Public Adjusters Can’t Charge Fees Before Contract, Kentucky Commissioner Says

Kentucky’s insurance commissioner is reminding public adjusters that they are not authorized to get paid up front, before a contract with a homeowner is signed, unless approved by the commissioner. And fees are limited to 15% of insurance awards for non-catastrophic claims and 10% for catastrophic events.

“Several public adjusters have submitted contracts for Department approval that include language that would allow them to collect a percentage of claims money negotiated and paid prior to execution of the contract with the insured,” Commissioner Sharon Clark said in an advisory opinion.

Most up-front charges are not allowed under a state law that took effect in June. House Bill 232, approved by the Kentucky General Assembly this spring, placed a number of new restrictions and requirements on public claims adjusters. The insurance commissioner’s office may approve advance fees in some emergency situations; but in most cases, adjusters cannot seek or accept down payments for their services.

“All contracts which charge a percentage of claim funds received by the insured prior to the execution of the contract are disallowed, unless approved by the Commissioner in an emergency circumstance,” the opinion reads.

The bulletin did not indicate the nature of the recent claims that brought the issue to light, but parts of Kentucky have been hit with tornadoes and flooding in the last two years.