The Adjuster's Advantage
A Newsletter Devoted to the Public Adjuster
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Vol.1 No.3 March 11, 2011 |
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Who Gets The Money?
The "insured" who first retains your services is always anxious for you to get busy and recover lots of money. Whether that person is actually entitled to any money is often a problematic issue.
Remember that property insurance is personal to the named insured. The coverage does not "run with the land" as a mortgage does. The policy protects the respective interests of those identified in it. You need to know WHO is insured and WHAT their interests are. The Declarations page will identify the known parties who have an insured interest in the property. These will include the "named insured" but may also include additional named insureds, additional insureds, loss payees and one or more mortgagees. In a commercial setting there may even be a specific endorsement identifying a laundry list of insureds. The policy will not identify a bankruptcy Trustee (although coverage usually extends directly to the Trustee), or the holder of a tax lien.
You need to know how those other parties may affect your work and your entitlement to payment. In the current economy, the apparent owner of the property, either commercial or residential, may actually have little or no financial interest in the property. A financing entity may be the real party in interest, especially in a foreclosure situation. That entity may control the hiring of a Public Adjuster, may claim all of the proceeds of an insurance recovery, and may refuse to recognize your efforts in adjusting the loss. I suggest that, before you invest a great deal of time, energy and money in the adjustment of a loss, you first determine that you are representing the parties who control the disposition of the insurance proceeds and that they all agree to your retention.
You may already be aware that the Fannie Mae/Freddie Mac form of residential mortgage, used by most financial institutions and mortgage originators throughout the United States, are standard forms. Standardization allows the mortgages to be sold and re-sold without review of their terms. Both forms contain a specific provision which prohibits payment of the fee of a public adjuster or any third party (even attorneys) from the proceeds of the insurance payment.
Recent case law in New Jersey has recognized the equitable lien of a public adjuster on the insurance payment, the fund which the public adjuster helped to create, even in preference to an existing mortgagee. Both cases, however, involved private mortgages that did not contain the Fannie Mae/Freddie Mac prohibition. A subsequent case in the Superior Court, Law Division in Essex County upheld that prohibition and excluded the public adjuster from recovering a fee from the insurance proceeds received for the building loss. What do you do?
You need to ask some direct, pointed and potentially embarrassing questions, get responsive answers and then verify those answers. Review a copy of any mortgage. In New Jersey, for example, nine (9) counties (Atlantic, Burlington, Cape May, Mercer, Monmouth, Morris, Ocean, Passaic and Sussex) provide free on-line searches of land records, including mortgages. More counties will follow. The apparent owner may or may not admit unfavorable facts to you. But you need to know this information at the outset! The alternative could be very unpleasant and detrimental to your financial health.
COMMUNICATION IS THE KEY! We suggest that you contact any party with a potentially overriding interest in the insurance claim to identify yourself, explain the terms of your retention and request a specification of their interest and whether they acknowledge the terms of your retention on their behalf. If they do not intend to honor your retainer, they must say so and they probably will. Once you know their position, you can be creative in dealing with it.
If we can help you or your insured in dealing with these situations, please feel free to call us at 973-538-4100 or email us at tmaloney@thomasmaloneylaw.com . We are here to help! |
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Tom Maloney |
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Representing the Insured in:
- Coverage Disputes
- Claims
- Investigations
- Examinations Under Oath
- Suits
- Trials
- Appeals
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Associate Member New Jersey Public Adjusters Association
AV rated Attorney Martindale-Hubbell
Admitted: All State and Federal Courts in New Jersey; Third Circuit Court of Appeals; U.S. Supreme Court
Certified by the Supreme Court Of New Jersey as a Civil Trial Attorney - 1982
Qualified Mediator by the New Jersey Supreme Court
Pro Hac Vice Admissions:NY, NH, MD, USDC-SDNY,
Second Circuit Court of Appeals
Georgetown University Columbia Law School
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