AB 597: Public insurance adjusters.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2025-07-14
Current Status:
In Progress
(2025-08-29: In committee: Held under submission.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters and requires the Insurance Commissioner to administer the act. The act prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract and governs the form and content of the contract, including setting forth required and prohibited contract terms, including requiring a description of the services to be provided to the insured. Existing law prohibits a public adjuster from receiving a fee or other consideration in excess of the amount or percentage provided in the contract. A person who violates these provisions is guilty of a misdemeanor.
This bill would require the contract between the public adjuster and the insured to include a description of the services to be provided, including the specific claim and coverages to which the services apply. The bill would prohibit a public adjuster contract from allowing a licensees fee, commission, or other valuable consideration to be for, or based upon, (1) any amount paid to the insured prior to the date of the written contract with the public adjuster or if the claim pertains to a catastrophic disaster or a state of emergency, or, (2) on an insurers payment for specific claims or coverages to which the services do not apply.
Existing law prohibits licensees from soliciting or attempting to solicit employment from a client during a loss-producing occurrence, or from soliciting a policyholder or initiating contact with a policyholder during specified hours.
This bill would instead prohibit licensees from soliciting or attempting to solicit employment from a policyholder or their representative during a loss-producing occurrence and would prohibit a licensee from also soliciting or contacting a policyholders representative during those specified hours.
Existing law entitles an insured to rescind a contract without any time limit if the licensee misrepresents or conceals a material fact from the insured before the execution of the contract. Existing law authorizes an insured to cancel a contract with a public adjuster within 5 calendar days of signing it and being provided a copy of the signed contract if the loss is included in an area subject to catastrophic disaster.
This bill would expand those provisions to entitle an insured to void or rescind the contract if the licensee misrepresents or conceals a material fact before the execution of the contract or solicits employment in violation of the provisions described above. The bill would also extend the ability to cancel a contract within 5 calendar days if a property loss is included in an area subject to a state of emergency. The bill would make conforming changes to a Notice of Cancellation form required to be included with each contract and other related disclosures.
Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would declare that it is to take effect immediately as an urgency statute.
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters and requires the Insurance Commissioner to administer the act. The act prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract and governs the form and content of the contract, including setting forth required and prohibited contract terms, including requiring a description of the services to be provided to the insured. Existing law prohibits a public adjuster from receiving a fee or other consideration in excess of the amount or percentage provided in the contract. A person who violates these provisions is guilty of a misdemeanor.
This bill would require the contract between the public adjuster and the insured to include a description of the services to be provided, including the specific claim and coverages to which the services apply. The bill would prohibit a public adjuster contract from allowing a licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured prior to the date of the written contract with the public adjuster or on an insurers payment for specific claims or coverages to which the services do not apply. The bill would also prohibit the fee, commission, or other valuable consideration from being greater than 15% of the amount paid by the insurer after the date of the written contract if the claim pertains to a catastrophic disaster or state of emergency, as defined. The bill would make these provisions applicable to policies of residential and commercial property insurance, as specified.
Existing law prohibits licensees from soliciting or attempting to solicit employment from a client during a loss-producing occurrence, or from soliciting a policyholder or initiating contact with a policyholder during specified hours.
This bill would instead prohibit licensees from soliciting or attempting to solicit employment from a policyholder or their representative during a loss-producing occurrence and would prohibit a licensee from also soliciting or contacting a policyholders representative during those specified hours.
Existing law entitles an insured to rescind a contract without any time limit if the licensee misrepresents or conceals a material fact from the insured before the execution of the contract. Existing law authorizes an insured to cancel a contract with a public adjuster within 5 calendar days of signing it and being provided a copy of the signed contract if the loss is included in an area subject to catastrophic disaster.
This bill would expand those provisions to entitle an insured to void or rescind the contract if the licensee misrepresents or conceals a material fact before the execution of the contract or solicits employment in violation of the provisions described above. The bill would also extend the ability to cancel a contract within 5 calendar days if a property loss is included in an area subject to a state of emergency. The bill would make conforming changes to a Notice of Cancellation form required to be included with each contract and other related disclosures.
Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would declare that it is to take effect immediately as an urgency statute.
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters and requires the Insurance Commissioner to administer the act. The act prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract and governs the form and content of the contract, including setting forth required and prohibited contract terms, including requiring a description of the services to be provided to the insured. Existing law prohibits a public adjuster from receiving a fee or other consideration in excess of the amount or percentage provided in the contract. A person who violates these provisions is guilty of a misdemeanor.
This bill would require the contract between the public adjuster and the insured to include a description of the services to be provided, including the specific claim and coverages to which the services apply. The bill would prohibit a public adjuster contract from allowing a licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured prior to the date of the written contract with the public adjuster or on an insurers payment for specific claims or coverages to which the services do not apply. The bill would also prohibit the fee, commission, or other valuable consideration from being greater than 15% of the amount paid by the insurer after the date of the written contract if the claim pertains to a catastrophic disaster or state of emergency, as defined. The bill would make these provisions applicable to policies of residential and commercial property insurance, as specified.
Existing law prohibits licensees from soliciting or attempting to solicit employment from a client during a loss-producing occurrence, or from soliciting a policyholder or initiating contact with a policyholder during specified hours.
This bill would instead prohibit licensees from soliciting or attempting to solicit employment from a policyholder or their representative during a loss-producing occurrence and would prohibit a licensee from also soliciting or contacting a policyholders representative during those specified hours.
Existing law entitles an insured to rescind a contract without any time limit if the licensee misrepresents or conceals a material fact from the insured before the execution of the contract. Existing law authorizes an insured to cancel a contract with a public adjuster within 5 calendar days of signing it and being provided a copy of the signed contract if the loss is included in an area subject to catastrophic disaster.
This bill would expand those provisions to entitle an insured to void or rescind the contract if the licensee misrepresents or conceals a material fact before the execution of the contract or solicits employment in violation of the provisions described above. The bill would also extend the ability to cancel a contract within 5 calendar days if a property loss is included in an area subject to a state of emergency. The bill would make conforming changes to a Notice of Cancellation form required to be included with each contract and other related disclosures.
Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would declare that it is to take effect immediately as an urgency statute.
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters and requires the Insurance Commissioner to administer the act. The act prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract and governs the form and content of the contract, including setting forth required and prohibited contract terms. terms, including requiring a description of the services to be provided to the insured. Existing law prohibits a public adjuster from receiving a fee or other consideration in excess of the amount or percentage provided in the contract. A person who violates these provisions is guilty of a misdemeanor.
This bill would make technical, nonsubstantive changes to those provisions. would require the contract between the public adjuster and the insured to include a description of the services to be provided, including the specific claim and coverages to which the services apply. The bill would prohibit a public adjuster contract from allowing a licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured prior to the date of the written contract with the public adjuster or on an insurers payment for specific claims or coverages to which the services do not apply. The bill would also prohibit the fee, commission, or other valuable consideration from being greater than 15% of the amount paid by the insurer after the date of the written contract if the claim pertains to a catastrophic disaster or state of emergency, as defined. The bill would make these provisions applicable to policies of residential and commercial property insurance, as specified.
Existing law prohibits licensees from soliciting or attempting to solicit employment from a client during a loss-producing occurrence, or from soliciting a policyholder or initiating contact with a policyholder during specified hours.
This bill would instead prohibit licensees from soliciting or attempting to solicit employment from a policyholder or their representative during a loss-producing occurrence and would prohibit a licensee from also soliciting or contacting a policyholders representative during those specified hours.
Existing law entitles an insured to rescind a contract without any time limit if the licensee misrepresents or conceals a material fact from the insured before the execution of the contract. Existing law authorizes an insured to cancel a contract with a public adjuster within 5 calendar days of signing it and being provided a copy of the signed contract if the loss is included in an area subject to catastrophic disaster.
This bill would expand those provisions to entitle an insured to void or rescind the contract if the licensee misrepresents or conceals a material fact before the execution of the contract or solicits employment in violation of the provisions described above. The bill would also extend the ability to cancel a contract within 5 calendar days if a property loss is included in an area subject to a state of emergency. The bill would make conforming changes to a Notice of Cancellation required to be included with each contract and other related disclosures.
Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Public Insurance Adjusters Act, governs the regulation, licensing, and registration of public insurance adjusters and requires the Insurance Commissioner to administer the act. The act prohibits a licensee from acting as a public insurance adjuster without having first entered into a written contract and governs the form and content of the contract, including setting forth required and prohibited contract terms.
This bill would make technical, nonsubstantive changes to those provisions.
(a)A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or the commissioners duly authorized representative, and one original contract shall be given to the insured.
(b)The written contract between the licensee and the insured shall contain each of the following:
(1)Title of Public Adjuster Contract.
(2)The name, business name, license number, telephone number, and address of the licensee.
(3)The name and address of the insured.
(4)A description of the loss and its location, if applicable.
(5)The name of the insurer and the policy number, if known.
(6)The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
(7)A public adjusters fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
(8)A description of the services to be provided to the insured, including, but not limited to, the specific claim and coverages to which the services apply.
(9)Signatures of the licensee and the insured.
(10)The date the contract was signed by the licensee and the date the contract was signed by the insured.
(11)The following statement: As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.
(12)A statement of the compensation to the licensee, including the percentage and base to which the percentage applies, including the specific claim and coverages to which the compensation applies.
(13)A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
(c)A contract covered by this section shall not contain a contract term that does any of the following:
(1)Allows the licensees fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
(2)Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
(3)Imposes late fees or collection costs on the insured.
(4)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster. adjuster, if the claim pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
(5)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, an insurers payment for specific claims or coverages to which the services do not apply.
(d)A licensee shall not solicit or attempt to solicit a policyholder or policyholders representative for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
(1)Any of the circumstances that caused 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.
(3)An evacuation order is still in effect at the property where the solicitation would otherwise take place.
(e)A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder or policyholders representative for employment or initiate any contact with a policyholder or their representative between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder or policyholders representative.
(f)A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
(1)A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned Notice of Cancellation, that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in at least 12-point type the following statement written in the same language, example, Spanish, as used in the contract:
Notice of Cancellation
| (Date of Contract) |
You may cancel this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. This contract does not permit your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.
If you cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to:
| (name of public adjuster) | |
| at | |
| (address of public adjusters place of business) | |
| not later than midnight of | |
| (Date) | |
| I hereby cancel this contract | |
| (Date) | |
| (Clients signature) | |
(2)The statement WE REPRESENT THE INSURED ONLY prominently displayed in at least 12-point type.
(3)(A)A provision disclosing the percentage of the insureds claim, or other fee, that the licensee will charge for services to be performed by the licensee. The licensee shall obtain the initials of the insured next to this provision.
