Florida's public adjuster (PA) industry sits at the intersection of the insurance adjustment process, the AOB controversy, and the consumer-protection apparatus that the legislature has periodically tightened in response to perceived abuses. For plaintiffs' counsel navigating hurricane property claims, understanding the public adjuster's role — and the legal constraints on that role — is essential both to evaluating whether a PA-represented client's position has been complicated by a defective or overreaching PA contract, and to identifying whether the PA's conduct has itself created actionable claims or defenses.
I. Licensing and Regulatory Framework: Fla. Stat. § 626.854
Florida Statute § 626.854 governs the definition and regulation of public adjusters in Florida. A public adjuster is defined as any person who, for compensation, on behalf of an insured, adjusts, investigates, negotiates, or settles insurance claims for loss or damage. The statute requires licensure and imposes detailed conduct requirements.
A. Fee Caps
Florida imposes caps on public adjuster fees. Under the current statutory framework:
- For emergency claims (declared state of emergency or claims involving uninhabitable property): the PA fee cap is 10% of the claim payment during the first year following the declaration of the emergency.
- For non-emergency claims: the PA fee cap is 20% of the claim payment.
These caps replaced earlier regulatory frameworks and were tightened in response to post-hurricane abuses where PA contracts improperly directed large portions of insurance proceeds away from policyholders. A PA contract that purports to charge fees in excess of these statutory caps is unenforceable as to the excess.
B. Cancellation Rights
Section 626.854 provides specific cancellation rights for policyholders, and these rights are prominently disclosed in the mandatory notice that PA contracts must contain. The statutory notice language that must appear in PA contracts includes:
You, the insured, may cancel this contract for any reason without penalty or obligation to you within 10 days after the date of this contract. If this contract was entered into based on events that are the subject of a declaration of a state of emergency by the Governor, you may cancel this contract for any reason without penalty or obligation to you within 30 days after the date of loss or 10 days after the date on which the contract is executed, whichever is longer.
Additionally, the insured may cancel without penalty if the PA fails to provide a written estimate within 60 days of contract execution (with a tolling provision if the delay is caused by factors beyond the PA's control).
A PA contract that omits or misstates these cancellation rights is defective, and a policyholder who was not provided compliant disclosure may have the right to rescind the contract entirely, rather than merely cancel for the applicable period.
C. Mandatory Disclosures and Form Requirements
Beyond cancellation rights, § 626.854 requires that PA contracts contain specific disclosures about:
- The PA's identity and license number;
- The scope of services to be provided;
- The compensation arrangement;
- The statement: "THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT" (required in post-loss solicitations).
II. Public Adjuster Liens
Florida law allows licensed public adjusters to claim a lien against insurance proceeds for their fees. The PA lien attaches to the insurance proceeds payable on the claim the PA adjusted. This creates practical complications for the policyholder and for counsel:
- Priority dispute: If the policyholder disputes the PA's fee or the quality of the PA's services, the lien may cloud the insurance proceeds. The carrier may interplead the proceeds pending resolution of the PA-policyholder dispute, delaying the policyholder's recovery.
- Interaction with the mortgage company: Most homeowner policies require that insurance proceeds above a threshold be jointly payable to the policyholder and the mortgage lender. The addition of a PA lien creates a three-party proceeds dispute — policyholder, lender, and PA — that can substantially complicate settlement.
- Fee disputes as litigation: A PA who has performed services and been denied payment may sue the policyholder for the contracted fee (subject to the statutory cap) and may enforce the lien against the proceeds. Conversely, a policyholder who believes the PA's estimate was inflated, that the PA directed the claim improperly, or that the PA engaged in unlicensed activity has counterclaims available.
III. The AOB Interplay: Post-2019 Reform Dynamics
Before January 1, 2023, some public adjusters structured their compensation as an AOB from the policyholder to the PA — assigning the right to pursue the insurance claim to the PA in exchange for services. This structure attempted to convert the PA relationship into the contractor-AOB model. Under Fla. Stat. § 627.7152 as enacted in 2019, however, assignments were restricted to "assignment agreements" with specific requirements; PA "assignments" were independently scrutinized by the Florida Department of Insurance.
Post-SB 2A (effective December 16, 2022), post-loss AOBs for policies issued after January 1, 2023, are void under § 627.7152(13). This means a PA cannot structure their engagement as an AOB for new policies. PAs on post-2023 policies must be engaged as agents for the policyholder — not as assignees of the claim.
The practical effect on counsel: a PA purporting to act under an AOB on a post-2023 policy is operating outside the statute, and the arrangement is void. Any correspondence or legal filings made by the PA in the PA's "own name" under such a void arrangement may affect the claim's posture and the insurer's response.
