When insured persons are employed, they simply do not have the time or patience to deal with the details of a first party's property claim. The general insurance adjuster is available to help the insured to present a claim to the insurer. In most states, the general insurance adjuster is licensed by the state insurance department. The insurer's adjusters are often asked to handle a general insurance adjuster. The contact between the general insurance adjuster and the insurer's adjustment is often controversial because the general insurance adjuster wants to justify his contingency fee to the insured. Both must work towards the same goal: payment of correct and complete compensation to the insured.
Public Adjusters claim that they, primarily with good cause, are professionals who are employed exclusively by a policyholder who has maintained an insured property from the first party loss. The public adjuster handles all details of the indemnity and works closely with the insured to provide as fair and quick a solution as possible. A public adjustment should immediately inspect the claim site, analyze the claims, collect claims support data, review the insured's coverage, determine current compensation costs and only serve the client, not the insurance company while working ethically with the insurer's adjuster.
The National Association of Public Insurance Adjusters (NAPIA) publishes a code of conduct that sets out the ethical standards that all public insurance adjusters must follow. It provides:
The following rules of professional conduct and ethics apply to all members of NAPIA:
- Members shall act in a spirit of fairness and justice towards their customers, insurance companies and the general public.
- Members should refrain from making incorrect requests.
- No incorrect presentation of any kind may be made to an insured or the insurance companies.
- The commission fees shall be fair and equitable and strict in accordance with the prevailing custom in the locality, and must, where there are laws or regulations for insurance departments, fully comply with such laws or regulations.
- Members shall act to exercise respect and trust. They must work in harmony with each other, with their customers and the representatives of the insurance companies, in order to promote a cordial and harmonious relationship with all branches of the insurance business and with the general public.
- The members must be equipped, through knowledge and experience, for the work they perform. They must not jeopardize the interest of the public adaptation profession or risk injustice to the insured or to the insurance companies by trying to deal with losses or claims for which they are not qualified and for which they cannot find competent technical support.
- Members may not engage in unauthorized exercise of law.
- Members may not acquire any interest in recovered property or participate in any way, directly or indirectly, in the reconstruction, repair or restoration of damaged property, except with the knowledge, consent
- Members shall cooperate and assist each other in all possible ways. way.
- Members may not distribute or use any form of contract, advertising or any printed matter that is harmful to the public profession. adjustment, or which does not comply with the rules and regulations of the insurance department of the State where such a member is professionally employed, or which may bject general adjustment and public adjusters for criticism or disrespect.
An example of a public insurance adjuster and the lawyer who failed to comply with the requirements of NAPIA. Both represented the same client, involving a claim stemming from the 1994 Northridge, California earthquake. The earthquake caused billions of dollars in damage across southern California. It attracted lawyers and public organizers who sought large fines like vultures flying over a dead antelope. As a result of the disaster, the insurers' investigation was limited due to the extent of losses caused by the earthquake and the need to meet their needs quickly. Many unnecessary and false complaints were filed. Insurance fraud was rampant and insurers paid rather than fighting because there were insufficient staff available to deal with fraud and government agencies threatened insurers with large fines if they did not pay quickly.
Some insurers, due to the lack of trained staff, refused. claims that should not have been denied. The errors led the state of California to pass a law that allowed insured persons to sue their insurers as late as 2002, four years after the expiration of the limitation period and eight years after the expiration of the private action restrictions in most insurances. This change in the statute of limitations resulted in many real costumes and some false deeds.
Insurers are not the only entities that acted unethically. Some public insurance companies, acting alone or with the help of unscrupulous lawyers, violated the standards set by NAPIA and the union in good faith and fair trade.
I U.S. Pat. v. Saada 212 F.3d 210 (3rd Cir., 1999) The United States presented evidence at the trial showing that 1990 complainants contacted Ezra Rishty for assistance in an insurance fraud. Rishty was a general insurance adjuster in New York City who had previously conspired with various clients in over 200 fraudulent insurance systems. Rishty agreed to help Isaac file a fraudulent insurance claim and arrived with the help of Morris Beyda, a former employee who then owned his own business.
In an unofficially published opinion, the California Court of Appeal dealt a serious blow to a lawyer who filed a manifestly damaging and unfounded lawsuit against the Scottsdale Insurance Company (Scottsdale). The Court of Appeal decided that the lawyer must face an action from an insurer for damaging prosecution because it was very likely that the suit would succeed.
Scottsdale took an important step in protecting insurers from attorneys. and public courts, which use the courts as a challenge – whether appropriate or not – to force insurers to pay to avoid litigation costs. If they take the case to court and prove the evil, criminal damages against the lawyer and the public adjuster will go a long way in cooling some lawyers' ability to bring an action without sufficient facts on the assumption that everything an insurer does is wrong and in bad faith.