(B)A clear and conspicuous statement in at least 12-point type in immediate proximity to the statement specified in subparagraph (A) indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
(4)A conspicuous statement in at least 12-point type in immediate proximity to the space reserved for the clients signature, as follows: You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of cancellation form at the end of this contract for an explanation of this right.
(g)A licensee shall not knowingly make a false report to the licensees employer or divulge to any other person, except as the licensee may be required by law to do so, any information acquired by the licensee, except at the direction of the employer or a client for whom the information is obtained.
(h)A licensee shall not use a badge in connection with the official activities of the licensees business.
(i)A licensee shall not permit an employee or agent in the licensees own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
(j)Pursuant to subdivisions (a) and (c) of Section 15006, the commissioner has the authority to enforce this chapter and prosecute violations of this chapter committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
(k)For purposes of this section, business day has the same meaning as defined in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
(l)The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
(m)Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
(n)The licensee is not entitled to compensation for services performed before cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. This subdivision does not permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
(o)Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
(p)Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
(q)Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
(r)Until the licensee has complied with this section, the client may cancel the contract.
(s)The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
(t)The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
(u)A confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
(v)Before the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
DISCLOSURE
There are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:
(1)Public adjusters are the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
(2)Company adjusters are the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California.
(3)Independent adjusters are the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.
Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.
Your Public Adjuster Contract, with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the Public Adjuster Contract. The salary, fee, commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).
You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster, as defined in subdivision (c) of Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured has the right to cancel within five calendar days.
If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.
You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.
If you have any concerns or questions, the officers at the California Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.
(w)No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that the public adjuster has entered into a written contract with the insured.
(x)If the licensee misrepresents or conceals a material fact from the insured before the execution of the contract, or solicits employment in violation of subdivision (d) or (e), the insured is entitled to void or rescind the contract without time limit.
(y)Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured may cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from predatory and exploitative practices, including unfair fees and price gouging from public adjusters, in the aftermath of major disasters and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
(a)A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or the commissioners duly authorized representative, and one original contract shall be given to the insured.
(b)The written contract between the licensee and the insured shall contain each of the following:
(1)Title of Public Adjuster Contract.
(2)The name, business name, license number, telephone number, and address of the licensee.
(3)The name and address of the insured.
(4)A description of the loss and its location, if applicable.
(5)The name of the insurer and the policy number, if known.
(6)The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
(7)A public adjusters fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
(7)(8)A description of the services to be provided to the insured, including, but not limited to, the specific claim and coverages to which the services apply.
(8)(9)Signatures of the licensee and the insured.
(9)(10)The date the contract was signed by the licensee and the date the contract was signed by the insured.
(10)(11)The following statement: As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.
(11)(12)A statement of the compensation to the licensee, including the percentage and base to which the percentage applies, including the specific claim and coverages to which the compensation applies.
(12)(13)A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
(c)A contract covered by this section shall not contain a contract term that does any of the following:
(1)Allows the licensees fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
(2)Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
(3)Imposes late fees or collection costs on the insured.
(4)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
(5)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, an insurers payment for specific claims or coverages to which the services do not apply.
(6)If the claim pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the licensees fee, commission, or other valuable consideration shall not be greater than 15 percent of the amount paid by the insurer after the date of the written contract between the insured and the public adjuster for specific claims and coverages to which the services apply. This paragraph shall apply to all claims relating to either of the following:(A)A policy of residential property insurance as defined in subdivision (a) of Section 10087.(B)A policy of commercial property insurance that is subject to Section 675.5 and involving policy limits of ten million dollars ($10,000,000) or less.(d)A licensee shall not solicit or attempt to solicit a policyholder or policyholders representative for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
(1)Any of the circumstances that caused 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.
(3)An evacuation order is still in effect at the property where the solicitation would otherwise take place.
(e)A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder or policyholders representative for employment or initiate any contact with a policyholder or their representative between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder or policyholders representative.
(f)A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
(1)A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned Notice of Cancellation, that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in type of at least 10-point 12-point type the following statement written in the same language, e.g., example, Spanish, as used in the contract:
Notice of Cancellation
| (Date of Contract) |
You may cancel this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. This contract does not permit your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.
If you cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to:
| (name of public adjuster) | |
| at | |
| (address of public adjusters place of business) | |
| not later than midnight of | |
| (Date) | |
| I hereby cancel this contract | |
| (Date) | |
| (Clients signature) | |
(2)The statement WE REPRESENT THE INSURED ONLY prominently displayed in at least 10-point 12-point type.
(3)(A)A provision disclosing the percentage of the insureds claim, or other fee, that the licensee will charge for services to be performed by the licensee. The licensee shall obtain the initials of the insured next to this provision.
(B)A statement in at least 10-point type in immediate proximity to the provision specified in subparagraph (A), as follows: For claims pertaining to a catastrophic disaster or a state of emergency declared by the President of the United States or the Governor of California, the total cost for the services performed pursuant to this contract shall not exceed 15 percent of the amount paid by the insurer after the effective date of this contract for claims and coverages to which those services apply. (C)(B)A clear and conspicuous statement in at least 10-point 12-point type in immediate proximity to the statement specified in subparagraph (B) (A) indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
(4)A conspicuous statement in at least 10-point 12-point type in immediate proximity to the space reserved for the clients signature, as follows: You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of cancellation form at the end of this contract for an explanation of this right.
(g)A licensee shall not knowingly make a false report to the licensees employer or divulge to any other person, except as the licensee may be required by law to do so, any information acquired by the licensee, except at the direction of the employer or a client for whom the information is obtained.
(h)A licensee shall not use a badge in connection with the official activities of the licensees business.
(i)A licensee shall not permit an employee or agent in the licensees own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
(j)Pursuant to subdivisions (a) and (c) of Section 15006, the commissioner has the authority to enforce this chapter and prosecute violations of this chapter committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
(k)For purposes of this section, business day has the same meaning as defined in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
(l)The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
(m)Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
(n)The licensee is not entitled to compensation for services performed before cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. This subdivision does not permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
(o)Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
(p)Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
(q)Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
(r)Until the licensee has complied with this section, the client may cancel the contract.
(s)The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
(t)The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
(u)A confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
(v)Before the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
DISCLOSURE
There are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:
(1)Public adjusters are the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
(2)Company adjusters are the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California.
(3)Independent adjusters are the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.
Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.
Your Public Adjuster Contract, with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the Public Adjuster Contract. The salary, fee, commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).
You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster, as defined in subdivision (c) of Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured has the right to cancel within five calendar days.
If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.
You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.
If you have any
concerns or questions, the officers at the California Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.
(w)No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that the public adjuster has entered into a written contract with the insured.
(x)If the licensee misrepresents or conceals a material fact from the insured before the execution of the contract, or solicits employment in violation of subdivision (d) or (e), the insured is entitled to void or rescind the contract without time limit.
(y)Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured may cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from predatory and exploitative practices, including unfair fees and price gouging from public adjusters, in the aftermath of major disasters and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
(a)A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or the commissioners duly authorized representative, and one original contract shall be given to the insured.
(b)The written contract between the licensee and the insured shall contain each of the following:
(1)Title of Public Adjuster Contract.
(2)The name, business name, license number, telephone number, and address of the licensee.
(3)The name and address of the insured.
(4)A description of the loss and its location, if applicable.
(5)The name of the insurer and the policy number, if known.
(6)The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
(7)A description of the services to be provided to the insured, including, but not limited to, the specific claim and coverages to which the services apply.
(8)Signatures of the licensee and the insured.
(9)The date the contract was signed by the licensee and the date the contract was signed by the insured.
(10)The following statement: As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.
(11)A statement of the compensation to the licensee, including the percentage and base to which the percentage applies, including the specific claim and coverages to which the compensation applies.
(12)A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
(c)A contract covered by this section shall not contain a contract term that does any of the following:
(1)Allows the licensees fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
(2)Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
(3)Imposes late fees or collection costs on the insured.
(4)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
(5)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, an insurers payment for specific claims or coverages to which the services do not apply.
(6)If the claim pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the licensees fee, commission, or other valuable consideration shall not be greater than 15 percent of the amount paid by the insurer after the date of the written contract between the insured and the public adjuster for specific claims and coverages to which the services apply. This paragraph shall apply to all claims relating to both either of the following:
(A)A policy of residential property insurance as defined in subdivision (a) of Section 10087.
(B)A policy of commercial property insurance that is subject to Section 675.5 and involving policy limits of ten million dollars ($10,000,000) or less.
(d)A licensee shall not solicit or attempt to solicit a policyholder or policyholders representative for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
(1)Any of the circumstances that caused 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.
(3)An evacuation order is still in effect at the property where the solicitation would otherwise take place.
(e)A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder or policyholders representative for employment or initiate any contact with a policyholder or their representative between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder or policyholders representative.
(f)A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
(1)A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned Notice of Cancellation, that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in type of at least 10-point the following statement written in the same language, e.g., Spanish, as used in the contract:
Notice of Cancellation
| (Date of Contract) |
You may cancel this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. This contract does not permit your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.
If you cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to:
| (name of public adjuster) | |
| at | |
| (address of public adjusters place of business) | |
| not later than midnight of | |
| (Date) | |
| I hereby cancel this contract | |
| (Date) | |
| (Clients signature) | |
(2)The statement WE REPRESENT THE INSURED ONLY prominently displayed in at least 10-point type.
(3)(A)A provision disclosing the percentage of the insureds claim, or other fee, that the licensee will charge for services to be performed by the licensee. The licensee shall obtain the initials of the insured next to this provision.
(B)A statement in at least 10-point type in immediate proximity to the provision specified in subparagraph (A), as follows: For claims pertaining to a catastrophic disaster or a state of emergency declared by the President of the United States or the Governor of California, the total cost for the services performed pursuant to this contract shall not exceed 15 percent of the amount paid by the insurer after the effective date of this contract for claims and coverages to which those services apply.
(C)A clear and conspicuous statement in at least 10-point type in immediate proximity to the statement specified in subparagraph (B) indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
(4)A conspicuous statement in at least 10-point type in immediate proximity to the space reserved for the clients signature, as follows: You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of cancellation form at the end of this contract for an explanation of this right.
(g)A licensee shall not knowingly make a false report to the licensees employer or divulge to any other person, except as the licensee may be required by law to do so, any information acquired by the licensee, except at the direction of the employer or a client for whom the information is obtained.
(h)A licensee shall not use a badge in connection with the official activities of the licensees business.
(i)A licensee shall not permit an employee or agent in the licensees own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
(j)Pursuant to subdivisions (a) and (c) of Section 15006, the commissioner has the authority to enforce this chapter and prosecute violations of this chapter committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
(k)For purposes of this section, business day has the same meaning as defined in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
(l)The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
(m)Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
(n)The licensee is not entitled to compensation for services performed before cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. This subdivision does not permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
(o)Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
(p)Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
(q)Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
(r)Until the licensee has complied with this section, the client may cancel the contract.
