

There may be a fine line between the "consultant" who represents the insured as their roofing or building consultant.  Since the definition of a PA is:

 “Adjustment or settlement of claims,” the negotiation with an insurer on behalf of an insured as to the amount or extent of a loss covered by a policy of fire or allied lines of insurance and the acts of representing the insured or speaking on behalf of the insured toward any agent or other person granted the authority to adjust claims by an insurer.

How do you determine a legitimate consultant from one who is acting as unlicensed PA?  Many commercial insureds have claims consultants or building/roofing consultants.

 

I would appreciate your insight as I know this comes up somewhat frequently.

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Something else, I have had dozens of my folks who were/are newly licensed rookie adjusters PRIOR to getting their shot as an IA go to work for roofing contractors selling roofs. I feel this is a great way for newly licensed adjusters to get actual field experience and to get comfortable working at height. I give them one caveat:

The most important reason to do this besides the obvious field experience/comfort with working at height IS to find those roofing contractors who utilize XM8 when creating estimates. Whilst not all roofing contractors utilize XM8 and some of my folks have worked for those roofing contractors as well, it is my opinion that giving the newly licensed adjuster a real world application using XM8 with regard to documenting roof damage and associated components is CRUCIAL to their future success when they do get their shot with working for an IA firm.

Outside of being picked up as a staff adjuster trainee or an organized mentor program through an reputable IA firm, selling roofs is a great way for adjusters to further prepare themselves for that oh so important first deployment.

It works, I chose several of my members who had prior experience working with roofing contractors to go through the Mariposa Insurance Services Apprentice Project I created for Mariposa back in 2010 when I was working as a residential claims account manager SOLELY because they had real world experience utilizing XM8 estimates through their work with these contractors.

I am extremely proud to state that 6 out of 10 of my members who went through the MAP (Mariposa Apprentice Project) back in 2010 are today successful working IA's with 3 of them working as staff adjusters

It has long been my opinion that rookie adjusters MUST have a solid working knowledge of their estimating platform (in the CAT industry that will be XM8) PRIOR to accepting any deployment. Further, I created the pre-requisite for rookie adjusters who wished to be selected to participate in the Mariposa Insurance Services Apprentice Project that they already be fluent in XM8. It is my belief that many things can be taught in the field, yet XM8 is NOT one of them.

I have a couple of Apprentice Projects (outside of Mariposa) that are in the works, one is at NO cost to the adjuster and another that the rookie adjuster must pay for to participate.(It should be noted that any and all monies go directly into the pocket of the senior adjuster who is mentoring said rookie adjuster. I am not making a dime off of my rookie adjuster sub-set)

Again, BOTH of the above projects require rookie adjusters to have a strong working knowledge of XM8 prior to going out into the field. They must gain said XM8 knowledge on their own time.

In closing and a bit off subject, I feel that every rookie adjuster after initial licensing should concentrate their attention and monies SOLELY on mastering XM8. I encourage them to set a goal of an XM8 level 3 certification PRIOR to accepting a deployment( and at a minimum they should NOT accept any deployment until they have at least an XM8 level 2 certification and/or knowledge) Not doing so will almost certainly result in an expensive painful lesson where they will get overwhelmed and quit or be asked to leave a site.....BROKE 

Posted By Stormkat on 29 Apr 2013 07:48 PM
In addition, it is not the compensation which determines the liability it is what they do and how it is defined or not defined. 

The form of compensation is exactly what some states use as an essential component of a Consultant, PA, or Lawyer.  For example, I have a friend who works as a consultant for a Plaintiff Attorney from time to time (To those reading in; Yes, believe it or not there are actually reasonable PA/consultants out there).  He has told me that he can not work on commission since this is one of Alabama's key indicators that determine whether or not one is an attorney.

The roles and actions of a consultant then create the rest of the picture.  Any action taken by this individual may throw additional red flags as to whether the unlicensed practice of law has taken place.  This here is the key reason why I suggested that you may need to consult a legal opinion (not a chat forum even though it makes for interesting discussion):  each state has its own 1. Definition and their 2. Own set of statutes formed as a result of past cases.

Stormkat, I too use building consultants on my large losses.  After they put together their estimates, I allow them to reach agreed scopes, prices (negotiating).  They do not apply depreciation, but they can provide age information so that I can apply it.  Yet, they are all paid hourly-  none bill on commission.

During the aftermath of Katrina, many consultants and adjusters billed their fees on a contingency basis.  My recollection is a little muggy, but in Louisiana there was some legal push-back against adjusters who billed on a contingency basis.  The story went along the lines of a carrier who rejected a fee bill from an IA because they thought it was too expensive.  The IA sued the carrier for the rejected bill.  The carrier won because the form of compensation qualified that adjuster as a Lawyer.  Since the adjuster was not licensed to practice law, the carrier won.

If you've ever worked with an accountant or legal expert concerning employee classification from W2 versus 1099, you will notice similarities - each state has their own criteria that they rely on to paint the picture.

YW........this is one of my favorites. It would never make it to the screen in todays world though. Mr. Knotts was oh so good.

http://www.youtube.com/watch?v=b5jmzo0kWF8

If the insured makes it clear it's ok to discuss the loss with them while the "consultant" is present, I'll listen to what the consultant says and use my own judgement as to whether or not the consultant has any legitimate points.  Not a scrap of paperwork will go from me to the "consultant" though.