IL Public Adjuster cheat sheet

Public adjusters must be licensed by the Illinois Department of Insurance (IDOI); negotiating or settling a first-party claim for compensation without that license is unlawful.

A public adjuster represents the insured only; the same individual may not act as a company adjuster or receive payment from the insurer on the same claim.

The adjuster's compensation must be stated in a written contract signed by the insured, expressed as a fixed fee or a percentage of the amount recovered.

IDOI may deny, suspend, revoke, or fine a license for misrepresentation, fraudulent claim activity, rebating, or other conduct violating the Insurance Code.

215 ILCS 5/154.6 (Improper Claims Practices Act) identifies prohibited claim conduct, including misrepresenting policy provisions and unreasonable delay or denial.

Article XXVI of the Illinois Insurance Code (215 ILCS 5/421 et seq.) bars misrepresentation, false advertising, and other unfair or deceptive insurance practices.

Presenting or assisting in a false or inflated claim is insurance fraud under Illinois law (720 ILCS 5/17-10.5) and can be prosecuted criminally.

Advertisements and solicitations may not use names or titles implying the adjuster works for an insurer, a government agency, or a consumer organization.

Indemnity: the settlement cannot exceed the insured's actual financial loss; the insured should be restored, not enriched.

Insurable interest in property must exist at the time of loss; a person with no financial stake cannot collect.

ACV = replacement cost minus depreciation. Replacement cost pays new-for-old without depreciation, subject to stated limits.

Coinsurance applies a limit-to-required ratio: payment = (limit carried / required limit) x loss, capped at the policy limit.

Subrogation transfers the insured's recovery right to the insurer after payment, preventing double recovery and shifting cost to the at-fault party.

Insurance contracts are contracts of adhesion (drafted by the insurer), aleatory (unequal exchange), conditional, and unilateral (only the insurer makes an enforceable promise).

Concealment, material misrepresentation, and breach of warranty may void coverage; the doctrine of utmost good faith governs both parties' disclosures.

Adverse selection and moral or morale hazard raise loss costs; underwriting, deductibles, and exclusions are the standard controls.

HO-3: dwelling and other structures on open peril, personal property on named peril, with Coverages A through D and standard deductibles.

Commercial property causes of loss: basic (named perils), broad (named perils plus breakage), special (open, all risk unless excluded).

Coinsurance required amount = coinsurance percentage x replacement cost at time of loss; the ratio applies even when the loss is smaller than the limit.

CGL limits: each occurrence, damage to premises rented, personal and advertising injury, medical expense, general aggregate, products-completed operations aggregate.

Business income pays lost net income plus continuing normal expenses during restoration; extra expense pays costs to avoid or shorten the shutdown.

Flood is excluded on most property forms; NFIP or private flood coverage is separate and typically carries a 30-day waiting period.

Auto policy parts: liability, medical payments or PIP, uninsured/underinsured motorist, collision, and other than collision (comprehensive).

Deductibles may be flat dollar or a percentage of the Coverage A limit (common for wind and hail); a percentage deductible is applied to the limit, not to the loss.

Claim sequence: acknowledge, investigate and inspect, document, analyze coverage, set reserves, then pay, deny, or compromise with a written explanation.

Proof of loss is a sworn, itemized statement from the insured; failure to submit it can bar the claim when the policy requires it.

A reservation of rights letter preserves the insurer's coverage defenses while the investigation continues; a non-waiver agreement does the same and is signed by the insured.

Illinois Insurance Code Section 155 allows fees, costs, and other damages when an insurer's delay or denial is vexatious and unreasonable.

Illinois uses modified comparative fault: a claimant 51 percent or more at fault recovers nothing; below that, damages are reduced by the claimant's percentage of fault.

Adjusters may not accept fees, gifts, or referral compensation from contractors, vendors, or restoration firms working the same loss.

Claim file entries should record date, time, participants, evidence reviewed, coverage reasoning, reserve changes, and the rationale for payment or denial.

Denying or delaying a claim without a reasonable investigation, or misrepresenting policy language, is an improper claims practice that exposes the adjuster to discipline.