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Claims Adjuster Abdicates His Responsibilities to a Restoration Contractor

Publication date: July 3, 2017 | Last update: April 26, 2020
Targeted audience

When, While Processing a Claim, a Claims Adjuster Abdicates His Responsibilities and Hands Them Over to a Restoration Contractor

This summary does not constitute a legal opinion. The information it contains may not reflect the current state of the law.

The complaint 

Back from a weekend at the cottage in August, the insureds, who were owners of a duplex, saw that serious water damage had occurred due to an upstairs leak. Most of the damage was in the kitchen.

The insureds reported the loss to their insurer. Initially, a telephone claims adjuster took on their file. Two months later, their file was assigned to an on-the-road claims adjuster.

The insureds complained about the professional practice of both claims adjusters, stating that the restoration work was of very poor quality, had to be redone a number of times and that their belongings had been damaged during the course of the work.  

However, for the most part, their complaint focussed on the attitude of the claims adjusters, who did not seem to take the many complaints they made during the course of the work seriously. The insureds had the impression that the adjusters only trusted the word of the insurer-certified contractor.

The ethics investigations

The file was transferred to an on-the-road claims adjuster after the insureds complained to the telephone claims adjuster about the poor quality of the work, the fact that the employees of the insurer-certified contractor did not arrive at the worksite when expected and that the damages were getting worse.

Two months after the loss, the on-the-road claims adjuster finally came to inspect the damage on the second floor and the ground floor, as well as the work done thus far.

It was agreed that the work would be redone by the same contractor and that the furniture would be removed from the residence. However, the contractor decided to remove only some of the insureds’ belongings and to store them in an outside, unheated shed.

A few weeks later, the insureds demanded that the contractor stop the work since it was still of poor quality. The damaged area had been improperly closed off from the rest of the house and the damage was continuing to worsen. Despite this request, the contractor’s employees continued to come to the worksite. In order to have their wishes respected, the insureds had to resort to serving the contractor and the insurer with a formal notice.

Almost four months after the loss, a meeting was held on-site with the insureds, the claims adjuster and the insurer’s assessor, who saw the faulty workmanship for himself.  

Then—unannounced—a new contractor arrived to continue the work. He explained that the first contractor was having financial difficulties and was unable to finish what he had started. Upset that they were the last to know, the insureds refused the new contractor.

At a meeting organized at the insurer’s offices, it was agreed that the insureds would find a contractor of their choice to correct and finish the work. When the insureds submitted a quote, the insurer found it exorbitant, accusing them of trying to have extra work done, and stopped paying for their accommodations.

Over five months after the water damage occurred, the insureds finally returned home—after having had to finish the work themselves with the help of friends; after the subcontractors, who had not been paid by first contractor, had registered two legal mortgages against their residence; and after they had launched a lawsuit against their insurer for compensation.

The formal complaints*

Here are a few of the charges laid against the telephone claims adjuster:

  • Failed to act with professionalism and showed himself unable to control the insured’s claim for water damage, in particular:

a.   by not knowing the nature, extent and/or costs of the work to be done and by delegating all responsibility to the building contractor who had been certified by the insurer;

b.   by not attempting to find out how long the repairs to the insureds’ residence in the wake of water damage in August would last.

  • Pursued his activities negligently by not informing the insureds that they could ask for a copy of the damage assessment carried out by the insurer following the claim they made for water damage in August.   

Here are a few of the charges laid against the on-the-road claims adjuster:

  • Failed to act with professionalism and showed himself unable to control the insured’s claim for water damage, in particular:

a.   by delegating his own responsibilities to suppliers and building contractors who had been certified by the insurer;

b.   by not knowing and not trying to find out when, why and which personal property would be put in storage and which property would remain on-site during the work;

c.    by waiting until December to obtain the list of non-recoverable property assessed by the supplier.

  • Pursued his activities negligently and failed to provide the insureds with the explanations they required to properly understand the settlement of their claim, in particular by not informing them that they could request a copy of the damage assessment carried out by the insurer.

The Discipline Committee’s Rulings Regarding Guilt and Sanctions

The Discipline Committee found the two adjusters guilty of the charges indicated above. There is much to be learnt from these decisions, including:

With respect to the in-house procedure of giving a copy of the damage assessment to the insureds only upon request, the committee wrote:

[69]  It is worthwhile recalling that a professional’s ethical obligations take precedence over an employer’s instructions and that this defence is inadmissible;

[70]  The testimony of the insureds showed that they had unsuccessfully asked for a copy of the assessment several times;

[72]  Pursuant to section 14 of the Code of Ethics of Claims Adjusters, adjusters must promote measures to provide education and information in their field of professional activities;

[73]  In practice, this means that a claims adjuster must not follow his clients lead. He must be proactive and anticipate the consumer’s information needs.

Further on, the committee added:

[119] According to the testimony of the on-the-road adjuster, he gave the insureds a copy of the quote that provided no indication of the cost of the work.

[120] The committee considers that without any indication of the cost of the work, this copy of the quote was of absolutely no use to the insureds.

With respect to the lack of control over the processing of the claim, the committee concluded that the insureds went through a true nightmare due to the claims adjusters’ lack of follow-up, and wrote:

[91] This nightmarish situation could have been easily avoided had the on-the-road adjuster exercised much tighter control.

[92] Not only did the adjuster delegate his responsibilities to the contractor and the suppliers—one could even say that he abdicated all his responsibilities to them.

[93] This disaster could have been averted by better controlling the situation and paying closer attention to the insureds’ complaints.  

And in the decision on sanctions, the committee added:

It appears that the on-the-road claims adjuster abdicated all his responsibilities to the contractor and the suppliers. By thus delegating his responsibilities to incompetent individuals, the respondent made himself liable for their errors and omissions.


The Discipline Committee’s landmark decisions confirm that the legislator’s intent is clear: when making a claim, the presence of a competent, responsible claims adjuster who is in control of the situation ensures that the public is protected. No one else may, nor should, play this role.