Your Rights When You Hire A Public Adjuster in Illinois by Steven B. Pollack, Esq. You have certain protections under Illinois law against unethical and illegal acts by public adjusters.  Under most circumstances, only a licensed attorney may represent another in a contract negotiation like the insurance claims process.  Because public adjusters are not attorneys they are not subject to the strict ethical and professional rules guiding the legal profession. The State of Illinois has therefore enacted minimum standards by which public adjusters must adhere if the Illinois Department of Insurance authorizes them to represent you with your insurance claim. Violation of these rules may allow you to void your contract with the public adjuster, file a complaint with the Department of Insurance and file suit for damages incurred as a result of the violation. These rules and standards are set out in Illinois statute and Illinois Department of Insurance administrative code.  They require the public adjuster or public adjusting company to do, or refrain from, the following: not approach the homeowner while the fire is still being fought by firefighters, that they and their company be licensed by the Illinois Department of Insurance as public adjusters, that their contract for services be maintained on file with the Illinois Department of Insurance, that the homeowner who signs a contract for public adjusting services be allowed to void the contract under certain circumstances, that the public adjuster not make any final settlement with the insurance company without the homeowner’s prior approval, and finally if the adjuster is also providing services for board-up or construction that the adjuster also submit not less than two competitive bids. A public adjuster must not solicit you while the fire is still ongoing; Must be licensed with the Illinois Department of Insurance; Must inform the homeowner of right to cancel contract; Must not make any final settlement without homeowner approval; Must provide two competitive bids if they suggest their own remediation services. SOLICITATION - Public adjusters may not approach you to solicit their services until the fire is put out.  The Illinois Insurance Code requires they wait at least the time it takes for the loss producing event to end. Attorneys are precluded by professional rules of conduct from soliciting your business face to face without invitation. Public adjusters have no such restriction and will therefore approach you at your home without invitation to sell their services.  To protect the homeowner, the code requires:   A Public Insurance Adjuster may not propose or attempt to propose to any person that the Public Insurance Adjuster represent that person while a loss-producing occurrence is continuing nor while the fire department or its representatives are engaged at the damaged premises nor between the hours of 7:00 p.m. and 8:00 a.m. . (215 ILCS 5/512.59(e)) If any such solicitation occurs and you find it offensive, you may file a complaint with the Illinois Department of Insurance against that adjuster or its representative. Complaints may be submitted in the following ways: On-line at www.idfpr.com/DOI/default2.asp (Click on Consumer/Provider link at left of page) By email at consumer_complaints@ins.state.il.us. By fax to (217) 558-2083. By mail to 320 W. Washington Street , Springfield , IL 62767 LICENSING-If you contract for public adjusting services with a person or company who is not licensed, the contract may be considered void. All persons who solicit your business for public adjusting services and with who you contract for such services must be licensed with the Illinois Department of Insurance.  Companies providing public adjusting services must be separately licensed from its individual public adjusters.  The Illinois Insurance Code states: Any person who acts as or holds himself out to be either engaged in the business of adjusting insurance claims or a Public Insurance Adjuster without holding a valid and current Public Insurance Adjuster's license is hereby declared to be inimical to the public welfare and to constitute a public nuisance. (215 ILCS 5/512.64) You can check to see if the public adjuster your are considering contracting with, or have contracted with, is licensed by searching the database here: http://www.insurance.illinois.gov/Producer/default.asp Remember, if the contract presented to you is from a company and not the individual, the company must also hold a valid public adjuster license. RIGHT TO CANCEL CONTRACT- A homeowner who signs a contract within five days of the loss event has the right to cancel the contract for 10 days after signing:  At the option of the insured, any such contract which is executed within 5 business days after conclusion of the loss-producing occurrence shall be voidable for 10 days after execution. The insured may void the contract by notifying the Public Insurance Adjuster in writing by (i) registered or certified mail, return receipt requested, to the address shown on the contract; or (ii) personally serving the notice on the Public Insurance Adjuster. (215 ILCS 5/512.58(a))   This right to cancel must be spelled out in the contract according to the Illinois Administrative Code: [I]n addition to the requirements of the Fire Damage Representation Agreement Act [815 ILCS 625], each contract form must include the following: "Pursuant to Article XXXI¾ of the Code, a contract which is executed within 5 days after the conclusion of the loss-producing occurrence shall be voidable at the option of the insured for 10 days after execution of the contract. The written contract shall constitute the entire agreement between the public adjuster and the insured." (Title 50, Section 3118.80(c)(4))   Finally, under the Fire Damage Representation Agreement Act the adjuster obtaining a contract within five days of the fire must furnish a copy of the agreement, the address for revocation, and a copy of this act at the time of signing.  