Section 1 Lesson3: Florida Adjuster Laws, Regulations, and Code of Ethics Study Guide
Legal and Regulatory Framework for Florida Adjusters
Jurisdictional Oversight: Carriers and the adjusters who work for them—including independent adjusters and public adjusters—are governed by a variety of laws and regulatory guidelines across all jurisdictions.
Nature of Regulations: These laws prescribe specific behaviors that are categorized into two types:
Expected Behaviors: Actions that an adjuster or carrier is legally or ethically required to perform.
Prohibited Behaviors: Actions that are explicitly forbidden by law or regulation.
Focus on Florida Law: Adjusters operating in the state of Florida are subject to specific statutes that are crucial for professional compliance and legal protection.
Florida's Unfair Insurance Trade Practices Act (Section )
Purpose and Scope: This act is intended to regulate the trade practices of insurance carriers, their agents, and their adjusters. It outlines the standards for professional conduct in the insurance industry.
Prohibited General Behaviors and Practices: Section of the Florida insurance law prohibits several general behaviors. Engaging in these practices can result in significant penalties for both the carrier and the individual adjuster:
Failing to act promptly: Adjusters must handle claims with speed and diligence.
Denial without investigation: Denying claims without conducting a "reasonable investigation" is a violation of the act.
Failure to respond: Adjusters must provide a response to every insured or claimant who files a claim.
Lack of written explanation: Any denial of a claim must be explained in writing to the claimant.
Procedural Non-compliance: Failure to maintain compliant claim-handling procedures is a prohibited practice.
Mandatory Affirmative Requirements: To maintain compliance, all carriers and adjusters must:
Act promptly in the handling of all claims.
Conduct a reasonable investigation for every single claim filed.
Provide every insured or claimant an answer regarding their claim status.
Explain all claim denials in writing.
Carrier-Specific Requirement: Insurance carriers (not individual adjusters) are specifically required to develop and implement formal procedures for handling and responding to consumer complaints.
Civil Remedies and Liabilities under Section
Legal Remedy for Damages: Section provide a remedy for any person who is damaged by the behaviors mentioned in the Unfair Insurance Trade Practices Act or other specific prohibited behaviors.
Additional Actionable Behaviors: The law lists further behaviors that allow for legal action:
Bad Faith Settlement Practices: Not making a good faith attempt to settle claims when the opportunity to do so exists.
Unidentified Payments: Making payments to an insured without identifying the specific coverage under which the payment is being made (e.g., failure to explain what the payment is for and why it is being issued).
Leveraging First-Party Claims: This occurs when a carrier fails to settle a first-party claim (where the obligation to settle is clear) in order to influence a settlement under a different form of first-party coverage.
Examples: Delaying a homeowner\u2019s contents claim to influence the building/residential claim, or delaying an auto collision claim to influence a Personal Injury Protection () claim.
Legal Consequences and Trends:
Personal Liability: If an adjuster engages in these behaviors and the claimant suffers damages, Florida law entitles the claimant to sue not only the carrier but the adjuster personally.
Suit Trends: Historically, personal lawsuits against adjusters were rare because plaintiffs targeted carriers (perceived as having "deep pockets"). However, recent case law indicates a growing trend toward suing adjusters individually within the lawsuit.
The Florida Adjusters Code of Ethics
Origin and Authority: Developed by the Florida Department of Financial Services ()—formerly known as the Department of Insurance—this is a formal list of rules governing adjusting practices.
The Core Declaration: The code begins with the foundational statement: "The work of adjusting insurance claims engages the public trust." This serves as the backdrop for all ethical requirements.
Specific Ethical Requirements:
Representation by Attorney: An adjuster may not discuss a settlement with anyone represented by an attorney.
Ceasing Communication: If a letter of representation is received, all communication with the claimant must stop unless the attorney provides specific written authorization to continue.
Exceptions: Unless requested otherwise, there are specific circumstances where an adjuster can handle certain elements of a claim directly with a represented insured, though this does not include settlement discussions.
Interview Integrity: During written or recorded interviews with insureds, claimants, or witnesses, an adjuster must never suggest or induce the interviewee to suppress the truth or deviate from it.
Provision of Statements: If requested, the adjuster must provide the interviewee with a copy of their transcribed statement.
Prohibition on Legal Advice: Adjusters are required to explain legal and policy rights but must never provide legal advice or advise claimants on their decision-making process.
Prohibition on Drafting special releases: Drafting special releases is considered the unauthorized practice of law. Adjusters must only use the release forms provided by their carrier or client.
Protection of Incapacitated Claimants: Adjusters must never take advantage of a claimant whose judgment is impaired by being in the hospital, on medication, or under undue stress/pressure.
Duty to Advise of Rights: Adjusters must advise insureds/claimants of their rights under the insurance policy and the law.
The "Fine Line": The difference between advising of rights and giving legal advice depends on the recommendation. An adjuster explains the rights (contractual/legal) but remains neutral on the ultimate decision. An attorney recommends a specific path as being in the person's best interest.
Objectivity and Integrity: Investigations must be approached with an unbiased, unprejudiced and open state of mind.
Reporting and Professionalism: All facts must be reported truthfully and handle all claims with integrity.
Prohibition of Gratuities: Adjusters are strictly forbidden from accepting any payments or compensation from anyone involved in the claims handling process.
Goal of Disposition: The adjuster must act on each claim promptly with the goal of achieving final disposition as quickly and fairly as reasonably possible.