IV. Common Disputes: Scope Creep, Inflated Estimates, and Unlicensed Activity
A. Scope Creep
"Scope creep" — the gradual expansion of a PA's claimed scope of loss beyond what the physical evidence supports — is a recurring dispute in hurricane litigation. A PA who adds uncovered items to a claim estimate, or who inflates line-item costs, may expose both the PA and the policyholder to insurer challenges to the entire claim. Insurers are entitled to examine under oath (EUO) not only the policyholder but may also seek EUO of the PA as the policyholder's authorized representative in some circumstances.
Counsel representing a policyholder with a PA on the file should review the PA's estimate critically and independently before adopting it as the litigation damages position. A PA estimate that contains non-covered items, incorrect code requirements, or pricing that does not reflect local market conditions is a liability in litigation.
B. Inflated Fee Arrangements
Some PA contracts have been structured with escalating fees (e.g., a base percentage plus "incentive" percentages for achieving payment above a threshold) that may violate the statutory fee caps. Others have been drafted with poorly-defined "bonus" compensation provisions. If the PA contract's compensation structure exceeds the statutory cap on any portion of the recovery, the excess fee provision is unenforceable, and the PA may have violated § 626.854's licensing requirements.
C. Unlicensed Activity
Fla. Stat. § 626.854 prohibits unlicensed persons from acting as public adjusters. Contractors who represent homeowners in insurance negotiations — without a PA license — engage in unlicensed public adjusting, which is a regulatory violation. The unlicensed activity does not void the insurance claim itself, but it may void the contract between the homeowner and the contractor for adjustment services, and any PA lien attempted by an unlicensed person is unenforceable.
V. Alabama: A More Permissive Regulatory Regime
Alabama has a comparatively lighter regulatory framework for public adjusters. The Alabama Department of Insurance licenses public adjusters but does not impose the same fee cap structure, detailed mandatory disclosure requirements, or cancellation-right provisions that Florida mandates.
Key differences:
- Fee caps: Alabama does not have a statutory fee cap equivalent to Florida's 10%/20% structure. PA fees in Alabama are negotiated by contract, subject to general reasonableness and consumer protection standards.
- Cancellation rights: Alabama does not have a statutory cancellation right equivalent to Florida's 10-day/30-day provisions. The PA contract terms govern.
- AOB: Alabama does not have a statutory framework equivalent to Florida's § 627.7152 governing AOBs. Post-loss assignments in Alabama are generally governed by common-law assignment principles; courts assess validity under the policy's anti-assignment clause, if any.
- Licensing: Alabama requires PA licensure; unlicensed activity is a regulatory violation, but the consequence structure differs from Florida.
For practitioners advising Alabama policyholders who are considering engaging a PA, the absence of statutory fee caps and cancellation rights places greater importance on careful contract review before execution.
VI. Practice Notes for Counsel
- Review the PA contract at intake: Before adopting a PA's estimate as the litigation damages position, review the PA contract for compliance with § 626.854's fee cap, disclosure, and cancellation requirements. A defective PA contract may create exposure for the policyholder in the adjustment process.
- Assess the PA's license status: Verify the PA's Florida licensure through the Department of Financial Services' licensee search before the claim is pursued. An unlicensed PA's work product may be tainted and could complicate the claim.
- Evaluate scope independently: Do not accept a PA estimate at face value. Commission an independent review of the estimate against the physical evidence, the applicable codes, and local market pricing. Where the PA estimate is defensible, adopt it; where it contains overreach, adjust it before filing suit.
- Protect the policyholder on lien disputes: If the PA fee dispute is likely, consider seeking the insurer's consent to segregate the undisputed proceeds pending resolution of the fee dispute, to avoid full proceeds interpleader.
- Post-SB 2A engagement structures: For post-2023 policies, ensure that the PA engagement is structured as an agency relationship, not an AOB. A PA acting as a licensed agent on behalf of the policyholder retains the right to adjust the claim, but cannot sue the insurer in the PA's own name.
VII. Open Questions
- Whether the 60-day written estimate provision in § 626.854 applies as a cancellation trigger for all PA contracts or only those that lack a defined commencement date: The statutory text is somewhat ambiguous on the interplay between the commencement-date rule and the estimate-delivery rule; Florida courts have not resolved this.
- Whether PA lien rights survive the SB 2A AOB prohibition for post-2023 policies: If PAs cannot take AOBs, their only compensation is from the policyholder directly — raising questions about whether PA liens attach to the proceeds at all if the PA has no assigned right to them.
VIII. Closing
The public adjuster is both a potential asset and a potential liability in hurricane property litigation. A well-qualified, licensed PA who produces a rigorous, defensible estimate and navigates the adjustment process professionally is a valuable ally. A PA who overreaches on scope, violates fee caps, or operates outside the statutory framework can complicate the policyholder's recovery and generate litigation that consumes the very proceeds it was meant to maximize. Counsel should treat the PA contract and work product as documents that require the same critical scrutiny as any other piece of the case file.
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Informational only. Not legal advice. No attorney-client relationship is created by reading this post. Consult a licensed attorney in your jurisdiction.