Regulator sends notice to all licensed public adjusters
News: 2017 Press Release
Public adjusters do not work for insurance companies but rather directly for policyholders who hire the adjuster for a fee to work to settle their insurance claim. Public adjusters' fees are paid by the policyholder and are typically a percentage of the settled claim, which means it comes out of the funds used to recover from the loss.
"When people experience such devastating losses the emotional need is to return to normal, which leaves many people vulnerable," said Insurance Commissioner Dave Jones. "We strongly suggest people take their time when considering a contract for a public adjuster or hiring a contractor. It is difficult to make business decisions when you are most vulnerable emotionally."
The Department of Insurance urges consumers to begin the claims process by contacting their insurance company or agent. If consumers have questions or concerns about their claim, what their insurer is telling them, or settlement offers, the department's consumer services team can assist and there is no charge for that assistance.
Policyholders are not restricted from contacting public adjusters directly. If a policyholder is considering hiring a public adjuster, the department also urges consumers to check the adjuster's license and make sure they are properly licensed and in good standing.
The law limits how and when public adjusters may solicit business after a disaster like the fires that burned across the state this month. For example, public adjusters are prohibited from soliciting business from fire victims until seven days after the conclusion of the loss producing event, in this case, after the evacuation order was lifted. California law also limits how and when public adjusters may contact consumers, how they are compensated, and what they are required to have in their contracts for service.
In 2016, the department sponsored and Governor Brown signed SB 488, which ushered in new reforms and limitations on public adjusters. Many of those reforms were the direct result of consumer complaints and criminal investigations conducted into alleged wrongdoing by public adjusters.
Questions regarding this notice should be directed to the Department of Insurance Licensing Hotline at (800) 967-9331.
- A "loss producing occurrence" continues to exist when any of the following conditions exist at the property that is the subject of the solicitation: (1) any of the circumstances that cause the loss are present at the property where the solicitation would otherwise take place, (2) emergency responders are present at the property where the solicitation would otherwise take place, or (3) an evacuation order is still in effect at the property where the solicitation would otherwise take place.
- In addition to the restrictions contained in California Insurance Code section 15027(e), a public adjuster may not solicit a contract of engagement for residential properties that are included in an area subject to a catastrophic disaster until seven calendar days have elapsed from the conclusion of the loss producing event unless the public adjuster is contacted directly by the insureds or the insured's representative. Cal. Ins. Code §15027.1(a) and (b). A licensed public adjuster is not, however, prohibited from providing a policyholder with accurate written materials explaining services provided by public insurance adjusters only if the public adjuster does not make personal contact with the policyholder. Cal. Ins. Code §15027.1(c).
- A public adjuster may not, directly or indirectly, act within this state as a public adjuster without having first entered into a contract, in writing, on a form approved by the Insurance Commissioner. Cal. Ins. Code §15027. Each contract between a public adjuster and an insured must disclose the public adjuster's full salary, adjuster's fee, commission, or other valuable consideration the public adjuster is to receive for services under the contract and a public adjuster's fee, commission, or other valuable consideration may not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date the written contract between the insured and the public adjuster is signed. Cal. Ins. Code §15027.
- Additionally, every advertisement, as defined in 10 CCR 2691.17, by a public adjuster soliciting or advertising business must contain his or her name, address, or license number as they appear in the records of the Insurance Commissioner. Cal. Ins. Code §15032.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $394 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.