Pennsylvania Public Adjuster Law Adds Cap on Fees, Bans Ties With Contractors

Pennsylvania Governor Josh Shapiro signed House Bill 1972 into law, updating the state’s public adjuster law by capping adjusters’ fees, requiring pre-contract disclosures, prohibiting kickbacks from contractors, and strengthening licensing enforcement.

The new law provides stronger protections for homeowners, businesses, and families navigating the insurance claims process after a loss. The bill reflects national best practices adopted by the National Association of Insurance Commissioners (NAIC).

The Shapiro Administration including the Pennsylvania Insurance Department (PID) worked with Rep. Robert Merski, the sponsor of the bill, and the General Assembly to advance legislation by unanimous votes of approval in both the House and Senate. Other sponsors included Rep. Jeff Olsommer and Sen. Jarrett Coleman.

“When families are recovering from a fire, storm, or other devastating event, they should not have to worry about excessive fees, hidden conflicts, or individuals operating outside the law. Pennsylvanians deserve honest, transparent, and professional assistance when recovering from a disaster,” said Pennsylvania Insurance Commissioner Michael Humphreys.

The new legislation:

• Caps public adjuster fees at 10% for catastrophic claims and 20% for other claims, helping consumers retain more of their insurance recovery. The prior law had no cap on what adjusters could charge and led to some complaints about unexpected and high charges.
• Expands cancellation rights, giving consumers additional time to reconsider contracts signed after a disaster or major loss. Sponsors argued that insureds face confusing and sometimes aggressive solicitation immediately following traumatic disasters and should be given time to reconsider.
• Requires insurers to verify that individuals acting as public adjusters are properly licensed and report suspected unlicensed activity to the state insurance commissioner.
• Establishes stronger conflict-of-interest protections by prohibiting public adjusters from having a financial interest in repair or reconstruction work related to the same claim. This change stemmed from complaints about some adjusters having financial interests in restoration, demolition, or salvage companies, or accepting referral payments or kickbacks from contractors.
• Increases bonding requirements and strengthens licensing standards to improve accountability and consumer safeguards. The new law doubles the minimum surety bond requirement for public adjusters from $20,000 to $40,000.
• Requires clearer pre-contract disclosures so consumers understand their rights, responsibilities, and alternatives before hiring a public adjuster. It also prohibits contract provisions that can unfairly divert insurance payments away from policyholders.

“This bill is a result of bipartisan compromise,” said Rep. Robert Merski, D-Erie. “Working across the aisle and with the administration, Senate and stakeholders, we were able to enhance consumer protections and provide common sense reforms and clarification for the industry.”

Adjusters’ Positions

Adjusters associations including the American Adjuster Association (AAA) and the Mid-Atlantic Association of Public Insurance Adjusters (MAAPIA) opposed the law, arguing that the restrictions on public adjusters’ fees and financial relationships will restrict consumers’ access and leave many without representation. They maintain that flat fee caps and strict restrictions on adjusters’ income mean public adjusters may not be available for smaller claims —with the AAA noting that the majority of insurance claims fall under $16,000 and a 10% is insufficient.

As for the ban on public adjusters having any financial interest in repair or restoration companies, both AAA and MAPIA lobbied for disclosure, not prohibition, maintaining many homeowners rely on contractor recommendations and insurers often have their own preferred vendors.

Why Public Adjusters Are Facing Growing Scrutiny Across the Insurance Industry

However, the National Association of Public Insurance Adjusters (NAPIA) refrained from criticizing the new law.

A Facebook message from NAPIA President Tim Woodard described the law as, “strengthening consumer protections and professional standards for public adjusters while recognizing the important role we play in helping policyholders recover after a loss.”

He added, “As the law is implemented, NAPIA will continue supporting our members with education and guidance.”

Public adjusters are facing a different and perhaps bigger challenge involving some insurers adding endorsements to their policies that that discourage property owners’ use of public adjusters altogether. NAPIA and the Florida Association of Public Insurance Adjusters have filed suit over those endorsements.

Also, Kentucky passed a new law (House Bill 568 ) that restricts the public insurance adjusting profession. The law freezes new public adjuster licenses for two years, bars apprentice paths, and prohibits public adjusters from negotiating with insurers on behalf of policyholders.

Topics Contractors Pennsylvania