Professional Guidelines

An agency of the Supreme Court of Virginia

The Virginia State Bar

Professional Guidelines

Unauthorized Practice Rule 2 - Lay Adjusters

Lay Adjusters.

UPR 2-101. Definitions.

  • (A) "Lay adjuster" refers to a non-lawyer retained by a principal as an employee, independent contractor, or employee of an independent contractor, for the purposes of
    • (1) investigating facts and circumstances related to a personal injury and/or property claim;
    • (2) reporting such facts to his principal; or
    • (3) assisting his principal in the handling, negotiation and settlement of such claim.
  • (B) "Principal" refers to:
    • (1) an insurance company as defined in Title 38.2 of the Code of Virginia;
    • (2) a self-insured; or
    • (3) any insured individual, business entity or governmental organization asserting a right to payment under an insurance policy or insurance contract issued to such individual, business entity or governmental organization arising out of the occurrence of the contingency or loss covered by such policy or contract.
  • (C) A business entity shall include but not be limited to a sole proprietorship, firm, partnership, corporation, joint venture, association or unincorporated association engaged in a commercial, charitable or professional activity.
  • (D) "Self-insured" refers to any person, business entity (as defined hereinabove) or governmental organization which is potentially liable for claims and which does not elect to insure against loss or, to the extent such organization retains by way of a percentage or deductible, a portion of its risk.

 

UPR 2-102. Investigation.

  • (A) A non-lawyer shall not for compensation, direct or indirect, advise another as to the law governing the facts as disclosed by his investigation, except:
    • (1) A lay adjuster may investigate the facts relative to a claim, and make a report thereon and an estimate of its monetary value to his principal.
    • (2) A lay adjuster may give his opinion to his principal as to liability with respect to a claim investigated by him.

UPR 2-103. Negotiation of a Settlement.

  • (A) A non-lawyer shall not for compensation, direct or indirect, negotiate or settle a claim on behalf of another party not represented by a lawyer except:
    • (1) A lay adjuster may secure and convey factual data and information, transmit settlement offers made by either party, determine and express his opinion on the extent of damage or injury and its monetary value, deliver releases or other documents, and assist the lawyer for his principal in the efficient performance of ministerial acts arising out of the settlement negotiations.
    • (2) A lay adjuster may, in the course of negotiating a settlement for his principal, make statements to the claimant or others as to his principal's liability or as to the law governing the facts to the extent consistent with the principles enunciated in the Rules Governing Unfair Claim Settlement Practices as from time to time promulgated by the State Corporation Commission of Virginia, Section 38.2-510 of the Code of Virginia, provided that
      • (a) the lay adjuster has informed the claimant or other person that his principal may be adversarial to the claimant or other person;
      • (b) it is clear that the claimant or other person recognizes the lay adjuster as an adversary; and
      • (c) it is apparent that the claimant or other person is otherwise competent to manage his own affairs.
  • (B) A non-lawyer shall not for compensation, direct or indirect, conduct negotiations to settle a claim pending in court except with the approval of the lawyer for his principal.

UPR 2-104. Preparation of Documents.

  • (A)A non-lawyer shall not, with or without compensation, direct or indirect, prepare or deliver legal instruments of any character except a lay adjuster may prepare a form of release or other document prepared or approved by his principal as to which the lay adjuster may fill in blanks supplying factual data.

UPR 2-105. Third Party Claims.

  • (A)The activities authorized under UPR 2-102, 2-103 and 2-104 are permitted only on behalf of a principal
    • (1) which is making a claim against its own insurance carrier; or
    • (2) which is subject to a claim which may be paid by the principal or its insurance carrier; or
    • (3) which is pursuing its subrogation rights.
  • (B)Except as permitted in (A)(3) above, neither a non-lawyer nor a lay adjuster may engage in any of the activities described in UPR 2-102, 2-103 and 2-104, on behalf of any principal or other party which is making or may make a claim against a third party or against an insurance carrier or other potential guarantor or payor of third party liability to the principal or other party. Claims against an insured's insurance carrier for Uninsured Motorists or Under Insured Motorists coverage shall be deemed to be third party claims.

Unauthorized Practice Considerations.

UPC 2-1. For example, the activities of a lay adjuster in claims may consist of acting on behalf of his principal in identifying the facts and parties, securing witness statements, estimating the costs of repair, and compiling other information about the claim. Statements are given by the lay adjuster to his principal from whom he receives instructions as to the disposition of the claim. The lay adjuster then may attempt to settle the claim at the monetary value his principal is willing to pay or accept.

UPC 2-2. As a part of his factual analysis, a lay adjuster may express his opinion on the extent of damage or injury and the monetary value of any claim investigated by him.

UPC 2-3. A lay adjuster may, incident to his investigation of the facts, give to his principal his opinion of liability as disclosed by his investigation. Such lay adjuster is authorized to make a settlement on behalf of his principal and, in the course of such negotiations, make statements as to his principal's liability or as to the law governing the facts to the extent consistent with the Rules Governing Unfair Claim Settlement Practices, as applicable. A lay adjuster not now covered by such Rules may make statements as to his principal's legal liability, or as to the law governing the facts to the extent consistent with the principles enunciated in such Rules, and with the requirements of UPR 2-103(A)(2).

UPC 2-4. In a claim pending in court, a lay adjuster may properly secure factual data and transmit settlement offers made on behalf of his principal when acting with the consent of the lawyers for both plaintiff and defendant. With such consent, he may also assist in the settlement negotiations with the approval of the lawyer for his principal.

UPC 2-5. A lawyer who is regularly employed on a salary basis as a lay adjuster is deemed to be acting on behalf of his employer and is subject to the same limitations with respect to representing his employer's customers or patrons as are imposed on his employer hereunder.

UPC 2-6. If a lay adjuster in any case attempts to draft legally binding settlement papers, he is engaged in the unauthorized practice of law. A lay adjuster may draft a receipt or fill in blanks supplying factual data in a form of release or other document prepared or approved by his principal, but he may not otherwise undertake to draft particular provisions intended to have legally binding effect in a specific case.

Updated: April 20, 2010