An Update on Illinois Public Insurance Adjuster Laws

A few years ago I wrote this post about public insurance adjusters and the law in Illinois, and the 2011 case of Golub and Associates v. State Farm Fire and Casualty Company. Thank you to all who commented on that post (and there were many!).  Based on the level of interest and the fact that the relevant statutes have been amended since the last post, I decided to write this update.  

What's a public insurance adjuster?  See here for the full definition in the statute.  Basically, a public adjuster is hired to assist someone who has suffered a catastrophe or other loss or damage to property, in negotiating with the insurance company on behalf of the insured. To do so in Illinois, the public adjuster is required to hold a license.  

The rules for obtaining and maintaining a license are provided in Article XLV of the Illinois Insurance Code; this Article is also referred to as the "Public Adjusters Law," and became effective in 2011.  Since that time, Article XLV has been amended several times.  The requirements for who may be licensed have been modified particularly to specify certain criminal history specifics that may not prohibit licensure, and also to allow for consideration of potential rehabilitation so that individual with a reportable, prior criminal background may still be eligible for licensure under certain circumstances.  For these specific provisions in the statute, see Sections 1525, 1530, 1550, and 1555.

The Public Adjusters Law was also amended as to public adjuster fees.  Section 1570 of the statute now caps such fees at 10% of the settlement claim arising from a catastrophic event, as paid by the insurer , unless on a case by case written application approved by the Director of the Department of Insurance.  The "catastrophic event" envisioned is tied to a declaration of disaster by the Governor.  

To circle back to our previous post, we should note that these changes to the statute would not appear to have changed the outcome of that case.  In Golub, the appellate court held that the public adjuster had a right to be paid its 10% fee, even though the homeowner insured had second thoughts a few months after signing, and that the insurer could not take the homeowner's direction to send her (solely) a separate check.  The adjuster had a lien interest in the insurance proceeds.  

If the adjuster's fee in Golub had been greater than 10%, the statutory changes would change things.  The adjuster would have had to apply to the Department of Insurance to make an exception and justify the greater fee. 

The Department has updated its website since our last post as well. Instead of the previous links, they now have a "Consumer Homeowner" page, with tabs on the same site for various links, including "public adjusters" (under "tips and guides") and "disasters." The Attorney General website links are still current.  Finally, note the special requirements in event of fire damage, under the Fire Damage Representation Agreement Act; this statute has not changed since our last post.