2.1 Solicitation Restrictions & Prohibited Conduct
Key Takeaways
- Under 11 NYCRR § 25.3(a) (Regulation 10), public adjusters are strictly prohibited from soliciting losses or entering into compensation agreements between 6:00 PM and 8:00 AM.
- The solicitation curfew applies across all communication channels, including in-person visits, scene canvassing, phone calls, SMS text messages, direct mail, and electronic messaging.
- Under 11 NYCRR § 25.3(b), a public adjuster may not pay anyone a fee or commission for procuring a loss unless that person was a licensed public adjuster, or a licensed broker who was broker of record or designated in writing before the loss.
- Under 11 NYCRR § 25.3(c), a licensee may not be employed by or associated with anyone whose public adjuster license has been revoked, and anyone who solicits, investigates, or adjusts claims for a public adjuster for pay must be licensed (Ins. Law § 2101(g)(2)).
- A public adjuster may refer an insured to a repair business it owns only with prominent disclosure in the compensation agreement, a separate repair contract, and no referral compensation (Ins. Law § 2108(s)(2); 11 NYCRR §§ 25.6(e), 25.7(c)).
Solicitation Restrictions & Prohibited Conduct
Public adjusters in New York occupy a sensitive commercial position. Because they interact with policyholders who have recently suffered traumatic property damage—such as residential fires, structural collapses, or severe storm destruction—the State of New York imposes strict regulatory safeguards. The primary administrative body of rules governing day-to-day practice conduct is codified in Title 11 of the New York Codes, Rules and Regulations (11 NYCRR) Part 25, widely known throughout the insurance industry as Insurance Department Regulation 10.
Promulgated by the Superintendent of the Department of Financial Services (DFS) under statutory authority granted in N.Y. Insurance Law §§ 301 and 2108, Regulation 10 establishes rigorous ethical standards, prevents high-pressure solicitation tactics, bars illicit financial entanglements, and ensures that the public adjuster remains an undivided fiduciary advocate for the insured.
The Solicitation Curfew: 11 NYCRR § 25.3(a)
Among the most heavily tested provisions on the New York Public Adjuster licensing examination is the statutory solicitation curfew. Under 11 NYCRR § 25.3(a):
"No individual or entity licensed to act as a public adjuster or named as a sublicensee in any public adjuster's license shall, between the hours of 6:00 p.m. and 8:00 a.m., directly or indirectly, including through a contractor or any other individual or entity, solicit the adjustment of a loss from an insured or from any insurance broker or other individual or entity, whether by personal interview, telephone, or any other method; accept any order, commission or contract for the adjustment of any loss that is within the scope of Insurance Law section 2108; or permit an agent, representative or employee to do so."
This creates a mandatory blackout period during which all solicitation, contracting, and order acceptance is strictly prohibited by law.
| Time window | Rule |
|---|---|
| Permitted Window (8:00 AM – 6:00 PM) | Adjusters may contact prospective clients, conduct in-person interviews, inspect damaged premises with policyholder consent, present compensation agreements, and execute written contracts. |
| Prohibited Window (6:00 PM – 8:00 AM) | Complete blackout on all direct and indirect solicitation, signing contracts, accepting retainers, or formalizing client representation. |
Regulatory Rationale: Preventing Traumatic Harassment
The legislative and regulatory purpose behind § 25.3(a) is consumer protection. Immediately following a late-afternoon or nighttime catastrophe, property owners are frequently displaced, emotionally shaken, and physically exhausted. Historically, aggressive individuals monitored emergency radio scanners to arrive at active fire scenes ("fire chasing") to pressure distressed victims into signing binding representation contracts before they could consult family, legal counsel, or their insurance carriers. The 6:00 PM to 8:00 AM prohibition eliminates predatory nocturnal contact and grants property owners time to regain composure before making financial and legal commitments.
Scope of Prohibited Outreach
The curfew applies broadly to both direct and indirect solicitation. Prohibited activities between 6:00 PM and 8:00 AM include:
- Physical appearance at a fire or casualty loss scene to distribute business cards or solicit representation.
- Visiting temporary shelters, hotels, or neighbors' residences where displaced insureds are staying.
- Telephone calls, voice messages, or automated ringless voicemails.
- SMS text messages, cellular instant messages, and social media direct messaging.
- Hand-delivering promotional flyers, marketing packets, or contracts to the damaged premises or temporary dwelling.
- Soliciting indirectly through a contractor, restoration company, or any other person. The 2021 amendment to Regulation 10 added this wording expressly.
Unsolicited Policyholder Inquiries During Blackout Hours
A common licensing exam scenario tests what happens when an insured initiates contact during the prohibited window:
- If an insured calls a public adjuster at 11:30 PM requesting urgent assistance, the adjuster may speak with the insured to provide immediate safety precautions, confirm that emergency mitigation should occur, and schedule an appointment for the following morning.
- However, the adjuster cannot execute a written compensation agreement, take a digital or written retainer, or accept a binding order before 8:00 AM. Contracting before 8:00 AM violates § 25.3(a) regardless of who initiated the dialogue.
