Connecticut Public Adjusters, Beware
Recently, a client in Connecticut had a series of disputes with a public adjustment firm in connection with a residential fire loss. Setting aside some other issues, the firm violated Connecticut law in two respects: (1) by failing to provide a signed contract to our clients; and (2) using outdated, consumer protection language mandated by a Connecticut law. This is where things get interesting, at least for law geeks.
The Connecticut insurance regulations at Section 38a-788-6 (mandating a specific “Form of Contract” and contract language as to public adjustment contracts) require that an adjuster’s employment contract include certain language protecting the client, including a cancellation provision as follows:
You may cancel this contract by notifying us at the address shown `on the other side of this page, in writing, by certified mail, postmarked no later than midnight two (2) days following the day this contract is signed. If the contract is signed on a Friday, Saturday or Sunday, you will have until midnight on the following Tuesday to mail the notice of cancellation to us as described above.
The contract must also state, “This form is in compliance with Section 38a-788-6 of the Regulations of the Connecticut Insurance Department.”
The rub is that the Connecticut statute, CGSA Sec. 38A-724, provides that:
…Any such contract signed on or after October 1, 2013, shall contain a provision, prominently displayed on the first page of such contract in not less than twelve-point boldface type, specifying that the insured may cancel the contract, provided such insured notifies the public adjuster at such public adjuster’s main office or branch office at the address shown in the contract, by certified mail, return receipt requested, posted not later than midnight of the fourth calendar day after the day on which the insured signs the contract, except that if the signing is on a Friday, Saturday or Sunday, the cancellation shall be posted not later than midnight of the Thursday immediately following, and thereafter the contract shall be void ab initio.
The statute also says that, “any such contract signed on or after October 1, 2013, that does not display the provision as specified in subdivision (1) of this subsection shall be void ab initio,” so this issue can be very important to consumers and adjusters.
My clients’ adjustment firm had used language based on the regulation. Again, there were other issues in this case, but had we litigated, our clients likely would have prevailed and avoided any obligation to the adjuster, based upon Connecticut case law holding that a statute prevails over a regulation in the event of a conflict between the two. That rationale is even more compelling where, as here, the statute was updated after the regulation went into effect.
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