The following informal opinion was issued by the Office of the Attorney General on February 13, 2001 and April 4, 2001, representing the position of the New York State Department of Insurance.
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re: insurance adjusters and appraisers
No specific facts related to these questions were provided.
authorization of insurance adjusters
a. independent adjusters
n.y. in s. § 2101(g)(1) (mckinney 2000) defines the term “independent adjuster” as:
Although the insurance law does not specifically define the term “adjust”, it means to liquidate or bring to a satisfactory state so that the parties agree on the result. see Black Law Dictionary 27 (6th ed. 1993).
Exempt from the definition of an independent adjuster are officers, directors, or regular salaried employees of a licensed insurer who adjust on behalf of the insurer, unless they are acting as auto body repair appraisers as defined by n.y. in s. law § 2101(j) (mckinney 2000). In such cases, auto body repair appraisers must be licensed as independent adjusters, according to N.Y. in s. law § 2108 (a)(3) (mckinney 2000).1 Employees of a licensed insurer who adjust do so exclusively for that insurer, while independent adjusters may work for several different insurers.
further, pursuant to n.y. draft codes r. & reg. tit. 11, § 216.7 (b) (3) (2000) (regulation 64), the person who inspects the damaged vehicle on behalf of the insurer must be licensed or authorized under section 21 of the insurance law, to negotiate a loss with the insurer. insured.
b. public adjusters
n. Y. in s. § 2101(g)(2) (mckinney 2000) defines the term “public adjuster” as:
Section 2101 outlines the types of insurance that a public adjuster can adjust on behalf of policyholders. motor vehicle claims are not included in the types of insurance listed in this section. with respect to those classes of insurance not listed, no license is required under the insurance law. however, such person may be practicing law or a private investigator, for which a license is required. we offer no opinion on when such a license is required.
Regulation 64 also allows an insured to appoint a representative, such as a repair shop, to negotiate the cost of motor vehicle repair. When the repair shop is located in New York, it must be registered in accordance with the provisions of the Motor Vehicle Repair Shop Registration Act (Section 12-A of the Vehicle and Traffic Act). the insured’s registered broker may also be a designated representative. see n.y. draft codes r. & reg. tit. 11, § 216.7(a)(2) (2000).
review an offer of independent adjusters
n.y. comp codes r. & reg. tit. 11, § 216.7 (b) (2000) (regulation 64) provides the following:
therefore, if an insurer fails to comply with the procedures set forth in regulation 64, or engages in an unfair settlement practice amounting to a general business practice, the insured or claimant may file a complaint with the office of consumer services and will investigate the allegations in the complaint.
In addition, the aggrieved party may exercise the option of filing a lawsuit to resolve the matter.
In situations where the insured makes a claim under their own property insurance policy, the insured may sue the insurer under the insurance contract, or the parties may agree to arbitrate all controversies or disputes arising in connection with the insurance policy. Usually, this agreement appears in the form of an arbitration clause in the insurance policy itself. The insurance policy may contain an appraisal clause specifying that when the insured and the insurer disagree on the amount of the loss, the matter will be submitted for appraisal. see, for example, n.y. in s. law § 3404 (mckinney 2000). Significantly, arbitration differs from an appraisal in that arbitration disposes of the entire dispute between the parties, while an appraisal is limited to deciding the collateral issue of the value of the loss.
however, when the insured has taken out civil liability insurance, the third party claimant generally has no direct recourse against the insurer, but only against the insured.
Disputes arising from no-fault motor vehicle claims, involving non-serious injuries, are subject to special rules, including arbitration.
adjusters versus appraisers
Regarding the distinction between appraisers and adjusters, an adjuster is a person who acts on behalf of an insurance company or an insured in the adjustment or settlement of claims. see n.y. in s. law §2101 (mckinney 2000). an appraiser is a person selected or appointed by a competent authority or an interested party to determine and establish the real value of property or real estate. see Black Law Dictionary 67 (6th ed. 1993).
therefore, the line of demarcation between an appraiser and an adjuster is fairly sharp, as merely conducting an appraisal does not equate to negotiating, investigating, and adjusting claims. however, an adjuster’s role may encompass the evaluation of claims.2
The above opinion is informal and not binding on any court. For more information, you may contact Attorney Pascale Joasil at the New York City office.
1 n.y. in s. section 2101(j) of the law states the following:
2 see n.y. in s. § 2101(j) law (mckinney 2000) (illustrating that the definition of an auto body repair appraiser encompasses the function of appraising claims).