Paying for Business: 11 NYCRR § 25.3(b)
Section 25.3(b) controls who may be paid for bringing a loss to a public adjuster. A licensee or sublicensee may not divide or give any fee, commission, or other compensation to anyone for procuring, or helping to procure, the adjustment of a loss unless that person, at the time of the loss, held:
- A public adjuster's license in force; or
- An insurance broker's license in force, and the broker either was the broker of record who placed the insurance involved or was designated in writing to act for the insured before the loss occurred.
Everyone else is off limits. That includes emergency board-up, tarping, and water-mitigation companies; roofers and general contractors; firefighters, police, and other public personnel; real estate agents and property managers; and any broker who is not the broker of record or pre-loss designee. Paying any of them a "finder's fee" or referral commission for a claim violates § 25.3(b). Any violation of Part 25 is grounds to refuse, revoke, or suspend the license.
Revoked Licensees and Unlicensed Staff
- 11 NYCRR § 25.3(c): no licensee or sublicensee may be employed by, or associated with, any individual or entity whose public adjuster license has been revoked by the Superintendent.
- Ins. Law § 2101(g)(2): anyone who, for compensation, solicits, investigates, or adjusts claims on behalf of a public adjuster is within the definition of public adjuster and must be licensed. A firm cannot send unlicensed canvassers or estimators to do that work.
- Clerical staff: employees who handle filing, scheduling, and billing, without soliciting, investigating, or adjusting, are not performing licensed activity. The licensee remains responsible under Ins. Law § 2110 for the conduct of its business.
Referrals, Ownership Interests, and the Best-Interest Duty
Ins. Law § 2108(s)(1) gives every public adjuster an affirmative duty to act on behalf of and in the best interests of the insured. New York does not flatly prohibit a public adjuster from owning a construction or restoration business. DFS's Office of General Counsel (Opinion No. 08-09-15) concluded that a licensed public adjuster may also own and operate a construction or renovation company, but must comply with the Insurance Law in both roles. The statute and Regulation 10 control how the two roles interact:
| Situation | Rule |
|---|---|
| PA receives compensation for referring the insured to a vendor | Allowed only if prominently and clearly disclosed in the written compensation agreement (§ 2108(s)(2)(A); 11 NYCRR § 25.6(e)(1)). The referral compensation counts toward the fee cap (§ 25.7(b)). |
| PA (or spouse) has a financial or ownership interest in the vendor | Referral allowed only if the interest is prominently disclosed in the compensation agreement (§ 2108(s)(2)(B); § 25.6(e)(2)). The repair contract must be a separate document that itemizes all fees and cannot be used to increase the PA's compensation, and the PA may receive no referral compensation at all (§ 25.7(c)). |
| Vendor is a relative within the second degree of consanguinity | The relationship must be disclosed in the compensation agreement (§ 25.6(e)(3)) |
| Referral made after the agreement is signed | No referral compensation unless the PA obtains the insured's acknowledged disclosure statement (Form 2) and gives the insurer a copy (§ 25.6(e)(4)) |
| Choice of vendor | The PA may not require the insured to use any individual or entity (§ 25.6(e)(5)) |
Failure to act in the insured's best interests, or to make these disclosures, is an express ground for discipline under Ins. Law § 2110(a)(15).
Summary of Permissible vs. Prohibited Practice Conduct
| Practice Area | Permissible Conduct | Prohibited Conduct |
|---|---|---|
| Solicitation Timing | Soliciting, discussing, and executing agreements between 8:00 AM and 6:00 PM. | Directly or indirectly soliciting or executing contracts between 6:00 PM and 8:00 AM. |
| Loss Scene Conduct | Responding to daytime inquiries; meeting property owners by scheduled appointment. | Fire chasing; monitoring emergency radio traffic to canvass late-night fire or collapse scenes. |
| Paying for Referrals of Losses | Paying for procuring a loss only to a licensed public adjuster, or to a licensed broker who was broker of record or designated in writing before the loss. | Paying finder's fees to contractors, emergency crews, other brokers, or unlicensed scouts. |
| Staffing & Delegation | Utilizing unlicensed staff for clerical data entry, file organization, and customer support. | Deploying unlicensed personnel to inspect damages, scope repairs, negotiate with insurers, or solicit clients. |
| Repair Referrals | Referring an insured to a vendor with compensation, ownership interests, and family relationships disclosed as § 2108(s) and § 25.6(e) require. | Undisclosed referral fees; any referral fee from a vendor the PA owns; requiring the insured to use a particular vendor. |
At 9:30 PM on a Tuesday, a licensed New York public adjuster monitors a local emergency broadcast and observes that a commercial warehouse has suffered extensive roof collapse. The adjuster immediately drives to the site, introduces themselves to the building owner outside the property, and offers to handle the claim. Which statement correctly evaluates the adjuster's conduct?
A water mitigation contractor refers a homeowner with significant burst-pipe damage to a licensed public adjuster. To thank the contractor, the adjuster promises to pay the contractor a 10% referral commission out of the fee collected from the final insurance settlement. How does New York insurance regulation treat this arrangement?
A licensed New York public adjuster also owns a general contracting company. After agreeing to adjust a fire claim, the adjuster wants to refer the insured to that company for the repairs. Which statement is correct under Ins. Law § 2108(s) and Regulation 10?