This post follows “Does the Insurance Carrier Pay the Public Adjuster Fee?” where I indicated that public adjuster fees cannot be collected under a first-party insurance policy. Today’s discussion indicates that in a commercial policy allowing for “claims adjustment expenses,” public adjuster fees, but not accounting fees, can be collected per one’s court’s view.
Following Hurricane Katrina, CSX Corporation sought reimbursement from its insurers for the millions it spent responding to storm losses. Among the disputed items were fees CSX paid to PricewaterhouseCoopers (PwC), which the company hired to collect and analyze data in support of its insurance claim. The core legal question was whether these PwC costs qualified as “claims adjustment expenses” under CSX’s property insurance policies.
The policy provided that coverage extended to “the expense of debris removal, rerail, salvage, defense, claims adjustments expenses and rerouting of insured property damaged by an insured peril.” CSX argued that PwC’s work fell within this provision because it was integral to the adjustment of its claim. The company maintained that the phrase “claims adjustments expenses” was broad, unqualified, and not limited solely to the costs incurred by insurers. According to CSX, the process of adjusting a claim necessarily involved both the insurer’s adjuster and the policyholder’s representatives, and PwC’s services in preparing and presenting the claim were part of the same adjustment process. To hold otherwise, CSX contended, would render the coverage meaningless, since the insured never directly pays the insurer’s own adjusters.
The insurers rejected this interpretation. The insurers argued that the ordinary meaning of “claims adjustments expenses” referred to the costs of adjusting claims from the insurer’s perspective. Those would be expenses associated with investigating, evaluating, and settling losses. In their view, what PwC did was “claim preparation,” not claim adjustment. They argued that CSX was wrongly trying to make the provision into “claims preparation expense” coverage.
They stressed that PwC was retained by CSX, not by the insurers, and that claim preparation expenses are traditionally borne by policyholders unless a policy specifically provides otherwise. To accept CSX’s reading, they warned, would transform ordinary consulting and accounting fees into covered losses, a result the insurers insisted the contract language did not support.
The court ultimately sided with the insurers. 1 It looked to industry definitions, noting that “in the insurance industry, the phrase ‘loss adjustment expenses’ generally means the expense incurred by the insurer to investigate and settle a claim.”
The court then drew an important distinction under Florida law, recognizing that a qualified adjuster could be an independent adjuster, a company employee adjuster, or a public adjuster. Florida Statutes define a public adjuster as “any person … who … prepares, completes, or files an insurance claim form for an insured.”
The court emphasized that “the public adjuster is the only one who is limited by definition to act on behalf of an insured. The [other types of adjusters], by definition, represent insurers.” Applying this distinction, the court held: “In the present case, the Stipulated Facts show that PwC is a consulting firm, not an adjuster, and that it was retained by CSX. In order to recover its expenses, CSX needs to show that PwC is a public adjuster. Since CSX has failed to demonstrate that, it is not entitled to recover its expenses.”
While policies like CSX’s may cover claims adjustment expenses, this case, if followed, will limit that phrase to the costs tied to the insurer’s own adjustment process or possibly to licensed public adjusters working directly on behalf of policyholders. By contrast, fees for accountants or consultants retained to prepare or maximize a claim are generally viewed as non-recoverable claim preparation expenses.
I would be curious to see the result if a commercial policyholder whose policy had this clause were successful in having its public adjuster fees paid. Maybe there is a limited method to have a policyholder’s fee paid by an insurer under a first-party contract.
Thought For The Day
“The difference between winning and losing is most often not quitting.”
—Walt Disney
1 CSX Corp. v. North River Ins. Co., No. 3:08-CV-00531, 2025 WL 10671267 (M.D. Fla. Sept. 25, 2009). See also, CSX Corporation’s Motion for Summary Judgment, and Insurers’ Motion for Summary Judgment.