Insurance Commissioner Lara issues consumer fraud alert as flood recovery begins in San Diego County

News: 2024 Press Release

SAN DIEGO, Calif. — Following the recent flooding in San Diego which damaged and destroyed hundreds of homes, businesses, and vehicles, Insurance Commissioner Ricardo Lara put the Department of Insurance on alert for potential fraud and illegal actions targeting flood victims. The Department has received reports from San Diego consumers of public adjusters approaching them immediately after the recent floods. The Department has posted “Don’t Get Scammed After a Disaster” tips in English and Spanish urging consumers not to rush into decisions and to report any suspected illegal actions by contractors or public adjusters.

Public adjusters do not work for insurance companies, but rather work directly for policyholders who hire the adjuster for a fee 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 rebuild or recover. Consumers should make sure they understand what is charged and the services they are paying for before signing a public adjuster contract.

“As consumers begin the difficult road to recovery, they need time to consider their options before rushing into hiring hire a public adjuster or contractor right away,” said Commissioner Lara. “By law, public adjusters are not allowed to solicit business in disaster areas for seven days, protecting consumers from being pressured. My Department is on your side and can help you navigate the recovery process.”

In most cases, if a consumer suffers flood damage, a homeowners’ or renters’ insurance policy does not cover flood damage, generally a separate flood policy is needed with either a private insurance company or the National Flood Insurance Program (NFIP). The Department of Insurance urges consumers to begin the claims process by contacting their flood insurance company or agent and file a claim. 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.

The law limits how and when public adjusters may solicit business after a disaster. For example, public adjusters are prohibited from soliciting business from disaster victims until seven days after the conclusion of the loss producing event. 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. Some public adjusters may insist on a contract that includes payment to the public adjuster based upon the entire amount paid to the policyholder by the insurer, including amounts paid to the policyholder before the public adjuster contract was signed. Anyone who experiences this issue is urged to contact the Department.

The Department has resources for disaster survivors and strongly encourages consumers check out these resources, including how to avoid scams after a disaster as there is often unscrupulous individuals who try and take advantage of disaster survivors who can be vulnerable during a challenging time. Consumers who have questions on their insurance or wish to file a complaint against a public adjuster can do so on the Department’s website or by calling 800-927-4357.

The Department urges consumers to check the public adjuster’s license and make sure they are properly licensed and in good standing by visiting the Department’s website or by calling 800-927-4357.

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Media Notes:

• Don't Get Scammed After a Disaster Information Guide - English 
• Evite Las Estafas Después de un Desastre Information Guide - Spanish