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Linder v. Insurance Claims Consultants2/25/2002
IN THE ORIGINAL JURISDICTION
Heard September 25, 2001
We granted petitioners' request to hear this declaratory judgment action in our original jurisdiction. Petitioners seek to have the Court declare that the actions of respondents, as public insurance adjusters, constitute the unauthorized practice of law. A lawsuit between these parties is currently pending in circuit court based on respondents' claim against petitioners for breach of contract. That lawsuit has been stayed pending the Court's decision in the instant matter.
FACTUAL BACKGROUND
The factual background for this case is both general and specific. We first take a look at the business of public insurance adjusting, in general, and then detail the circumstances surrounding the dispute between the parties.
Public Insurance Adjusting
Insurance adjusting is the business of settling an insurance claim. Black's Law Dictionary defines an "adjuster" as one "appointed to adjust [i.e., settle] a matter;... One... who makes any adjustment or settlement, or who determines the amount of a claim." Black's Law Dictionary 27 (6th ed. 1991).
First-party public insurance adjusting involves the situation where "an insured hires a public adjuster to assist the insured in filing a claim of loss with its insurer" and is based on contract law. Utah State Bar v. Summerhayes & Hayden, 905 P.2d 867, 868 (Utah 1995). Specifically, a first-party adjuster is retained to:
determin the amount of loss recoverable under the policy. The adjuster documents and measures damages, gathers relevant facts, determines repair or replacement costs, and submits the claim to the insurance company. The adjuster then negotiates with the insurance company, or the insurance company's adjuster, to obtain the best settlement for the insured. Id.
In contrast, third-party adjusting involves the situation where a "stranger to the insurance contract" asserts a claim against an insured tortfeasor. Id. "In third-party adjusting, an adjuster represents an injured client in making a claim under a liability insurance contract against an insurance company that insures or indemnifies a third person who is or may be liable for the injury caused to the adjuster's client." Id. at 870. Therefore, the third-party adjuster "must determine the extent of the liability, rights, and duties of the parties before attempting to resolve the issue of a settlement amount." Id. at 868-69.
A first-party adjuster is generally considered to be synonymous with the term "public adjuster." According to the National Association of Public Insurance Adjusters (NAPIA), the term "Public Insurance Adjuster" means a representative of an insured regarding the adjustment of an insurance claim for loss resulting from "fire and its allied lines." In its amicus brief, NAPIA asserts that the main question a public adjuster is hired to answer is that of "how much?" In that capacity, the public adjuster "documents and measures the damage caused by a property loss to the insured."
Recently, a new South Carolina statute went into effect regulating public insurance adjusting. See S.C. Code Ann. ยงยง 38-48-10 through -160 (Supp. 2000). Under the statute, "Public Adjusting" is defined as:
investigating, appraising or evaluating, and reporting to an insured in relation to a first party claim arising under insurance contracts, that insure the real or personal property, or both, of the insured. Public adjusting does not include acting in any manner in relation to claims for damages to or arising out of the operation of a motor vehicle. Public adjusting does not include any activities which m
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