The Kentucky Legislature now has new pending legislation regarding public adjusters. There are significant changes to contract requirements and new proposed fee caps.
The significant part of the fee cap legislation is:
“(1) Except as provided in subsection (2) of this section:
(a) Any fee charged to an insured by a public adjuster shall be:
1. Based only on the amount of insurance settlement proceeds actually received by the insured; and
2. Collected by the public adjuster after the insured has received the insurance settlement compensation from the insurer;
(b) A public adjuster may receive a commission for services rendered under this subtitle consisting of:
1
. An hourly fee;2. A lump sum;
3. A percentage of the total amount paid by the insurer to settle a claim; or
4. Another method of compensation; and
(c) 1. A public adjuster shall not charge an unreasonable fee.
2. A public adjuster may charge a reasonable fee that does not exceed:
a. For non-catastrophic claims:
i. Two and one-half percent (2.5%) of the first twenty-five thousand dollars ($25,000) of the insured’s total insurance recovery; and
ii. Ten percent (10%) of the insured’s total insurance recovery in excess of twenty-five thousand dollars ($25,000); or
b. For catastrophic damage, ten percent (10%) of the insured’s total insurance compensation.
3. As used in paragraph 2.b. in this paragraph, “catastrophic claims” means claims arising from a catastrophe, as defined in KRS 304.9-
020.
(2) If an insurer, not later than seventy-two (72) hours after the day on which an injury or damage is reported to the insurer, either pays or undertakes in writing to pay the policy limit of the policy to the insured, a public adjuster shall:
(a) Not receive a commission consisting of a percentage of the total amount paid by the insurer to settle a claim;
(b) Inform the insured that the settlement amount may not be increased by the insurer; and
(c) Be entitled only to reasonable compensation from the insured for services provided by the adjuster on behalf of the insured, based on the time spent on the claim and expenses incurred by the adjuster before the compensation was paid or the insured received a written commitment to pay from the insurer .
I strongly encourage public adjusters in all states to read this entire Kentucky bill. The language of insurance laws enacted in one state has a way of being copied into the insurance laws of other states.
A thought on proposed legislation
Laws are like sausages, it is better not to see them made.
—Otto von Bismarck
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