They must also obtain signed acknowledgment of having given you these items.  Failure to do any of this will extend the homeowner’s time to revoke the contract: The person undertaking the representation of the claimant by such an agreement must, at the time of the agreement, furnish the party with whom the agreement is made a copy of the agreement and the address to which the notice may be sent and a copy of this Act, and obtain written acknowledgement of receipt of such from the party represented. If he fails to do so, the 10 day period provided for in this Act does not commence to run until the agreement, address and a copy of this Act are furnished. (815 ILCS 625/1)   NO FINAL SETTLEMENTS - The adjuster may not accept a settlement offer from the insurance company on behalf of the insured without obtaining prior consent and authorization.  Even attorneys are precluded from making final decisions that rightfully belong to the client.  Public adjusters are precluded from doing so by statute: A Public Insurance Adjuster shall not agree to any loss settlement without the insured's knowledge and consent and shall provide the insured with a document setting forth the scope, amount, and value of the damages prior to requesting the insured for authority to settling any loss. (215 ILCS 5/512.59(b))   If you receive proceeds from the insurance company marked as settlement of a portion of your coverage, and you did not authorize the adjuster to make this settlement, you should not cash the check.  Instead, write to the adjuster and insurance company telling them that this settlement was not authorized. TWO COMPETITIVE BIDS REQUIRED – Often the public adjuster is aligned with a contractor or else is a contractor.  There is an inherent conflict of interest where the adjuster wears the two different hats of adjusting claims and recommending contractors.  Because of this conflict, the Illinois Administrative Code states: A licensed public adjuster, or its agent, shall present to the public adjuster client not fewer than two good faith, competitive bids for any contractor, vendor or service provider recommended to the client by the public adjuster. (Title 50, Section 3118.90(c))   How do you know if the adjuster is recommending a contractor to you?  If your adjuster introduces a contractor to you that you did not know prior to the introduction, the adjuster is arguably recommending them.  Where the adjuster has some financial relationship with the contractor, besides having to disclose this relationship to you, they are probably recommending them.  Where the adjuster is a contractor, they are definitely recommending themselves. When an adjuster/contractor is representing your interests by negotiating your claim with the insurance company they are also negotiating a financial benefit to themselves.  The conflict is not that they will overcharge (because the insurance company is paying, that would not really affect you unless your claim exceeded your coverage limits) but rather that they will make agreements with the insurance company’s adjuster that sacrifice quality.  Why would they do this?  It happens because it is in the contractor’s financial interest to create a good long-term relationship with the insurance company.  Fire damage and restoration contractors are specialists and there are very few of them in any given market. They work with the insurance companies on a regular basis and sometimes the insurers will even recommend them to unrepresented homeowners.  The contractor will work with you only once. Those contractors that are “hard to work with” will get less referrals than those who are “easy to work with.”  Being easy to work with may mean an adjuster/contractor agreeing to repair smoke damaged items that should really be replaced under the like-kind-and-quality provision of your insurance policy.  Getting outside bids will uncover these issues. The better alternative is to work with an adjuster or Illinois attorney who is not aligned with a contractor.  An adjuster whose only interest is representing your claim will be more likely to fight for replacement when appropriate, if the insurance company digs in its heels and demands repair. So if your adjuster recommends a particular contractor, make sure they plan to bring you two competitive bids.  If they don’t bring you competitive bids and it later turns out that something they adjusted was not properly repaired or replaced, you may be able to recover if a better alternative would have been suggested by other contractors bidding on the job. *The foregoing analysis of the laws governing public adjusters in Illinois is not intended to be comprehensive.  Other laws exist that may give you further rights.  If you have questions about your public adjuster representation, you should contact an attorney who can look at your specific situation and find the laws that apply.