A Florida court has thrown out a rule banning public adjusters from soliciting customers within 48 hours of a disaster or other insurance claims event.
The First District Court of Appeal ruled that the restriction on solicitation violates commercial speech protected in the state Constitution because it is too broadly written.
The state had argued that the statute regulates only the time, place and manner of commercial solicitation and is thus constitutional. The state also asserted that rule did not prohibit a public adjuster from contacting a potential claimant through email or in writing.
However, the court held that the statute does not simply regulate the time, place and manner and that it also prohibits all public adjuster-initiated contact, whether electronic, written or oral. In effect, the rule “unambiguously bans all solicitation for 48 hours” and thus is an unconstitutional restriction on commercial speech, according to the court.
The statute says:
A public adjuster may not directly or indirectly through any other person or entity initiate contact or engage in face-to-face or telephonic solicitation or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event that may be the subject of a claim under the insurance policy unless contact is initiated by the insured or claimant.
The court said the state failed to prove that the ban was narrowly tailored to meet the state’s objectives.
“While a statute regulating commercial speech need not be the least restrictive means of achieving the state’s asserted goal objective, it must be narrowly tailored to achieve the desired objective,” the court wrote.
Frederick Kortum, the public adjuster who filed the complaint, argued that the first 48 hours after a claim inducing event are critical because that is a period when a policyholder can make decisions that can substantially diminish recovery.
The court wrote that the state failed to show that the ban is justified by the possibility that some public adjuster may unduly pressure traumatized victims or otherwise engage in unethical or unprofessional behavior. The court said the state also failed to prove that state rules of professional conduct governing members the Florida Association of Public Insurance Adjusters are insufficient to regulate unduly coercive or misleading solicitation by public adjusters.
The Florida Association of Public Insurance Adjusters (FAPIA) praised the ruling.
“What is most important about this ruling is the impact it will have on Florida’s insured policyholders, providing them with unfettered access to the only licensed, trained and bonded advocates who fight for their rights,” the group said in a statement.
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