Contractor or public adjuster: who can handle your claim?

A contractor repairs the damage. A public adjuster is licensed by the state to negotiate your insurance claim for a fee. In Texas and Georgia, a contractor may not act as your public adjuster on a job it is repairing, and Florida requires a separate public adjuster license.

Rules differ by state. The state rules below are examples from statutes we have read, not a summary of every state.

What is the difference between a contractor and a public adjuster?

The job descriptions come from the NAIC’s Post-Disaster Claims Guide. The NAIC is the association of state insurance regulators. For more on the adjuster’s role, see what a public adjuster is.

Who is allowed to negotiate my claim?

You can always deal with your insurer yourself. Past that, state law decides who may do it for you for pay.

• Texas. Anyone who is paid to act for a policyholder in negotiating or settling a property claim is a public insurance adjuster and needs a state license. Attorneys are exempt (Tex. Ins. Code ch. 4102).
• Florida. Only an attorney or a licensed and appointed public adjuster may be paid to prepare, file, negotiate or settle a claim for you (Fla. Stat. § 626.854).
• Elsewhere. The NAIC notes that many states license public adjusters, and that some states do not let public adjusters negotiate claims. In those states only a licensed attorney can represent you.

You can check an adjuster’s license in our directory and license check.

Can my contractor act as my public adjuster?

In these three states, not on a job it is repairing.

• Texas. A contractor may not act as a public adjuster, or advertise to adjust claims, for any property where it is providing or may provide contracting services. That holds even if the contractor has a public adjuster license or a power of attorney from you (§ 4102.163). The Texas Department of Insurance puts it plainly: contractors cannot advertise that they will handle your claim.
• Georgia. The rule is worded the same way. Georgia adds that a contractor may discuss or explain its bid with you or your insurer, as long as it is charging the usual fees for the work in its contract with you (O.C.G.A. § 33-23-43.8).
• Florida. A licensed contractor or its subcontractor may not advertise, offer or perform public adjuster services unless it is licensed as a public adjuster. A contractor may still suggest that you ask your insurer whether a repair is covered, and may explain its bid to you or the insurer (§ 626.854).

The wall stands on the other side too. A public adjuster may not take part in the repair of property on a claim they are handling in Texas, Georgia, Florida, Louisiana or Nebraska. A Georgia public adjuster contract cannot describe the adjuster as also being a contractor.

The Texas, Georgia and Florida statutes treat doing both jobs on one claim as a conflict of interest.

What is an assignment of benefits?

An assignment of benefits is a contract that lets a third party, such as a roofer, plumber or water removal company, act for you on the claim and collect payment straight from the insurer. That is the NAIC’s description. It can sound convenient. The NAIC lists what you may give up:

• The third party files the claim, makes the repair decisions and collects the payments without you.
• The insurer may talk only to the third party.
• You may lose your right to mediation.
• The third party may be able to sue your insurer. The NAIC’s claims guide warns that a lawsuit could be filed without your approval or knowledge.

The NAIC says you are not required to sign one to have repairs done.

State law varies a great deal:

• Florida. The Department of Financial Services says policyholders can no longer assign post-loss benefits under residential or commercial property policies issued or renewed on or after January 1, 2023.
• Iowa. An assignment to a residential contractor must itemize the work and the price. You can cancel it for any reason within five business days of getting your signed copy. The contractor can only be a co-payee on checks with you and your mortgage lender, and cannot collect your additional living expense payments. A contractor may not sign you to one for at least 72 hours after a catastrophic disaster (Iowa Code § 515.137A).

If someone hands you one, the NAIC suggests taking your time, and asking your claims adjuster, an attorney or your state insurance department about it before you sign.

What are the warning signs after a storm?

The NAIC says fraudsters and scam artists often arrive quickly after a disaster. Watch for these:

• “We’ll handle the insurance for you.” Explaining a bid is one thing. Negotiating or settling your claim is public adjusting, and in the states above a contractor on the job may not do it.
• A paper called an “estimate” or a “release.” The Texas Department of Insurance warns that these labels are sometimes put on contracts, and says never to sign one with blank spaces.
• Repairs “for the value of insurance proceeds.” Texas regulators flag contract wording like this. The contract should list the work and the materials.
• An offer to waive, pay or rebate your deductible. The Texas Department of Insurance says this is illegal in Texas and may mean false repair costs are being sent to your insurer. Your insurer can ask for proof that you paid.
• A large payment up front. The NAIC says reputable contractors usually do not ask for one, and advises never paying the full amount before the work is done.
• Free or upgraded materials. The NAIC names this offer as one to watch for.
• A crew from out of state. The NAIC notes that many fraudsters travel from state to state. It suggests asking where a contractor is from and asking for references.
• One company offering to adjust the claim and do the repairs.

For roof claims, see roof damage insurance claims.

What can I do if I already signed something?

Read it for a cancellation clause first. Some states give you a set time:

• Nebraska. If a residential contractor is to be paid from insurance money, you can cancel by midnight of the third business day after you sign, or after your insurer tells you in writing that the claim is not covered, whichever is later. The contractor must return your payments within ten days (Neb. Rev. Stat. § 44-8603).
• Iowa. Five business days for an assignment, as described above. The contractor then has ten business days to return your payments.

If you signed with a public adjuster, different rules apply. See what a public adjuster contract must say.

You can also report a contractor who is adjusting claims without a license, or any suspected fraud, to your state insurance department. Here is how to file a complaint.

Which one do I need?

If the home needs repair, you need a contractor. A public adjuster is optional. You do not need one to file a claim. The Texas Department of Insurance describes hiring one as an option if your claim is denied or you think the insurer should pay more. Our two-minute quiz can help you decide.

If you use both, keep them separate. The contractor prices and does the work. The public adjuster deals with the insurer.