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Florida’s Supreme Court Strikes Down Law Prohibiting Public Adjusters From Aiding Policy Holders During the First 48 Hours After a Catastrophe

cat2_brokenwindows.jpgIn 2004 and 2005, Florida saw two of the most costly hurricanes seasons to date. Florida alone had four major hurricanes making landfall in a span of approximately 45 days in 2004, followed by another active hurricane season in 2005.

Thereafter, many home owners submitted insurance claims to their insurance companies. Studies revealed that homeowners that hired public adjusters were generally paid more during the claims process than those who did not.

Consequently, the insurance lobby ran to Tallahassee in an effort to slow down the steady growth of many small business in the State of Florida engaged in public adjusting. Indeed, the Florida legislature passed a law back in 2008 that prevented public adjusters from contacting potential customers within the first 48 hours after a serious weather event. Insurance companies, the primary supporters of the legislation, alleged that adjusters were increasing the cost of premiums by pressuring vulnerable homeowners to file claims against their insurers despite the fact that the homeowners had been paying for insurance for all those years. After all, isn’t insurance supposed to be there to help one cope with a natural disaster like a hurricane?

At any rate, the first 48 hours after a significant catastrophe could be critical to properly preserving and documenting an insurance claim. For example, a policyholder may not properly preserve evidence or find all damages. It is without question that the first two days are also very crucial to a claims investigation by a public adjuster because a policyholder may not stay at a severely damaged property and move to another location, which could lead to that policy holder not receiving the necessary information regarding the hiring of their own public adjuster and that policy holder may otherwise fail to properly document and preserve the claim during that crucial period.

As we discussed in our blog back on December 31, 2010, one adjuster, backed by countless supporters, decided to take on the state by questioning the legality of the provision through the legal system. On July 5th, the Florida Supreme Court struck down the subject provision that attempted to curtail the business practices of so many small businesses in Florida and to help so many policy holders in Florida correctly file insurance claims against their insurance companies.

According to the highest court in the state, the provision violated the Constitution of the United States because it barred commercial speech, which is protected under the 1st amendment. The government had the burden of showing that the regulation directly advanced an important interest and is no more restrictive of speech than necessary. In short, the government failed to satisfy the latter part of the test by “ban[ning] all types of communication during that [48-hour] period.”

This is particularly true and highlighted by the fact that there is simply no reason for a public adjuster to contact a policy holder but to engage in communication about the commercial transaction of public adjusting and the claims process in general. Such a ban would on such communication would be tantamount to banning free commercial speech and ending the competitiveness and livelihood of so many small businesses in Florida while depriving many Floridians of their right to engage in a commercial transaction with a public adjuster.

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