(s)The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
(t)The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
(u)A confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
(v)Before the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
DISCLOSURE
There are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:
(1)Public adjusters are the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
(2)Company adjusters are the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California.
(3)Independent adjusters are the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.
Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.
Your Public Adjuster Contract, with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the Public Adjuster Contract. The salary, fee, commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).
You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster, as defined in subdivision (c) of Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured has the right to cancel within five calendar days.
If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.
You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.
If you have any concerns or questions, the officers at the California Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.
(w)No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that the public adjuster has entered into a written contract with the insured.
(x)If the licensee misrepresents or conceals a material fact from the insured before the execution of the contract, or solicits employment in violation of subdivision (d) or (e), the insured is entitled to void or rescind the contract without time limit.
(y)Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured may cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 3.This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to provide critical safeguards and protect wildfire victims and those particularly vulnerable from predatory and exploitative practices, including unfair fees and price gouging from public adjusters, in the aftermath of major disasters and to ensure fair treatment and financial security for those rebuilding their lives, it is necessary that this act take effect immediately.
(a)A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or the commissioners duly authorized representative, and one original contract shall be given to the insured.
(b)The written contract between the licensee and the insured shall contain each of the following:
(1)Title of Public Adjuster Contract.
(2)The name, business name, license number, telephone number, and address of the licensee.
(3)The name and address of the insured.
(4)A description of the loss and its location, if applicable.
(5)The name of the insurer and the policy number, if known.
(6)The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
(7)A public adjusters fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer before the date of the written contract between the insured and the public adjuster.(8)(7)A description of the services to be provided to the insured. insured, including, but not limited to, the specific claim and coverages to which the services apply.
(9)(8)Signatures of the licensee and the insured.
(10)(9)The date the contract was signed by the licensee and the date the contract was signed by the insured.
(11)(10)The following statement: As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.
(12)(11)A statement of the compensation to the licensee, including the percentage and base to which the percentage applies. applies, including the specific claim and coverages to which the compensation applies.
(13)(12)A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
(c)A contract covered by this section shall not contain a contract term that does any of the following:
(1)Allows the licensees fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
(2)Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
(3)Imposes late fees or collection costs on the insured.
(4)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.
(5)Allows the licensees fee, commission, or other valuable consideration to be for, or based upon, an insurers payment for specific claims or coverages to which the services do not apply.
(6)If the claim pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the licensees fee, commission, or other valuable consideration shall not be greater than 15 percent of the amount paid by the insurer after the date of the written contract between the insured and the public adjuster for specific claims and coverages to which the services apply. This paragraph shall apply to all claims relating to both of the following:
(A)A policy of residential property insurance as defined in subdivision (a) of Section 10087.
(B)A policy of commercial property insurance that is subject to Section 675.5 and involving policy limits of ten million dollars ($10,000,000) or less.
(d)A licensee shall not solicit or attempt to solicit a client policyholder or policyholders representative for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
(1)Any of the circumstances that caused 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.
(3)An evacuation order is still in effect at the property where the solicitation would otherwise take place.
(e)A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder or policyholders representative for employment or initiate any contact with a policyholder or their representative between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder. policyholder or policyholders representative.
(f)A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
(1)A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned Notice of Cancellation, that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in type of at least 10-point the following statement written in the same language, e.g., Spanish, as used in the contract:
Notice of Cancellation
| (Date of Contract) |
You may cancel this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a disaster catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. Nothing in this contract permits This contract does not permit your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.
If you cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to:
| (name of public adjuster) | |
| at | |
| (address of public adjusters place of business) | |
| not later than midnight of | |
| (Date) | |
| I hereby cancel this contract | |
| (Date) | |
| (Clients signature) | |
(2)The statement WE REPRESENT THE INSURED ONLY prominently displayed in at least 10-point type.
(3)(A)A provision disclosing the percentage of the insureds claim, or other fee, that the licensee will charge for services. services to be performed by the licensee. The licensee shall obtain the initials of the insured next to this provision.
(B)A statement in at least 10-point type in immediate proximity to the provision specified in subparagraph (A), as follows: For claims pertaining to a catastrophic disaster or a state of emergency declared by the President of the United States or the Governor of California, the total cost for the services performed pursuant to this contract shall not exceed 15 percent of the amount paid by the insurer after the effective date of this contract for claims and coverages to which those services apply.
(C)A clear and conspicuous statement in at least 10-point type in immediate proximity to the statement specified in subparagraph (B) indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
(4)A conspicuous statement in at least 10-point type in immediate proximity to the space reserved for the clients signature, as follows: You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of cancellation form at the end of this contract for an explanation of this right.
(g)A licensee shall not knowingly make a false report to the licensees employer or divulge to any other person, except as the licensee may be required by law to do so, any information acquired by the licensee, except at the direction of the employer or a client for whom the information is obtained.
(h)A licensee shall not use a badge in connection with the official activities of the licensees business.
(i)A licensee shall not permit an employee or agent in the licensees own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
(j)Pursuant to subdivisions (a) and (c) of Section 15006, the commissioner has the authority to enforce this chapter and prosecute violations of this chapter committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
(k)For purposes of this section, business day has the same meaning as defined in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
(l)The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
(m)Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
(n)The licensee is not entitled to compensation for services performed before cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. This subdivision does not permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
(o)Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
(p)Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
(q)Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
(r)Until the licensee has complied with this section, the client may cancel the contract.
(s)The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
(t)The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
(u)A confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
(v)Before the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
DISCLOSURE
There are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:
(1)Public adjusters means are the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
(2)Company adjusters means are the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California.
(3)Independent adjusters means are the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.
Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.
Your Public Adjuster Contract, with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the Public Adjuster Contract. The salary, fee, commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).
You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster disaster, as defined in subdivision (c) of Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured has the right to cancel within five calendar days.
If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.
You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.
If you have any concerns or questions, the officers at the California
Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.
(w)No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that the public adjuster has entered into a written contract with the insured.
(x)If the licensee misrepresents or conceals a material fact from the insured before the execution of the contract, or solicits employment in violation of subdivision (d) or (e), the insured is entitled to void or rescind the contract without time limit.
(y)Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code, the insured may cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
SEC. 2.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)A licensee shall not, directly or indirectly, act within this state as a public insurance adjuster without having first entered into a contract, in writing, on a form approved by the insurance commissioner and executed in duplicate by the public adjuster and the insured or a duly authorized representative. One original contract shall be kept on file by the licensee, available at all times for inspection, without notice, by the commissioner or his or her the commissioners duly authorized representative, and one original contract shall be given to the insured.
(b)The written contract between the licensee and the insured shall contain each of the following:
(1)Title of Public Adjuster Contract.
(2)The name, business name, license number, telephone number, and address of the licensee.
(3)The name and address of the insured.
(4)A description of the loss and its location, if applicable.
(5)The name of the insurer and the policy number, if known.
(6)The full salary, fee, commission, or other consideration the licensee is to receive for services under the contract.
(7)A public adjusters fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to before the date of the written contract between the insured and the public adjuster.
(8)A description of the services to be provided to the insured.
(9)Signatures of the licensee and the insured.
(10)The date the contract was signed by the licensee and the date the contract was signed by the insured.
(11)The following statement: As a public adjuster, I am required by the California Insurance Code to post a surety bond in the sum of $20,000 to cover certain kinds of claims made by you, the insured. If you have any questions concerning the surety bond, you may contact the California Department of Insurance Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.
(12)A statement of the compensation to the licensee, including the percentage and base to which the percentage applies.
(13)A statement that the insured has the right to cancel the contract within three business days of signing it and being provided the signed contract.
(c)A contract covered by this section shall not contain a contract term that does any of the following:
(1)Allows the licensees fee to be collected when money is due from an insurer, but not paid, or allows a licensee to collect the entire fee from the first payment issued by an insurer, rather than as a percentage of each payment issued by an insurer.
(2)Requires the insured to authorize an insurer to issue a payment only in the name of the licensee.
(3)Imposes late fees or collection costs on the insured.
(d)A licensee shall not solicit or attempt to solicit a client for employment during a loss-producing occurrence. A loss-producing occurrence continues to exist when any of the following conditions exist at the property that is subject to solicitation:
(1)Any of the circumstances that caused 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.
(3)An evacuation order is still in effect at the property where the solicitation would otherwise take place.
(e)A licensee or any other person or entity offering, for a fee, service regulated by this chapter shall not solicit a policyholder for employment or initiate any contact with a policyholder between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder.
(f)A licensee shall not use any form of contract other than that approved by the commissioner and that contains each of the following:
(1)A provision allowing the client to cancel the contract by written notice sent or delivered by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee by midnight of the third business day after the day on which the client signs a contract that complies with this section and is provided a copy of that signed contract. Each copy of the contract shall contain a completed form, captioned Notice of Cancellation, that shall be placed at the end of the contract and be separated from the remainder of the contract by a printed line. Nothing shall be printed on the reverse side of the notice form. The notice form shall be completed by the licensee, and shall contain in type of at least 10-point the following statement written in the same language, e.g., Spanish, as used in the contract:
Notice of Cancellation
| (Date of Contract) |
You may cancel this contract within three business days from the above date that you signed the contract and you were provided with a copy of that signed contract, except that, as it pertains to a disaster as defined in Section 15001, your right to cancel is five calendar days without any penalty or obligation to pay your public adjuster, other than for reimbursement of moneys paid by your public adjuster for out-of-pocket emergency expenses for you or on your behalf. If your public adjuster seeks reimbursement from you for out-of-pocket emergency expenses, your public adjuster shall provide you with an itemized statement of those emergency expenses advanced to you or on your behalf if the cancellation is made within the first three business days after the contract was signed by you and you were provided a copy of the signed contract. Nothing in this contract permits your public adjuster to recover any costs, except for out-of-pocket emergency expenses advanced to you.
If you cancel, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel this contract, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to:
| (name of public adjuster) | |
| at | |
| (address of public adjusters place of business) | |
| not later than midnight of | |
| (Date) | |
| I hereby cancel this contract | |
| (Date) | |
| (Clients signature) | |
(2)The statement WE REPRESENT THE INSURED ONLY prominently displayed in at least 10-point type.
(3)A provision disclosing the percentage of the insureds claim, or other fee, that the licensee will charge for his or her services. The licensee shall obtain the initials of the insured next to this provision.
(4)A conspicuous statement in at least 10-point type in immediate proximity to the space reserved for the clients signature, as follows: You may cancel this contract at any time before midnight of the third business day after the date of this contract. See the notice of cancellation form at the end of this contract for an explanation of this right.
