Those in the insurance claims adjusting business and those who may be interested in becoming an insurance adjuster will inevitably encounter the concept of reciprocity in their licensing procedures.
However, the concept of reciprocity is often misunderstood or at the very least, misrepresented. For an adjuster, knowing the true ins and outs of state licensing reciprocity can save significant time, money, and aggravation. So what is reciprocity? And what does an insurance adjuster need to know about it?
What Reciprocity Isn’t
First, it’s important to understand what adjuster reciprocity doesn’t mean. There is a common misconception that once you have obtained a state’s license – say Texas for example – you can waltz into any other state, at any time, and begin working claims. This is not the case. Sure, on occasion, a state’s insurance commissioner will declare a state of emergency and grant “open doors” to licensed adjusters from other states, but this has less to do with reciprocity and more to do with the demands of a catastrophe.
The take away here is that under normal conditions, even if you hold an adjuster license in your home state, you will still need to go through the application procedure in other states where reciprocity is granted.
What Reciprocity Is
Adjuster license reciprocity refers to a mutual agreement between states whereby an adjuster holding a license in his or her home state can successfully apply for a license in another state without having to take that state’s exam or pre-licensing course. This is important to adjusters because meeting other states’ educational and testing requirements means significant investments of time and money. Reciprocity bypasses those requirements. But to obtain a reciprocal license, the adjuster still needs to apply for the other state’s license and pay any required fees.
Are some states better for Reciprocity?
Another common misconception suggests that some states enjoy more reciprocity than others (e.g. Texas is reciprocal with 32 states!). That may have been true once upon a time, but in today’s industry, reciprocity is predicated not on what state you have but on whether it’s your home state. In this sense, the term reciprocity is somewhat ill-cast. It’s not true reciprocity in the sense that there is a quid pro quo, a mutual agreement of exchange between two specific parties. Rather, its a more general, nation-wide acceptance that says ‘if you have your home state license, you can get our license too.’ Again, it doesn’t have anything to do with which state, so long as that state is your home state.
Again, it doesn’t have anything to do with which state, so long as that state is your home state.
For example, let’s say you live in and have an adjuster license in Oklahoma. You are applying for a North Carolina license. North Carolina will grant you a North Caroline nonresident license but not because of some previously agreed upon arrangement with Oklahoma. They grant you the license because Oklahoma is your state of residence and you have its license.
A few humbugs
Today, most states have gotten onboard with offering adjusters licensed in their home state reciprocity but there are a few caveats to the standard reciprocity rules. Some states do not offer any kind of reciprocal agreement or observance. California, Hawaii, and New York all require adjusters take their specific state adjuster exam or pre-licensing course to adjust claims in their state. No exceptions and no reciprocal licenses are available.
The lack of reciprocity offered by the three states above has created a bit of a domino effect. Some states, like Florida and Delaware, put a regulation in place that in essence says, “If your state doesn’t offer our adjusters a reciprocal license, then we won’t give your adjusters a license in our state either.” So according to this rule, New York adjusters may not obtain a reciprocal license in Florida because Florida adjusters can’t get one in New York. Likewise, other states such as Oklahoma have specifically written in that adjusters from California, New York, and Hawaii cannot obtain a reciprocal license in their state. But the exceptions are few and far between and are mostly rooted around the three non-reciprocal states.
The primary pitfall adjusters encounter with adjuster reciprocity is when they attempt to bypass their own state’s licensing requirements by obtaining another state’s license.
This happens rather frequently. For instance, many residents of Florida who wish to become adjusters get the impression that they can avoid taking Florida’s exam by obtaining a Texas adjuster license. This is just not true. In fact, Texas will no longer grant nonresident licenses to residents of other states who do not hold their home state license. There used to be a loophole but that has been closed for years. Still, some people try it and are obviously disappointed with the results. The bottom line? Get your home state license first.
What if your home state doesn’t license?
In the event that your home state does not require an adjuster license, you will want to obtain another state’s license and then designate it as your home state — now commonly referred to as a DHS license. Florida and Texas are two of the most popular DHS options and you really can’t go wrong with either of them, however, we strongly recommend pursuing the Florida 70-20 DHS license. We have found the Florida Dept. of Insurance to be extremely responsive and easy to work with. Most importantly for many would-be adjusters, Florida works quickly and can often turn around a license within the week. If you want to read more about the pros and cons of the DHS licensing options, visit our article The New Florida 70-20 DHS License.
Remember: reciprocity isn’t a magic wand that grants licenses automatically once you have obtained your home state. You still need to go through the application process and pay the licensing fees in order to get the other states’ licenses. Applications can conveniently and quickly be submitted through NIPR or SIRCON for most states. If you are beginning your insurance adjuster career, be sure to check your state’s licensing rules and procedures. When properly understood, reciprocity offers great benefits to adjusters looking to maximize their earning potential. Having more state licenses means being able to work more claims, plain and simple.