There are two issues that Public Adjusters are facing today. The first is, what happens

when you follow all of the proper rules in your attempted adjustment of a loss and either the loss

is underpaid and/or denied by the insurance company and your insured has to hire an attorney?

What is the legal status of your fee on the final result? As a general rule, the attorney is using

your work product in dealing with the insurance company. Now the attorney achieves a result

which also includes extra contractual damages even though most insurance companies in a

settlement will not so label them.

There is no settled law on the right of the Public Adjuster to get a fee on the additional

funds obtained by the attorney. Joseph Khoshlesan has handled two of these cases. In the first

case, he convinced the trial judge to not only award the Public Adjuster a fee on the additional

sums obtained on the structure, but also to collect his fee on the extra contractual portion

obtained by the insured’s attorney. Unfortunately, the insured never appealed our victory so

there is no appellate decision one way or the other. From the feedback we received, the trial

judge did not like the insured and perhaps that is why he awarded the Public Adjuster a fee on

the extra contractual damages.

Another trial judge in the same courthouse had a different opinion. Her opinion was that

the Public Adjuster was only entitled to a fee on the portion of the settlement that solely related

to the property damage and not any extra contractual amounts obtained either in settlement or

trial. Again no appeal, so no quotable authority.

Another area of contention that has come up recently is the interpretation of Cal. Code of

Civil Procedure Section 1282.2 regarding whether the procedure in an Appraisal is formal or not

formal. Insurance Code Section 2071 sets forth that it is informal. The dispute arises under

Section 1282.2(2). There are insurance companies that are taking the position that since all

appraisals involve more than $50,000.00 that changes the proceeding from an informal to a

formal proceeding. That position is wrong. When you read the first sentence of 1282.2 it

provides “Unless the arbitration agreement otherwise provides”. Insurance Code Section 2071

is the agreement and it “otherwise provides”. The Appraisal provision in 2071 is not voluntary

on the part of either the carrier or the insured. The provision is part of the Code and is standard

in every policy. Therefore, that provision governs the course of the Appraisal. The confusion

comes in because our State has a fulltime legislature and every time a case comes down and if it

deems proper, it adopts a new code provision. There was a property insurance case where one of

our appellate courts held that Appraisal is a form of Arbitration. However, since the Appraisal

Panel can only decide actual cash value of the loss, the formal provisions of discovery do not

apply.