(g)A licensee shall not knowingly make any a false report to his or her the licensees employer or divulge to any other person, except as he or she the licensee may be required by law to do so, any information acquired by him or her the licensee, except at the direction of the employer or a client for whom the information is obtained.
(h)A licensee shall not use a badge in connection with the official activities of the licensees business.
(i)A licensee shall not permit an employee or agent in his or her the licensees own name to advertise, engage clients, furnish reports, or present bills to clients, or in any manner whatever to conduct business for which a license is required under this chapter.
(j)Pursuant to subdivisions (a) and (c) of Section 15006, the commissioner shall have has the authority to enforce the provisions of this chapter and prosecute violations thereunder of this chapter committed by unlicensed persons or entities that hold themselves out or act as public insurance adjusters.
(k)For purposes of this section, business day shall have has the same meaning given to that term as defined in subdivision (e) of Section 1689.5 of the Civil Code, as in effect on the operative date of this statute.
(l)The contract and the notice of cancellation set forth in paragraph (1) of subdivision (f) shall be written in the same language, e.g., Spanish, as principally used in the negotiation of the contract.
(m)Within five business days after a contract has been canceled, the licensee shall tender to the client any payments made by the client and any note or other evidence of indebtedness, including an itemized statement of all amounts tendered to the client.
(n)The licensee is not entitled to compensation for services performed prior to before cancellation, other than for reimbursement of moneys paid by the licensee for out-of-pocket emergency expenses for the client or on behalf of the client. If the licensee seeks reimbursement from the client for out-of-pocket emergency expenses, and if the cancellation is made within the first three business days after the contract was initiated, the licensee shall provide the client with an itemized statement of those emergency expenses advanced to the client or on behalf of the client by the licensee. Nothing in this subdivision shall This subdivision does not permit the licensee to recover any costs, except for out-of-pocket emergency expenses advanced to the client. Any security interest shall be canceled upon cancellation of the contract.
(o)Notice of cancellation given by the client need not take the particular form specified in paragraph (1) of subdivision (f). Notice of cancellation, however expressed, is effective if it indicates the intention of the client not to be bound by the contract.
(p)Cancellation occurs when the client gives written notice of cancellation by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, to the licensee at the address specified in the contract.
(q)Notice of cancellation, if given by mail, is effective when sent by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, properly addressed with postage prepaid.
(r)Until the licensee has complied with this section, the client may cancel the contract.
(s)The contracts shall be executed in duplicate. The licensee shall retain one original contract, and shall provide the insured with an original contract.
(t)The licensee shall provide the client with an original contract and notice of cancellation at the time the client signs the contract.
(u)Any A confession of judgment or waiver of the provisions of this chapter shall be deemed contrary to public policy and shall be void and unenforceable.
(v)Prior to Before the signing of the contract, the licensee shall provide the insured with a separate printed disclosure document in the following form that bears the name and license number of the licensee:
DISCLOSURE
There are three types of insurance adjusters that could be involved in the processing of your insurance claim. The definitions of the three types are as follows:
(1)Public adjusters means the insurance adjusters who do not work for your insurance company. They work for you, the insured, to assist in the preparation, presentation, and settlement of your claim. You hire them by signing a contract and agreeing to pay them a fee or commission based on a percentage of the settlement, or other method of compensation. Public adjusters are required to be licensed, bonded, and tested by the State of California to represent your interest only.
(2)Company adjusters means the insurance adjusters who are employees of your insurance company. They represent your insurance company and are paid by your insurance company. They will not charge you a fee and are not individually licensed or tested by the State of California.
(3)Independent adjusters means the insurance adjusters who are hired on a contract basis by your insurance company to represent the company in the settlement of the claim. They are paid by your insurance company. They will not charge you a fee.
You have the right, but are not required, to use the services of a public adjuster in the preparation and handling of your insurance claim.
Public adjusters cannot solicit your business while the loss is underway, or between the hours of 6 p.m. and 8 a.m.
Your Public Adjuster Contract, with a public adjuster representing you, should clearly indicate the amount of the fee you will be paying to your public adjuster. Your contract, with this fee percentage, should be acknowledged by your initials on the Public Adjuster Contract. The salary, fee, commission, or other consideration is to be paid by you (the insured), not the insurance company (insurer).
You have the right to cancel the contract with your public adjuster, without any penalty or obligation, within three business days from the date the contract is signed. If the contract was established from a catastrophic disaster as defined in subdivision (c) of Section 15001, the insured has the right to cancel within five calendar days.
If you cancel the contract with your public adjuster, any money or other consideration paid by you will be returned within five business days following the receipt of your cancellation notice, and any security interest arising out of the transaction will be canceled.
To cancel the contract with your public adjuster, mail or deliver by certified mail, return receipt requested, or other form of mailing that provides proof of mailing, a signed and dated copy of the cancellation notice, or any other written notice, or send a telegram to the public adjuster at the address in the contract.
You have the right to, and may, communicate with your insurance company at any time if you feel the need during the claims process.
If you have any concerns or questions, the officers at the California Department of Insurance Consumer Hotline are there to help you. Please contact them at 1-800-927-HELP (4357) or www.insurance.ca.gov.
(w)No later than three business days after the cancellation has expired, the public adjuster shall notify the insurer, its adjuster, or its attorney, that he or she the public adjuster has entered into a written contract with the insured.
(x)If the licensee misrepresents or conceals a material fact from the insured prior to before the execution of the contract, the insured is entitled to rescind the contract without time limit.
(y)Notwithstanding any other provision of this section, if a property loss is included in an area that is subject to a catastrophic disaster, as defined in Section 15001, the insured shall have the right to may cancel a contract with a public adjuster within five calendar days of signing it and being provided a copy of the signed contract.
|
Date
|
Status
|
|---|---|
| Aug 29, 2025 | In committee: Held under submission. |
| Aug 18, 2025 | In committee: Referred to suspense file. |
| Jul 14, 2025 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 10, 2025 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (July 9). |
| Jul 3, 2025 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on INS. |
| May 7, 2025 | Referred to Com. on INS. |
| Apr 2, 2025 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 1, 2025 | Read third time. Urgency clause adopted. Passed. Ordered to the Senate. (Ayes 77. Noes 0.). |
| Apr 1, 2025 | Read third time. Urgency clause adopted. Passed. Ordered to the Senate. (Ayes 77. Noes 0. Page 957.). |
| Mar 24, 2025 | Read second time. Ordered to third reading. |
| Mar 20, 2025 | Read second time and amended. Ordered returned to second reading. |
| Mar 19, 2025 | From committee: Amend, and do pass as amended. (Ayes 15. Noes 0.) (March 19). |
| Mar 19, 2025 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 17. Noes 0.) (March 19). Re-referred to Com. on APPR. |
| Mar 13, 2025 | Assembly Rule 56 suspended. (Page 616.) |
| Mar 13, 2025 | (Pending re-refer to Com. on APPR.) |
| Mar 11, 2025 | Re-referred to Com. on INS. |
| Mar 10, 2025 | Referred to Com. on INS. |
| Mar 10, 2025 | From committee chair, with author's amendments: Amend, and re-refer to Com. on INS. Read second time and amended. |
| Feb 14, 2025 | From printer. May be heard in committee March 16. |
| Feb 13, 2025 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 18, 2025 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 9, 2025 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Insurance |
Passed |
|
| Apr 1, 2025 | AB 597 Harabedian Third Reading Urgency | Assembly Floor |
Passed |
|
| Mar 19, 2025 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Insurance |
Passed |
|
| Mar 19, 2025 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Alpha Kappa Alpha Sorority, Inc. - Pasadena Chapter | ** Support | |
| American Property Casualty Insurance Association | ** Support | |
| California Association Of Realtors | ** Support | |
| California-Hawaii State Conference Of The Naacp | ** Support | |
| County of Los Angeles Board of Supervisors | ** Support | |
| Eaton Fire Survivors Network | ** Support | |
| Greenspan Company Adjusters International | ** Against | |
| Insurance Commissioner Ricardo Lara / California Department of Insurance | ** Support | |
| Pacific Association Of Domestic Insurance Companies | ** Support | |
| Pasadena/Altadena Ivy Foundation | ** Support | |
| Personal Insurance Federation Of California | ** Support | |
| SunPoint Public Adjusters | ** Against |
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anna Caballero, Chair
2025 - 2026 Regular Session
AB 597 (Harabedian) - Public insurance adjusters
Version: July 14, 2025 | Policy Vote: INS. 6 - 0 |
Urgency: Yes | Mandate: Yes |
Hearing Date: August 18, 2025 | Consultant: Janelle Miyashiro |
Bill Summary:
AB 597 revises existing and requires additional disclosure and notification requirements for contracts between public adjusters and policyholders. AB 597 also restricts a public adjuster’s compensation from being based on a payment made to the policyholder prior to the contractual retention of the adjuster if the claim pertains to a catastrophic disaster or state of emergency.
Fiscal Impact:
Unknown fiscal impact, ranging from absorbable to the tens to low hundreds of thousands of dollars, to the California Department of Insurance (CDI) to ensure public adjuster compliance with the mandates of this bill (Insurance Fund). Potential workload to CDI includes updating regulations and other licensee guidance, and for enforcement workload associated with new disclosure requirements and compensation prohibitions for public adjusters. The magnitude of costs to CDI will depend on, among other things, the volume of complaints received, the complexity of any subsequent investigations, and the level of non-compliance by public adjusters in executing contracts. For context, CDI's website indicates the department annually receives more than 200,000 consumer assistance calls, and investigates more than 56,000 consumer complaints. It is unknown if or to what extent this bill may result in additional complaint intake and investigations for CDI.
Background:
The Insurance Commissioner administers the Public Insurance Adjusters Act, which regulates the activities of public adjusters in California to protect policyholders. A public adjuster is a person who, for compensation, acts on behalf of or aids policyholders in negotiating and settling insurance claims, specifically for property damage. Public adjusters are required to be licensed by CDI, which involves completing prelicensing education requirements and passing an examination.
The Act prohibits public adjusters from charging a fee, commission, or any other form of compensation that would result in the policyholder receiving less than the amount already paid to them by the insurer prior to the signing of the written contract with the public adjuster. The Act also prohibits public adjusters from soliciting clients for employment during a loss-producing occurrence, and establishes specific time restrictions on when public adjusters can initiate contact with policyholders. Public adjusters are prohibited from soliciting policyholders for employment or making contact between the hours of 6 PM and 8 AM, unless the policyholder has specifically requested such communication.
Proposed Law:
- Specifies the description of services to be provided to the policyholder contained in the written contract between a public adjuster and policyholder include the specific claim and coverages to which the services apply. Additionally specifies the statement of compensation to the public adjuster contained in the contract include the specific claim and coverages to which the compensation applies.
