Navigating the complexities of insurance claims can be daunting when property damages occur. Homeowners and businesses often seek the expertise of contractors to handle repairs swiftly and efficiently. However, there is a common misconception that contractors can also negotiate insurance claims on behalf of their clients. This is not only a misunderstanding but also a legal issue. In this blog, we will delve into why contractors cannot legally negotiate insurance claims, emphasizing the roles of the public and insurance adjusters in the insurance loss recovery process.
Understanding the Roles
When it comes to managing insurance claims, some specific professionals are legally permitted to handle these negotiations. A public adjuster is an independent professional representing the policyholder who negotiates with the insurance company. An insurance adjuster works on behalf of the insurance company to assess the property damage and determine the amount payable for commercial claims.
Legal Boundaries for Contractors
According to the USA law, specifically the National Association of Insurance Commissioners (NAIC), only licensed public adjusters and attorneys can negotiate insurance claims. Despite their expertise in repairs and construction, contractors do not have the legal authority to adjust claims. This is outlined in various state laws like Florida statute (626.854), which clearly states that anyone other than a licensed public adjuster or attorney who advertises, solicits, or handles compensation claims is committing an illegal act.
The Importance of Compliance
Why is this restriction in place? The primary reason is to prevent conflicts of interest and ensure policyholders receive unbiased advice. Contractors are vested in securing higher payouts for repair, which can lead to inflated claims and, consequently, higher insurance premiums for everyone. The law aims to maintain fairness and integrity in the insurance loss recovery process by restricting the negotiation of commercial claims to public adjusters and attorneys.
Risk of Non-Compliance
Engaging a contractor to negotiate insurance claims can lead to severe consequences for the contractor and the policyholder. Contractors who engage in this practice without the necessary license may face legal penalties, fines, and loss of their contractor’s license. For the policyholder, using an unlicensed individual can result in denying their claim or even allegations of fraud.
Insurance Claims In NYC
While contractors are essential in repairing and restoring property after damage, they cannot legally negotiate insurance claims. The expertise of a public adjuster or an insurance adjuster is indispensable for navigating the intricacies of the insurance loss recovery process. Homeowners and business owners should always seek licensed professionals to handle commercial claims to ensure legal compliance and the best possible outcome.
If you are dealing with a complex insurance claim, consider consulting Affiliated Adjustment Group, a licensed public adjuster, to guide you. Our expertise can make a significant difference in recovering your insurance benefits. Contact us today to learn how we can assist you with your property damage claims.
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