I just lately wrote a few controversial lawsuit involving anti-public adjuster endorsements being utilized by surplus traces insurers in The Insurance coverage Business’s New Playbook: Rent a Public Adjuster, and You Might Lose Protection. The case is pending in federal court docket in Massachusetts. 1 The insurer, Velocity Threat Underwriters, filed a movement to dismiss the lawsuit, and the public adjuster plaintiff has responded with a sharply worded reply defending each the deserves of the case and the jurisdiction of the Massachusetts court docket to listen to it. It’s quickly turning into probably the most important authorized battles within the nation over whether or not insurance coverage firms can use coverage endorsements to discourage or successfully prohibit policyholders from hiring licensed public adjusters.
The case started after a Rhode Island nation membership suffered a considerable fireplace loss and allegedly wished to retain Swerling Milton Winnick Public Insurance coverage Adjusters (“SMW”) to help with the declare. In accordance with the grievance, the insurance coverage coverage contained an “Anti-Public Adjuster Endorsement” offering that the insured couldn’t “rent, have interaction, retain, contract with, or in any other case make the most of the providers of a public adjuster” in reference to a coated loss. The lawsuit alleges that the endorsement and associated insurer conduct interfered with the insured’s potential to acquire skilled illustration and unlawfully harmed the general public adjusting occupation.
Velocity’s movement to dismiss is well-crafted and focuses totally on procedural defenses moderately than totally defending the endorsement on the deserves. The insurer argues that the federal court docket in Massachusetts lacks private jurisdiction as a result of the property, the insured, and the loss are all situated in Rhode Island. Velocity additionally contends that Massachusetts client safety legal guidelines don’t apply as a result of the alleged conduct didn’t happen “primarily and considerably” in Massachusetts. Additional, the insurer argues that the general public adjuster plaintiff lacks standing as a result of it’s not a celebration to the insurance coverage coverage and due to this fact can’t search to invalidate or reform the coverage’s endorsement.
The movement repeatedly frames the dispute as nothing greater than the insurer exercising its contractual rights. Velocity argues that the endorsement was a part of a bargained-for surplus traces coverage and that imposing contractual provisions can’t quantity to tortious interference or unfair enterprise conduct. The insurer additionally assaults the grievance as speculative, arguing that the allegations regarding threats, coercion, and broader business practices are unsupported and conclusory.
The reply transient filed by SMW pushes again arduous. One of many extra attention-grabbing features of the reply is its argument that Velocity shouldn’t be some distant firm with no Massachusetts connection. The general public adjusters level out that Velocity is registered to do enterprise in Massachusetts, seems on the Massachusetts Division of Insurance coverage record of permitted surplus traces carriers, and actively insures Massachusetts property. Concurrently with the reply, the plaintiff filed a Movement for Go away to Take Jurisdictional Discovery relating to the extent to which Velocity makes use of these anti-public-adjuster endorsements in Massachusetts insurance policies.
The reply additionally reframes the alleged harm. SMW argues that this isn’t merely about shedding a single charge from one declare. The transient states that public adjusting corporations construct goodwill, publicity, referrals, and fame by means of dealing with giant and high-profile losses. The plaintiff argues that being excluded from these claims creates enterprise harms which can be troublesome to quantify and due to this fact represent irreparable harm supporting injunctive reduction.
This argument might resonate with a court docket as a result of Massachusetts legislation has traditionally acknowledged that harm to goodwill and fame can represent irreparable hurt. The reply additionally sharply criticizes Velocity’s portrayal of the requested injunction as some sweeping nationwide order that might cripple the insurance coverage business.
The general public adjusting agency argues that Velocity’s filings focus closely on procedural defenses whereas largely avoiding the central substantive concern about whether or not an insurer needs to be permitted to situation protection on the insured giving up the suitable to rent a licensed public adjuster. That concern stays the elephant within the courtroom.
Public adjusters exist as a result of many policyholders lack the experience essential to navigate advanced property claims after catastrophic losses. Insurance coverage firms make use of skilled adjusters, consultants, engineers, accountants, and attorneys. The general public adjuster occupation developed as a result of policyholders usually want their very own experience to stage the taking part in subject. The broader concern is whether or not endorsements like this are merely one other try and isolate policyholders throughout the claims course of.
The court docket has not but dominated on the movement to dismiss or the request for injunctive reduction. I’ll proceed to maintain readers up to date as this necessary lawsuit develops.
Thought For The Day
“Justice delayed is justice denied.”
— William E. Gladstone
1 Swerling Milton Winnick Public Insurance coverage Adjusters, Inc. v. Velocity Threat Underwriters, No. 1:26-cv-12095 (D. Mass. 2026).