- Prohibits a contract between a policyholder and public adjuster from allowing a public adjuster’s fee, commission, or other valuable consideration to be for or based on any amount paid to the policyholder by the insurer prior to the date of the written contract with the public adjuster if the claim pertains to a catastrophic disaster or state of emergency. Additionally prohibits a public adjuster’s compensation to be for or based on an insurer’s payment for specific claims or coverages to which the services do not apply.
- Requires certain notifications included in a contract between a policyholder and public adjuster contain a clear and conspicuous statement, in at least 12-point type and in immediate proximity to the disclosure of the percentage an adjuster will charge for their services, that indicates whether or not the claim(s) to which the services apply pertain to a catastrophic disaster.
- Allows contractually engaged policyholders, during these circumstances, five calendar days to cancel the contract without any penalty or obligation to pay the public adjuster, except for certain out-of-pocket emergency expenses paid by the adjuster.
- Makes conforming changes that increase the font size, from 10-point to 12-point type, for all required notifications and disclosures in a contract.
- Extends protections for policyholders to include a policyholder’s representative, and makes conforming changes.
Related Legislation:
SB 240 (Dodd, Chapter 502, Statutes of 2019) required CDI to develop an informational bulletin regarding California laws related to property insurance policies, including those governing declared emergencies, and to distribute those bulletins to all insurers, adjusters, and claimants suffering losses in a declared emergency. SB 240 also made several changes to CDI’s responsibilities with respect to claims adjusters.
-- END --
SENATE COMMITTEE ON INSURANCE
Senator Susan Rubio, Chair
2025 - 2026 Regular
Bill No: AB 597 Hearing Date: July 9, 2025
Author: | Harabedian | ||
Version: | July 3, 2025 Amended | ||
Urgency: | Yes | Fiscal: | Yes |
Consultant: | Brandon Seto | ||
SUBJECT: Public insurance adjusters
DIGEST:
Requires additional transparency and disclosure requirements for contracts between public adjusters and policyholders including specifying services provided by the public adjuster. Restricts a public adjuster’s compensation from being based on a payment made to the policyholder prior to the contractual retention of the adjuster. Clarifies prohibitions on when public adjusters may solicit their services, and under certain conditions, gives policyholders additional ability to void or cancel contracts with public adjusters.
ANALYSIS:
Existing law:
- Defines “public insurance adjuster” to mean a person who, for compensation, acts on behalf of or aids in any manner, an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property or any person who advertises, solicits business, or holds themselves out to the public as an adjuster of those claims and any person who, for compensation, investigates, settles, adjusts, advises, or assists an insured with reference to claims for those losses on behalf of any public insurance adjuster.
- Prohibits a public adjuster from charging a fee, commission, or other valuable consideration that causes the policyholder to receive less than the amount paid to the policyholder by the insurer prior to the date of the written contract between the policyholder and the public adjuster.
- Prohibits public adjusters from soliciting a client for employment during a loss-producing occurrence, and specifies that a loss-producing occurrence continues to exist when any of the circumstances that caused the loss are present at the property, emergency responders are present at the property, or an evacuation order is still in effect at the property.
- Prohibits public adjusters from soliciting a policyholder for employment or initiating contact with a policyholder between the hours of 6 PM and 8 AM, unless requested by the policyholder.
- Prohibits public adjusters from soliciting a contract 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 occurrence.
- Requires a public adjuster to use a contract that has been approved by the Insurance Commissioner which contains several specified provisions, while specifically excluding others.
- Defines “catastrophic disaster” to mean an duly declared event that results in large numbers of deaths and injuries, causes extensive damage or destruction of facilities that provide and sustain human needs, produces an overwhelming demand on state and local response resources and mechanisms, causes a severe long-term effect on general economic activity, and severely affects state, local, and private sector capabilities to begin and sustain response activities.
- Defines a “state of emergency” as the duly proclaimed existence of conditions of disaster or extreme peril to the safety of persons and property within the state, caused by conditions such as air pollution, fire, flood, storm, epidemic, riot, drought, cyberterrorism, sudden and severe energy shortage, electromagnetic pulse attack, plant or animal infestation or disease, among other conditions.
This bill:
- States that a public adjuster must provide in any contract with a policyholder, a description of the services to be provided, including the specific claim and coverages to which the services apply.
- Prohibits these contracts between a public adjuster and a policyholder from allowing a public adjuster’s compensation to be for, or based upon, any amount paid to the policyholder by the insurer prior to the date of the written contract with the public adjuster. Further prohibits such compensation for, or based upon, an insurer’s payment for specific claims or coverages to which the services do not apply.
- Requires such contracts to contain a clear and conspicuous statement in at least 12-point type indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster or a state of emergency. Allows contractually engaged policyholders, during these circumstances, five calendar days to cancel the contract without any penalty or obligation to pay the public adjuster, except for certain out-of-pocket emergency expenses paid by the adjuster.
- Requires more legible type to be included in these contracts for certain policyholder notification provisions.
- States that a public adjuster may not solicit or attempt to solicit a policyholder or policyholder’s representative for employment during a loss-producing occurrence, as specified. If a public adjuster violates this provision, the policyholder is entitled to void or rescind any contract without time limit.
- Stipulates that a public adjuster or any other person or entity offering related services, shall not solicit a policyholder or a policyholder’s representative for employment or initiate any contact with a policyholder or their representative between the hours of 6 PM and 8 AM, unless requested by the policyholder or policyholder’s representative. If a public adjuster violates this provision, the policyholder is entitled to void or rescind any contract without time limit.
- Contains an urgency clause.
Background
According to the Author:
“AB 597 will strengthen consumer protections for policyholders working with public insurance adjusters. Public adjusters provide a valuable service by helping people navigate the complex insurance claims process after disasters like wildfires, reviewing policies, documenting losses, and negotiating with insurance companies to get a fair settlement. However, consumers can often be misled when retaining public adjuster services.
Public adjusters are currently allowed to charge a fee on monies already paid out, or “old money”, to a policyholder that the public adjuster had no hand in helping the policyholder gain. Further, some public adjuster contracts are unclear about the service fees they’ll charge a consumer and whether these fees will be on a percentage of old money, the “new money” that the public adjuster actually played a role in securing for the policyholder, or both.
Public adjusters should not profit from monies for which they did not provide services. Consumers deserve transparency and the ability to void a contract if a public adjuster misrepresents their services or fees, especially in their most vulnerable moments following a disaster. AB 597 will achieve this by prohibiting a public adjuster from charging fees on old money the adjuster did not help the policyholder gain, and requiring detailed descriptions of services in public adjuster contracts with a means of terminating the contract if the services were solicited during a prohibited time period. These provisions will help protect policyholders during their times of greatest need.”
Suggested Amendment
Apply the provisions of subdivision (c)(4) of the bill only during a catastrophic disaster or a state of emergency:
(c)(4) Allows the licensee’s fee, commission, or other valuable consideration to be for, or based upon, any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster, if the claim pertains to a catastrophic disaster, as defined in Section 15001, or a state of emergency, as defined in Section 8558 of the Government Code.
Related/Prior Legislation
SB 240 (Dodd, Chapter 502, Statutes of 2019): Required the California Department of Insurance (CDI) to develop an informational bulletin regarding California laws related to property insurance policies, including those governing declared emergencies, and to distribute those bulletins to all insurers, adjusters, and claimants suffering losses in a declared emergency. Made several changes to CDI’s responsibilities with respect to claims adjusters.
SB 488 (Block, Chapter 833, Statutes of 2016): Revised the eligibility requirements and regulations applicable to public adjusters, including defining several licensure requirements, prohibiting public adjusters from soliciting new business while the loss-inducing event is ongoing, permitting the policyholder to cancel a contract within five days of signing the contract after a catastrophe, and prohibiting the fee charged by a public adjuster from resulting in the policyholder receiving less compensation from the insurer than before the public adjuster was retained.
ARGUMENTS IN SUPPORT:
According to the sponsor, Insurance Commissioner Ricardo Lara:
“The heartbreak and challenges facing families and communities from the fires in Southern California are a stark reminder of how deeply these disasters impact all of us. These wildfires have brought immense emotional and financial strain, and we must work together to ensure no one faces this level of devastation alone. These events have also exposed the need to protect victims from bad actors who use wildfires as an opportunity to re-victimize disaster survivors. Although Public Adjusters (PAs) serve an essential role in negotiating on behalf of consumers, aiding them in securing additional funds under an insurance policy, a few bad actors take an exorbitant percentage – upwards of 30% or more – while also retroactively charging commission on funds that were paid to an insured prior to the PA entering into a contract with the insured.
AB 597 would provide fee transparency by prohibiting PAs from taking fees on any payments received before the date of the written contract between the consumer and the PA, ensuring they do not retroactively charge fees for funds they had no part in obtaining. Additionally, AB 597 would require contracts to provide a detailed description of services, including specific claims and coverages the PA will handle, and contract language requirements to inform consumers of their rights and protections. Lastly, it would give consumers a vital recourse to void or rescind a contract solicited during a prohibited period. AB 597 offers essential safeguards against the re-victimization of disaster survivors, ensuring that insurance payouts go to families and communities where they are most needed.”
ARGUMENTS IN OPPOSITION:
According to SunPoint Public Adjusters:
“We acknowledge the recent amendments to AB 597, including the removal of the arbitrary fee cap. But let’s be clear: the bill is still fundamentally broken and remains a direct threat to California consumers. This bill removes the fee cap and creates incentives for insurance companies to have actuarial tables determine how much to pay consumers under what they are owed based on their policy. The bill prohibits public adjusters from earning fees on any money paid before a contract is signed. This isn’t a consumer protection — it’s a loophole tailor-made for insurers to take advantage of disaster victims. Insurers will simply issue lowball payments up front — just enough to trap victims in a weakened position, making it financially impossible for them to hire an adjuster.
Public adjusters are often the only professionals standing between these consumers and a denied or drastically underpaid claim. If adjusters can’t get paid fairly, they can’t afford to help — and thousands will be forced to face billion-dollar insurance companies alone. This arbitrary “overage” limit means public adjusters will have to factor all their costs to professionally evaluate the claim, into a smaller portion of the claim — which could make fees appear as high as 15–30%. That alone may scare off many consumers from getting the help they need and getting what they are owed from their insurance company. AB 597 is a betrayal of fire survivors and every California consumer struggling to recover from property loss.”