The operation began in 1994 after the Northridge earthquake when the Regency Royale Homeowners Association (Regency) claimed that it repeated the damage. Five months later, Regency applied to Scottsdale for earthquake insurance, showing that it was insured through the Homestead Insurance Company and had not suffered any losses in the past five years. Scottsdale relied on these representations when issuing insurance to Regency, which provided coverage from July 1, 1994 to July 1, 1995. On December 26, 2001, Regency & # 39 ;s public insurance adjuster, Kapilow & Son (Kapilow), requested that Scottsdale appoint an adjuster to investigate Regent's claims for earthquake damage in accordance with the policy. On December 31, 2001, Regency Attorney Stephen Zelig brought an action before the Los Angeles Superior Court against Scottsdale and others, entitled Waldman et al. v. Golden Bear et al. case no. BC265308 (Waldman).
The complaint was filed under the Charter, which revived Northridge's overdue earthquake insurance claims, provided that the insured had contacted his, her or his insurer before January 1, 2000, and the lawsuit was filed before January 1, 2002. before the submission deadline under the Resuscitation Statute to conduct an independent inquiry into whether Scottsdale was the right insurer. Kapilow had also not independently investigated whether Scottsdale was the right insurer. In January 2002, Scottsdale Kapilow announced that Regency & # 39 ;s policy did not provide coverage until six months after the Northridge earthquake and that Homestead Insurance was likely the right insurer. Scottsdale also announced that Regency had not initiated a claim before January 1, 2000, as required by the resuscitation charter. Regardless, Zelig Waldman filed the complaint against Scottsdale on July 8, 2002.
In October 2002, Scottsdale responded to Regency & # 39 ;s request for documents in part by developing the insurance page for the insurance it had issued to Regency for the start six months ago. after earthquake. In November 2002, Kapilow Zelig's office announced that Farmers and State Farm had coverage on the Regency property at the time of the earthquake. Scottsdale had further communications with Zelig in April and July, claiming it had not insured the risk of the quake.
Following Scottsdale's submission of its summary judgment, a new lawyer, associated with Regency, acknowledged that Scottsdale was not the right insurer. The new lawyer fired Scottsdale without prejudice before the summary trial. Scottsdale incurred more than $ 30,000 in attorney fees in evaluating and defending the Waldman action. The trial court concluded that the voluntary termination without prejudice to the foregoing action was a favorable termination of the lawsuit in favor of Scottsdale.
The reasons for the voluntary termination must be reviewed in each case. The focus is on whether the dismissal is reflected in the matter. The Court concluded that evidence reflecting 'the appellant's view that the measure, if taken, would lead to a decision in favor of the defendant, is evidence of a favorable conclusion. [ Minasian v. Sapse (1978) 80 Cal.App.3d 823, 827] Along with the evidence that tends to show that Scottsdale was not the right insurer, the dismissal showed that the case against Scottsdale had no merit. The court considered such information to be condemning and was convinced that a "favorable dismissal" – an element that must be proved in order to pursue a harmful charge – was shown by Scottsdale. The court found that Zelig refrained from arguing about any probable cause or malice by failing to provide any facts or law to support his claims on appeal.
At the heart of accusations of Scottsdale's case is malicious prosecution. The lawsuit also alleges that Zelig and Kapilow conspired to commit a misdemeanor charge that resulted in damage to Scottsdale.
The court found that the charges were sufficient to bring a case against Zelig. Zelig, Kapilow and their client looked at a probable $ 30,000 sentence in law firms and as much as nine times that amount in criminal damages.
Scottsdale firmly took an aggressive stance against a lawyer and a public adjuster who it believed blatantly abused the court and forcibly forced Scottsdale to defend a trial that could not possibly succeed. Please allow Zelig and Kapilow to avoid a suit by informing them of the true nature of the policy, its effective date and that it would be impossible for it to respond with compensation to a claim before the policy came into force. Kindness was returned with aggression.
Scottsdale's reasonable conduct and attempts to resolve the situation in a non-confrontational manner were rewarded by abuse and Zelig's refusal to be confused with facts. The Court of Appeal was neither confused nor coerced. The results of the trial would have been interesting but the defendants arranged. Another appeal arose when the settlement amount was not paid to Scottsdale.
Adapted from Insurance Fraud – Volume I by Barry Zalma, Volume 1, available as a Kindle book and paperback.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance management, insurance claims and insurance fraud almost equal for insurers. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become professionals in insurance claims.
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