Understanding Reciprocity: Obtaining Licenses in Multiple States
What is Reciprocity?
Adjuster license reciprocity refers to a mutual agreement between states that says 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 involves a significant investment 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 Than Others?
Brand new insurance adjusters many times wrongly assume that some states enjoy more reciprocity than others. Although that may have been true in the past, in today’s industry, reciprocity is predicated not on what state you have but on whether it’s your home state or not.
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 Carolina 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.
Today, most states have begun offering adjusters licensed in their home state reciprocity, however, with a few exceptions to the standard reciprocity rules. Some states do not offer any kind of reciprocal agreement or observance at all. California, Hawaii, and New York all require adjusters to take their specific state adjuster exam to adjust claims in their state. No exceptions and no reciprocal licenses are available.
The most sought-after state of all three non-reciprocal states is New York. Because New York offers no reciprocity, adjusters who hold that license are some of the most heavily recruited in the industry. The size, population, and weather mean a lot of claims, but rarely are there enough adjusters to handle them.
How Lack of Reciprocity Hurts the Industry
The lack of reciprocity offered by some states has created a bit of a domino effect. States Florida and Delaware have put a regulation in place that basically 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 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 Importance of Getting Licensed in Your Home state First
Oftentimes, new adjusters will make the mistake of seeking a license of a state that is not their home state. For example, residents of Oklahoma or Arkansas who wish to become adjusters get the impression that “a Texas license is better” so they skip getting their home state license and jump right to obtaining Texas’. Or residents of smaller northern states might bypass their state license and opt to get one where more claims, and therefore more employment opportunities, are available.
And unfortunately, things don’t work like this any longer. Still, based on hearsay or poor advice, some people try it and are obviously disappointed with the results. They may be rejected when it comes time to get their own states’ license or they’ll be denied reciprocal licenses down the road.
If you happen to live in a state that 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 designated home state or DHS license. This is a specific license type and not every state offers a DHS license. When it comes to getting your adjuster license, you’ll want to make sure you choose a course/state with a DHS option and then make sure you apply for the correct license type once you pass your exam.
Why the type of license you get matters
Getting an All-Lines license will also allow you to obtain the most reciprocal licenses available. States will only approve a reciprocal license for the same lines of authority you are already approved for via your home state (or DHS) license.
You should also keep in mind that not all states offer the same types of licenses. Florida doesn’t offer a P&C license for example. Many don’t offer a single LOA like workers’ comp or crop. And if the state you’re applying in doesn’t offer that lower license type, you are denied a reciprocal license completely.
You can avoid the confusion and potential denials by obtaining the All-Lines license, which covers the most lines of authority and, therefore, offers the most reciprocity.
Important Note: reciprocity does not grant licenses automatically once you have obtained one in your home state. You will still need to go through the application process and pay the licensing fees in order to get the other states’ licenses. Most reciprocal license applications can conveniently and quickly be submitted through NIPR or SIRCON once you have your home state license number.
If you are a new insurance adjuster, 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. At the end of the day, having more state licenses only means being able to work more claims.