SUPPORT:
Insurance Commissioner Ricardo Lara / California Department of Insurance (Sponsor)
Alpha Kappa Alpha Sorority, INC. - Pasadena Chapter
American Property Casualty Insurance Association
California Association of Realtors
California-Hawaii State Conference of the NAACP
County of Los Angeles Board of Supervisors
Eaton Fire Survivors Network
Pacific Association of Domestic Insurance Companies
Pasadena/Altadena Ivy Foundation
Personal Insurance Federation of California
OPPOSITION:
Greenspan Company Adjuster International
SunPoint Public Adjusters
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 597
Author:(Harabedian)
As Amended Ver:March 20, 2025
2/3 vote. Urgency
SUMMARY
Prohibits a public insurance adjuster from charging a policyholder based on any amount paid to the policyholder by the insurer for claims or coverages to which the adjuster's services do not apply or paid before the contract between the policyholder and the public adjuster was initiated, and prohibits a public adjuster from charging more than 15% of the applicable amount paid by the insurer to the policyholder if the claim pertains to a state of emergency or catastrophic disaster.
Major Provisions
- Prohibits a written contract for a public insurance adjuster's services (henceforth, "public adjuster contract" or "contract") from basing compensation on any amount paid by the insurer to the policyholder prior to the date of the contract, and from basing compensation on an insurer's payment for specific claims or coverages to which the services do not apply.
- If the claim pertains to a catastrophic disaster or a state of emergency, as defined, prohibits a public insurance adjuster from charging the policyholder more than 15% of the amount paid by the insurer to the policyholder after the date of the contract for specific claims and coverages to which the services apply. Applies this limitation to all claims relating to a policy of residential property insurance and to a policy of commercial property insurance involving policy limits of $10 million or less.
- Requires the description of services and the statement of compensation in the public adjuster contract to describe the specific claims and coverages to which the services apply, and to which the compensation applies, respectively.
- Entitles the policyholder to void or rescind the public adjuster contract without time limit if the public adjuster solicited employment in violation of the prohibition on solicitation during a loss-producing occurrence or in violation of the prohibition on solicitation between the hours of 6 p.m. and 8 a.m.
- Applies the existing right for the policyholder to cancel a public adjuster contract within five days without penalty if it pertains to a catastrophic disaster, to circumstances in which the contract pertains to a state of emergency, and makes conforming changes to the required disclosure provided in advance of the policyholder signing the contract.
COMMENTS
What are public adjusters? Claims adjusters, generally, are central to the operation of an insurer – they investigate and evaluate claims, decide whether an insurance company must pay a claim, and, if so, how much the insurance company must pay to satisfy the claim. This frequently requires on-site physical inspection in a property damage claim. Public adjusters are claims adjusters that are contracted by the policyholder to represent their interests in the claims investigation, evaluation, settlement, and negotiation process. Though they must be licensed to conduct business in the state of California, public adjusters, despite their name, are not government employees nor do they operate on behalf of the government.
The insurance claims process can be complex, especially for those who have little or no experience with insurance. The methodology behind evaluating the claim is often opaque, and claims adjusters operating on behalf of the company, while ideally impartial, can be perceived as minimizing the claim settlement on behalf of the insurer. Public adjusters are intended to serve as advocates for the policyholder, conducting the often frustrating process of interacting with the insurer, independently evaluating the claim, and seeking to maximize the recovery of a fair settlement. Typically, their fee for service is a percentage of the settlement recovered from the insurer on behalf of the policyholder. This means, for example, that if the insurer pays out $100,000 for the claim, the public adjuster may receive 10% of that settlement, with the other $90,000 being received by the policyholder.
The services of public adjusters can be especially critical in the wake of catastrophic events, where traumatized and preoccupied victims lack the bandwidth to pursue their claims and advocate for themselves. In the absence of public adjusters, victims may instead seek representation from attorneys, who tend to have less direct experience with the claims process and in many cases cost considerably more to retain. During these vulnerable times, however, victims of loss can also be especially vulnerable to exploitative behavior.
Excessive fees, ambiguous contracts, and unethical solicitation practices: The California Department of Insurance (CDI) identifies several types of unscrupulous behaviors by public adjusters for which they have received complaints. For instance, CDI has identified ambiguous contracts that do not specify the claims or coverages for which the adjuster is providing service, leading to attempted recovery of fees from settlements they did not negotiate. Similarly, according to CDI, "[i]n extreme cases, adjusters have even tried to collect a percentage of insurance money that the homeowner already received before the adjuster was hired – taking payments they did not negotiate." While existing law prohibits solicitation by public adjusters in the immediate aftermath of a catastrophe, CDI also reports attempts to circumvent this prohibition by instead soliciting a victim's family member, attorney, or agent during the prohibited timeframe.
This bill seeks to prevent these behaviors by, among other things, requiring the contract to clearly specify the claims and coverages to which a public adjuster's services, and compensation, apply, and prohibiting fees based on money received before the contract was signed. The bill would also clarify that solicitation prohibitions apply to a policyholder's representative in addition to the policyholder.
Public adjuster fee caps in other states: Though Section 15027(b)(7) of the Insurance Code provides that "a public adjuster's fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster," California is one of 24 states that does not otherwise explicitly cap the fees that can be charged by public adjusters under any circumstances.
All other states - with the exception of Alabama and Arkansas, which prohibit public adjusters from practicing in their states entirely, and Louisiana, which requires compensation to be based on an hourly wage - impose some form of cap on public adjuster fees, the structures of which vary considerably. Six states cap fees on all public adjuster contracts regardless of whether the claims pertain to a catastrophe, with caps ranging from 2.5% of the amount paid to the policyholder by the insurer for settlements less than $25,000 in Delaware to 33.3% in Georgia.
This bill would not cap public adjuster fees under normal circumstances, but if the claim(s) for which the public adjuster provides service pertains to a catastrophic disaster or state of emergency, would impose a fee cap of 15% of the amount paid to the policyholder by the insurer for those claims. Eight states (Colorado, New Mexico, North Carolina, North Dakota, Rhode Island, Virginia, West Virginia, and Wisconsin) do not cap public adjuster fees under normal circumstances, but do impose caps for catastrophic events. All of these states cap fees at 10% of the amount paid to the policyholder by the insurer.
Public adjusters and money recovered before the date of the contract: In nearly all of the states that only cap fees on claims pertaining to catastrophes, the 10% fee cap is based on the total amount recovered on the claim for which the public adjuster provided service, including amounts recovered on that claim by the policyholder in advance of contracting for the services of the public adjuster. Public adjusters argue that this is a reasonable approach because in order to advocate for recovering any additional payment, they must perform a full inventory of the claim to determine what additional payment may be owed.
In Virginia, however, the fee cap for catastrophes limits fees to 10% of the amount paid to the policyholder by the insurer after the date of the contract with the public adjuster ("No public adjuster shall charge a fee, commission, or other valuable consideration based, in whole or in part, on an amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster." (Code of Virginia Title 38.2, Section 1845.14(D)) Florida, which caps fees under normal circumstances at 20% and those related to catastrophes at 10%, also prohibits the imposition of fees by public adjusters based on payments received before the date of the contract.
This bill would use substantially similar language to Virginia to cap fees at 15% of the amount paid after the date of the written contract in California. The bill's author argues that this approach is most appropriate, as, "in practice, this would stop adjusters from targeting a homeowner who has received an initial check and taking a percentage of that pre-existing payment."
State of emergency vs. catastrophic disaster: The terms "state of emergency" and "catastrophic disaster" are often used interchangeably, but have distinct definitions under California law. Generally speaking, the threshold for the declaration of a catastrophic disaster is greater than for a state of emergency, as it requires large numbers of deaths and injuries, extensive damage or destruction of critical infrastructure, severe long-term effects on economic activity, and overwhelming demand on state and local response resources. In contrast, a state of emergency can be declared any time conditions exist which, "by reason of their magnitude, are or are likely to be beyond the control of the services, personnel, equipment, and facilities" of any single municipality "and require the combined forces of a mutual aid region or regions to combat."
Existing law permits a policyholder to cancel a contract with a public adjuster within five days, rather than three days, if the claim pertains to a catastrophic disaster. This bill would expand this provision to include states of emergency. The bill would also apply the 15% cap on fees to claims pertaining to either a catastrophic disaster or a state of emergency.
According to the Author
Homeowners should feel secure in the aftermath of a disaster, knowing that those meant to help them are acting in their best interest. AB 597 strengthens consumer protections by ensuring that public insurance adjusters operate with fairness and transparency. When disaster strikes – whether through wildfire, earthquake, or storm – policyholders deserve clear contracts, reasonable fees, and ethical treatment. This bill is a safeguard for Californians during their most vulnerable moments by establishing clear limits on public adjuster fees, ensuring contracts are transparent and understandable, and preventing aggressive business practices that take advantage of disaster survivors. By closing loopholes and reinforcing ethical standards, AB 597 ensures families can focus on rebuilding their lives, not fighting hidden fees or misleading agreements. AB 597 will ensure increased clarity, fairness, and integrity in the insurance claims process when people need it most.
Arguments in Support
According to Insurance Commissioner Ricardo Lara, who sponsors the bill:
Although PAs serve an essential role in negotiating on behalf of consumers, aiding them in securing additional funds under an insurance policy, a few bad actors take an exorbitant percentage – upwards of 30% or more – while also retroactively charging commission on funds that were paid to an insured prior to the PA entering into a contract with the insured. Unfortunately, it is only a matter of time before the next natural disaster will impact Californians and leave them vulnerable to revictimization. As we move forward, we must protect victims of disasters from price gouging and other unfair practices that redirect essential funds away from those who need them most.
Arguments in Opposition
While no letters of opposition have been received, the Pacific Coast Association of Public Insurance Adjusters submitted written testimony to the Assembly Insurance Committee. According to their written testimony:
Implementing unreasonable fee caps will cause consumers to suffer as public adjusters will be forced to turn down consumers with smaller claims. If it is not economically feasible to assist a consumer when they have a small claim, then there will be no option for the insured to resolve their dispute with the insurer. Public adjusters are the only professionals licensed to represent the interest of the insured, with the exception of attorneys. Attorney's fees are not regulated and they may charge a much higher fee than public adjusters without the necessary skill and training required to properly adjust the claim. The end result of imposing a fee cap likely will remove consumers' ability to engage qualified, professional representation.
FISCAL COMMENTS
According to the Assembly Appropriations Committee, "minor and absorbable costs to California Department of Insurance to update informational materials and enforce new contract terms."
VOTES
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Sanchez, Arambula, Calderon, Caloza, Dixon, Elhawary, Fong, Mark González, Hadwick, Hart, Pacheco, Pellerin, Solache, Ta
ASM INSURANCE: 17-0-0
YES: Calderon, Wallis, Addis, Alvarez, Ávila Farías, Berman, Chen, Gallagher, Gipson, Hadwick, Harabedian, Krell, Nguyen, Ortega, Petrie-Norris, Michelle Rodriguez, Valencia
UPDATED
VERSION: March 20, 2025
CONSULTANT: Landon Klein / INS. / (916) 319-2086 FN: 0000174
Date of Hearing: March 19, 2025
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 597
Author:(Harabedian) – As Amended Ver:March 10, 2025
Policy Committee: | Insurance | Vote: | vote no available |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill adds requirements for contract terms set between a public adjuster (PA) and an insured policyholder.
