The insurance industry's New playbook: "hire a Public Adjuster, and you may lose coverage" A legal battle is unfolding in Massachusetts over the controversial insurance policy endorsement that many in the public adjusting profession view as an existential threat to their trade. The case, Swerling Milton Winnick Public Insurance Adjusters, Inc. v. Velocity Risk Underwriters, LLC, [1] involves allegations that an insurer and associated surplus lines carriers are using policy provisions to discourage insureds from hiring public adjusters by threatening loss of insurance coverage. I mentioned this lawsuit last week in Can Insurers Ban Policyholders from Hiring Public Adjusters? A New York Lawsuit Raises Troubling Questions. The lawsuit was initially filed in Massachusetts Superior Court before being removed to federal court in Boston. At issue is what the pleadings describe as an "Anti-Public Adjuster Endorsement," which states that it is a condition of the insurance policy that the insured "shall not hire, engage, retain, contract with, or otherwise utilize the services of a public adjuster" in connection with a covered loss. The plaintiff, Swerling Milton Winnick Public Insurance Adjusters ("SMW"), alleges that Velocity and participating surplus lines insurers are using this endorsement not simply as a contract provision, but as a coercive business strategy designed to eliminate public adjusters from the claims process. According to the complaint, insureds who attempt to hire public adjusters are allegedly met with threats of denied coverage, refusals to communicate, refusals to investigate claims, and pressure to terminate their public adjusters. The lawsuit arises out of a Rhode Island fire loss suffered by the Aquidneck Country Club. The club allegedly wanted to retain SMW to assist with adjusting the loss but decided not to do so after learning of the endorsement and its possible impact on coverage. The complaint alleges that the endorsement effectively forces insureds to choose between obtaining professional claim assistance and preserving coverage they already paid for. The pleadings go much further than simply arguing that the endorsement is unfair. The lawsuit accuses Velocity of orchestrating an industry-wide boycott of public adjusters. The complaint alleges that Velocity coordinated with multiple surplus lines insurers to include similar endorsements in policies and to suppress competition from public adjusters throughout New England and beyond. The public adjusters rely heavily on Massachusetts consumer protection laws, which prohibit unfair and deceptive business practices and unfair methods of competition in the insurance industry. The lawsuit also asserts claims for tortious interference with business relationships and coercive civil conspiracy. One of the central themes running throughout the complaint is that Massachusetts and Rhode Island have both chosen to license and regulate public adjusters as legitimate professionals, and insurers should not be permitted to contractually eliminate a profession that state law expressly recognizes and regulates. Velocity has now responded with a comprehensive motion to dismiss. The defense filing is well-crafted and strategically focused on procedural and jurisdictional attacks rather than directly litigating the fairness of the endorsement itself. The motion argues that the Massachusetts federal court lacks personal jurisdiction because the case primarily concerns a Rhode Island insured, a Rhode Island property, and a Rhode Island fire loss involving non-Massachusetts insurers. Velocity emphasizes that the only connection to Massachusetts is that SMW happens to be headquartered there. Velocity also argues that the Massachusetts consumer protection statutes do not apply because the alleged conduct did not occur "primarily and substantially" in Massachusetts. According to the motion, the insurance policy was issued for Rhode Island property, the insured was located in Rhode Island, and the claims activity occurred outside Massachusetts. The defense further contends that the complaint fails to plausibly allege wrongful conduct because the insurer is merely enforcing contractual rights contained in the policy. Velocity repeatedly frames the endorsement as a lawful exercise of freedom of contract, arguing that enforcing bargained-for policy conditions cannot constitute tortious interference or unfair conduct. Perhaps most significantly, Velocity argues that the public adjusters are improperly attempting to challenge rights belonging to policyholders rather than rights belonging to the public adjusters themselves. The motion asserts that SMW lacks standing to seek declaratory relief reforming policies to which it is not a party. That issue may ultimately define this lawsuit. Insurance policies are not ordinary commercial contracts negotiated between parties with equal bargaining power. They are heavily regulated contracts affecting matters of public welfare. Courts have long recognized that insurance policy forfeitures are disfavored, particularly where the alleged breach has nothing to do with causing the loss or prejudicing the insurer. The endorsement at issue here does not prohibit fraud, does not prohibit inflated claims, nor does it prohibit misrepresentation. It prohibits policyholders from hiring a licensed advocate to assist with navigating a complex claim process. This case is still in its early stages. The federal court has not yet ruled on the motion to dismiss. This lawsuit is a very important public adjuster case. If endorsements like this survive judicial scrutiny, they could spread through surplus lines markets. "The life of the law has not been logic; it has been experience." - Oliver Wendell Holmes Jr. [1] Swerling Milton Winnick Public Insurance Adjusters, Inc. v. Velocity Risk Underwriters, No. 1:26-cv-12095 (D. Mass. 2026).

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