Specifically, this bill:
- Requires a contract between a PA and the insured policyholder to include a description of the specific claim and coverages to which the PA’s services and compensation apply.
- Prohibits the contract from allowing the PA’s fee to be based upon any amount paid to the insured prior to the contract date or any claim or coverages unrelated to the PA’s services.
- Prohibits, if the claim pertains to a catastrophic disaster or state of emergency, the PA’s fee from being greater than 15% of the amount paid by the insurer after the contract date. This prohibition applies to a residential property insurance policy of any limit or a commercial property insurance policy of $10 million or less. The contract must disclose this fee cap and indicate whether the claim pertains to a catastrophic disaster or state of emergency.
- Allows the insured additional time to cancel a contract if the contract pertains to a state of emergency. This allowance mirrors existing law regarding a contract that pertains to a catastrophic disaster.
- Allows the insured to rescind the contract if the PA solicits employment from the insured during existing prohibited time periods: during a loss-producing event and, unless requested by the insured, between the hours of 6 p.m. and 8 a.m.
FISCAL EFFECT:
Minor and absorbable costs to California Department of Insurance to update informational materials and enforce new contract terms.
COMMENTS:
- Purpose. According to the author, “Homeowners should feel secure in the aftermath of a disaster, knowing that those meant to help them are acting in their best interest. AB 597 strengthens consumer protections by ensuring that [PAs] operate with fairness and transparency.” This bill is sponsored by Insurance Commissioner (IC) Ricardo Lara.
- PAs. The Public Insurance Adjusters Act, administered by the IC, governs the regulation, licensing, and registration of PAs, including contract terms and fees. Unlike a company or independent adjuster that represents the insurance company’s interests, a PA is generally hired directly by the insured to represent the insured against their insurance company for the purpose of settling an insurance claim, with a percentage of those claim proceeds comprising the PA’s service fee.
After a fire or other disaster, a PA may solicit policyholders for a business contract, but must follow certain rules to protect disaster victims during a vulnerable time. For example, the written contract between a PA and the insured must include the full salary, fee, commission, or other consideration for the PA’s services, as well as a description of the services the PA is to provide the insured. Additionally, a PA is prohibited from soliciting employment during a loss-producing occurrence, such as when an evacuation order is still in effect at the insured’s property, and between the hours of 6 p.m. and 8 a.m. This bill adds new rules for a contract between a PA and the insured, such as prohibiting the PA’s fee to be based upon any amount paid to the insured prior to the contract date and capping certain PA fees in relation to a catastrophic disaster or state of emergency at 15% of the amount paid by the insurer after the contract date. This bill also provides the insured additional opportunities to cancel a contract.
- Proposed Amendments. The author is requesting this bill be amended to: (a) include an urgency clause so the measure can take immediate effect if signed into law and (b) address the drafting error referenced in the Assembly Insurance Committee’s analysis of this bill.
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: March 19, 2025
ASSEMBLY COMMITTEE ON INSURANCE
Lisa Calderon, Chair
ABPCA Bill Id:AB 597 (
Author:Harabedian) – As Amended Ver:March 10, 2025
SUBJECT: Public insurance adjusters
SUMMARY: Prohibits a public insurance adjuster from charging a policyholder based on any amount paid to the policyholder by the insurer for claims or coverages to which the adjuster’s services do not apply or paid before the contract between the policyholder and the public adjuster was initiated, and prohibits a public adjuster from charging more than 15% of the applicable amount paid by the insurer to the policyholder if the claim pertains to a state of emergency or catastrophic disaster. Specifically, this bill:
- Prohibits a written contract for a public insurance adjuster’s services (henceforth, “public adjuster contract” or “contract”) from basing compensation on any amount paid by the insurer to the policyholder prior to the date of the contract, and from basing compensation on an insurer’s payment for specific claims or coverages to which the services do not apply.
- If the claim pertains to a catastrophic disaster or a state of emergency, as defined, prohibits a public insurance adjuster from charging the policyholder more than 15% of the amount paid by the insurer to the policyholder after the date of the contract for specific claims and coverages to which the services apply.
- Specifies that the limitation imposed by 2), above, applies to all claims relating to a policy of residential property insurance, as defined, and to a policy of commercial property insurance involving policy limits of $10 million or less.
- Requires the description of services and the statement of compensation in the public adjuster contract to describe the specific claims and coverages to which the services apply, and to which the compensation applies, respectively.
- Requires the public adjuster contract to include a statement in at least 10-point type in the immediate proximity of the statement of compensation, as follows: “For claims pertaining to a catastrophic disaster or state of emergency declared by the President of the United States or the Governor of California, the total cost for the services performed pursuant to this contract shall not exceed 15 percent of the amount paid by the insurer after the effective date of this contract for claims and coverages to which those services apply.”
- Requires the public adjuster contract to include a clear and conspicuous statement in at least 10-point type in immediate proximity to the statement specified in 5), above, indicating whether or not the claim or claims to which the services apply pertain to a catastrophic disaster or state of emergency, as defined.
- Applies the existing right for the policyholder to cancel a public adjuster contract within five days without penalty if it pertains to a catastrophic disaster, to circumstances in which the contract pertains to a state of emergency, and makes conforming changes to the required disclosure provided in advance of the policyholder signing the contract.
- Entitles the policyholder to void or rescind the public adjuster contract without time limit if the public adjuster solicited employment in violation of the prohibition on solicitation during a loss-producing occurrence or in violation of the prohibition on solicitation between the hours of 6 p.m. and 8 a.m.
- Clarifies that existing limitations on solicitation for employment by public insurance adjusters during a loss-producing occurrence or between the hours of 6 p.m. and 8 a.m. apply to solicitations directed toward the policyholder and also toward the policyholder’s representative.
EXISTING LAW:
- Defines “public insurance adjuster” to mean a person who, for compensation, acts on behalf of or aids in any manner, an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property or any person who advertises, solicits business, or holds themself out to the public as an adjuster of those claims and any person who, for compensation, investigates, settles, adjusts, advises, or assists an insured with reference to claims for those losses on behalf of any public insurance adjuster. (Insurance Code, Section 15007; all further references to code refer to the Insurance Code unless otherwise specified.)
- Prohibits a person from engaging in the business of public insurance adjusting, or from representing oneself as a public insurance adjuster, unless they are licensed by the Insurance Commissioner, and imposes a civil penalty of $10,000, or, for a willful violation, $25,000, for unlicensed practice. Also imposes a civil penalty of $100 per day, not to exceed a maximum amount of $5,000, for failure to comply with a cease and desist order issued by the Commissioner for unlawful practice. (Section 15006)
- Requires an applicant for a license to act as a public adjuster to meet specified requirements, including:
- Be at least 18 years of age. (Section 15011(a))
- Have at least two years’ experience in the handling of loss claims under insurance contracts. (Section 15011(c))
- Maintain an office in the State of California with public access during regular business hours. (Section 15011(d))
- Pass an exam given by the Insurance Commissioner in regard to property loss adjusting. (Section 15011(e))
- Post a $20,000 surety bond. (Section 15011(f))
- Not have committed acts or crimes constituting grounds for denial of licensure, as specified. (Section 15011(b))
- Prohibits contracts for the services of public adjusters from containing provisions that do any of the following:
- Allow the public adjuster’s fee to be collected when money is due from an insurer but not yet paid, or allow the public adjuster to collect the entire fee from the first payment issued by the insurer, rather than as a percentage of each payment. (Section 15027(c)(1))
- Require the policyholder to authorize an insurer to issue a payment only in the name of the public adjuster. (Section 15207(c)(2))
- Impose late fees or collection costs on the policyholder. (Section 15027(c)(3))
- Prohibits a public adjuster from charging a fee, commission, or other valuable consideration that causes the policyholder to receive less than the amount paid to the policyholder by the insurer prior to the date of the written contract between the policyholder and the public adjuster. (Section 15027(b)(7))
- Prohibits public adjusters from soliciting a client for employment during a loss-producing occurrence, and specifies that a loss-producing occurrence continues to exist when any of the circumstances that caused the loss are present at the property, emergency responders are present at the property, or an evacuation order is still in effect at the property. (Section 15027(d))
- Prohibits public adjusters from soliciting a policyholder for employment or initiating contact with a policyholder between the hours of 6 p.m. and 8 a.m., unless requested by the policyholder. (Section 15027(e))
- Prohibits public adjusters from soliciting a contract 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 occurrence. (Section 15027.1)
- Prohibits a public adjuster from using any form of contract other than one that has been approved by the commissioner (Section 15027(f)) and contains several specified provisions, including provisions that do all of the following:
- Allow the client to cancel the contract by written notice to the public adjuster within three business days of signing the contract and receiving a copy of the contract, and include specific language to that effect. (Section 15027(f)(1) & (4))
- Include the statement “WE REPRESENT THE INSURED ONLY,” as specified. (Section 15027(f)(2))
- Disclose the percentage of the policyholder’s claim or other fee that the licensee will charge for services. (Section 15027(f)(3))
- Notwithstanding 9), above, provides that, if a property loss is included in an area that is subject to a catastrophic disaster, as defined, the policyholder may cancel a contract with a public adjuster within five calendars of signing it and being provided a copy, rather than three business days. (Section 15027(y))
- Defines “catastrophic disaster” to mean an event that results in large numbers of deaths and injuries; causes extensive damage or destruction of facilities that provide and sustain human needs; produces an overwhelming demand on state and local response resources and mechanism; causes a severe long-term effect on general economic activity; and severely affects state, local, and private sector capabilities to begin and sustain response activities. Further specifies that a catastrophic disaster shall be declared by the President of the United States or the Governor of the state or district in which the disaster occurred. (Section 15001(c))
- Defines “state of emergency” to mean the duly proclaimed existence of conditions of disaster or of extreme peril to the safety of persons and property within the state caused by conditions such as air pollution, fire, flood, storm, epidemic, riot, drought, cyberterrorism, sudden and severe energy shortage, electromagnetic pulse attack, plant or animal infestation or disease, the Governor’s warning of an earthquake or volcanic prediction, or an earthquake, or other conditions which, by reason of their magnitude, are or are likely to be beyond the control of the services, personnel, equipment, and facilities of any single county, city and county, or city and require the combined forces of a mutual aid region or regions to combat, or with respect to regulated energy utilities, a sudden and severe energy shortage requires extraordinary measures beyond the authority vested in the Public Utilities Commission. Excludes conditions resulting from a labor controversy or conditions resulting from enemy attack, or the probable or imminent threat of enemy attack. (Government Code, Section 8558(b))
FISCAL EFFECT: Unknown.
COMMENTS:
- Purpose: According to the author, “Homeowners should feel secure in the aftermath of a disaster, knowing that those meant to help them are acting in their best interest. AB 597 strengthens consumer protections by ensuring that public insurance adjusters operate with fairness and transparency. When disaster strikes – whether through wildfire, earthquake, or storm – policyholders deserve clear contracts, reasonable fees, and ethical treatment. This bill is a safeguard for Californians during their most vulnerable moments by establishing clear limits on public adjuster fees, ensuring contracts are transparent and understandable, and preventing aggressive business practices that take advantage of disaster survivors. By closing loopholes and reinforcing ethical standards, AB 597 ensures families can focus on rebuilding their lives, not fighting hidden fees or misleading agreements. AB 597 will ensure increased clarity, fairness, and integrity in the insurance claims process when people need it most.”
- What are public adjusters? Claims adjusters, generally, are central to the operation of an insurer – they investigate and evaluate claims, decide whether an insurance company must pay a claim, and, if so, how much the insurance company must pay to satisfy the claim. This frequently requires on-site physical inspection in a property damage claim. Following a loss, there are three types of claims adjusters that a policyholder may encounter:
- Staff adjusters: employees of the insurance company who evaluate the claim on their behalf. Staff adjusters often handle routine claims.
- Independent adjusters: contractors hired by the insurance company to handle claims as-needed, especially following catastrophes where there are particularly high numbers of claims.
- Public adjusters: contracted by the policyholder to represent their interests in the claims investigation, evaluation, settlement, and negotiation process. Though they must be licensed to conduct business in the state of California, public adjusters, despite their name, are not government employees nor do they operate on behalf of the government.
The insurance claims process can be complex, especially for those who have little or no experience with insurance. The methodology behind evaluating the claim is often opaque, and claims adjusters operating on behalf of the company, while ideally impartial, can be perceived as minimizing the claim settlement on behalf of the insurer. Public adjusters are intended to serve as an advocate for the policyholder, conducting the often frustrating process of interacting with the insurer, independently evaluating the claim, and seeking to maximize the recovery of a fair settlement. Typically, their fee for service is a percentage of the settlement recovered from the insurer on behalf of the policyholder. This means, for example, that if the insurer pays out $100,000 for the claim, the public adjuster may receive 10% of that settlement, with the other $90,000 being received by the policyholder.
The services of public adjusters can be especially critical in the wake of catastrophic events, where traumatized and preoccupied victims lack the bandwidth to pursue their claims and advocate for themselves. In the absence of public adjusters, victims may instead seek representation from attorneys, who tend to have less direct experience with the claims process and in many cases cost considerably more to retain. During these vulnerable times, however, victims of loss can also be especially vulnerable to exploitative behavior.
Insurance Commissioner Ricardo Lara, who sponsors the bill, argues:
Although PAs serve an essential role in negotiating on behalf of consumers, aiding them in securing additional funds under an insurance policy, a few bad actors take an exorbitant percentage – upwards of 30% or more – while also retroactively charging commission on funds that were paid to an insured prior to the PA entering into a contract with the insured. Unfortunately, it is only a matter of time before the next natural disaster will impact Californians and leave them vulnerable to revictimization. As we move forward, we must protect victims of disasters from price gouging and other unfair practices that redirect essential funds away from those who need them most.
- Excessive fees, ambiguous contracts, and unethical solicitation practices: The California Department of Insurance (CDI) identifies several types of unscrupulous behaviors by public adjusters for which they have received complaints. For instance, CDI has identified ambiguous contracts that do not specify the claims or coverages for which the adjuster is providing service, leading to attempted recovery of fees from settlements they did not negotiate. Similarly, according to CDI, “[i]n extreme cases, adjusters have even tried to collect a percentage of insurance money that the homeowner already received before the adjuster was hired – taking payments they did not negotiate.” While existing law prohibits solicitation by public adjusters in the immediate aftermath of a catastrophe, CDI also reports attempts to circumvent this prohibition by instead soliciting a victim’s family member, attorney, or agent during the prohibited timeframe.
This bill seeks to prevent these behaviors by, among other things, requiring the contract to clearly specify the claims and coverages to which a public adjuster’s services, and compensation, apply, and prohibiting fees based on money received before the contract was signed. The bill would also clarify that solicitation prohibitions apply to a policyholder’s representative in addition to the policyholder.
- Public adjuster fee caps in other states: Though Section 15027(b)(7) of the Insurance Code provides that “a public adjuster’s fee, commission, or other valuable consideration shall not cause the insured to receive less than any amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster,” California is one of 24 states that does not otherwise explicitly cap the fees that can be charged by public adjusters under any circumstances.
All other states - with the exception of Alabama and Arkansas, which prohibit public adjusters from practicing in their states entirely, and Louisiana, which requires compensation to be based on an hourly wage - impose some form of cap on public adjuster fees, the structures of which vary considerably. Six states cap fees on all public adjuster contracts regardless of whether the claims pertain to a catastrophe, with caps ranging from 2.5% of the amount paid to the policyholder by the insurer for settlements less than $25,000 in Delaware to 33.3% in Georgia.
This bill would not cap public adjuster fees under normal circumstances, but if the claim(s) for which the public adjuster provides service pertains to a catastrophic disaster or state of emergency, would impose a fee cap of 15% of the amount paid to the policyholder by the insurer for those claims. Eight states (Colorado, New Mexico, North Carolina, North Dakota, Rhode Island, Virginia, West Virginia, and Wisconsin) do not cap public adjuster fees under normal circumstances, but do impose caps for catastrophic events. All of these states cap fees at 10% of the amount paid to the policyholder by the insurer.
- Public adjusters and money recovered before the date of the contract: In nearly all of the states that only cap fees on claims pertaining to catastrophes, the 10% fee cap is based on the total amount recovered on the claim for which the public adjuster provided service, including amounts recovered on that claim by the policyholder in advance of contracting for the services of the public adjuster. Public adjusters argue that this is a reasonable approach because in order to advocate for recovering any additional payment, they must perform a full inventory of the claim to determine what additional payment may be owed.
In Virginia, however, the fee cap for catastrophes limits fees to 10% of the amount paid to the policyholder by the insurer after the date of the contract with the public adjuster (“No public adjuster shall charge a fee, commission, or other valuable consideration based, in whole or in part, on an amount paid to the insured by the insurer prior to the date of the written contract between the insured and the public adjuster.” (Code of Virginia Title 38.2, Section 1845.14(D)) Florida, which caps fees under normal circumstances at 20% and those related to catastrophes at 10%, also prohibits the imposition of fees by public adjusters based on payments received before the date of the contract.
This bill would use substantially similar language to Virginia to cap fees at 15% of the amount paid after the date of the written contract in California. The bill’s author argues that this approach is most appropriate, as, “in practice, this would stop adjusters from targeting a homeowner who has received an initial check and taking a percentage of that pre-existing payment.”
- State of emergency vs. catastrophic disaster: The terms “state of emergency” and “catastrophic disaster” are often used interchangeably, but have distinct definitions under California law. Generally speaking, the threshold for the declaration of a catastrophic disaster is greater than for a state of emergency, as it requires large numbers of deaths and injuries, extensive damage or destruction of critical infrastructure, severe long-term effects on economic activity, and overwhelming demand on state and local response resources. In contrast, a state of emergency can be declared any time conditions exist which, “by reason of their magnitude, are or are likely to be beyond the control of the services, personnel, equipment, and facilities” of any single municipality “and require the combined forces of a mutual aid region or regions to combat.”
Existing law permits a policyholder to cancel a contract with a public adjuster within five days, rather than three days, if the claim pertains to a catastrophic disaster. This bill would expand this provision to include states of emergency. The bill would also apply the 15% cap on fees to claims pertaining to either a catastrophic disaster or a state of emergency.
- Drafting error: In the proposed Section 15027(c)(6), the bill in print provides that the 15% cap on fees for claims pertaining to catastrophic disasters and states of emergencies “shall apply to all claims relating to both of the following:
- A policy of residential property insurance as defined in subdivision (a) of Section 10087.
- A policy of commercial property insurance that is subject to Section 675.5 and involving policy limits of ten million dollars ($10,000,000) or less.”
The use of the word “both” here [emphasis added] could be interpreted to apply the fee cap only to a claim on property covered by both a policy of residential property insurance and a policy of commercial property insurance, rather than to property covered by either of these types of policies. This interpretation would mean the provision would apply only in a remarkably limited number of circumstances, and is likely not the author’s intent. Should the bill pass out of this committee, the author should consider amending the bill to change the word “both” to “either” in this provision.
- Urgency: The bill in print does not have an urgency clause. As victims of the devastating Pacific Palisades and Eaton wildfires, two of the costliest disasters in California history, seek to recover and rebuild, they would likely benefit from the protections provided by this bill. Should the bill pass out of this committee, the author may wish to consider adding an urgency clause to ensure the bill can take effect immediately.
- Previous and pending legislation:
- AB 637 (Flora, 2025) would prohibit a person from making false or misleading commercial communications that give the impression of being made by or approved by a government entity or not-for-profit organization following a declared state of emergency.
- SB 240 (Dodd, Ch. 502, Stats. 2019) required the CDI to develop an informational bulletin regarding California laws related to property insurance policies, including those governing declared emergencies, to distribute to all insurers, adjusters, and claimants suffering losses in a declared emergency, and made several changes to CDI’s responsibilities with respect to claims adjusters.
- SB 488 (Block, Ch. 833, Stats. 2016) revised the eligibility requirements and regulations applicable to public adjusters, including: defining several licensure requirements, prohibiting public adjusters from soliciting new business while the loss-inducing event is ongoing, permitting the policyholder to cancel a contract within five days of signing the contract after a catastrophe, and prohibiting the fee charged by a public adjuster from resulting in the policyholder receiving less compensation from the insurer than before the public adjuster was retained.
REGISTERED SUPPORT / OPPOSITION:
Support
American Property Casualty Insurance Association
Insurance Commissioner Ricardo Lara / California Department of Insurance
Pacific Association of Domestic Insurance Companies
Opposition
None on file.
Analysis Prepared by: Landon Klein / INS. / (916) 319-2086
Discussed in Hearing
31MIN
Senate Standing Committee on Insurance
1MIN
Assembly Floor
1MIN
Assembly Standing Committee on Appropriations
30MIN
Assembly Standing Committee on Insurance
Bill Author
Bill Co-Author(s):
