The Arizona Senate recently passed SB1206, a bill that could change how storm-damage insurance claims are handled across the state. The bill had already passed the House and was sent to the Governor on June 10, 2026, where it will become law if the Governor doesn’t veto it. For policyholders, contractors, and public adjusters, this is a bill worth watching.
SB1206 is framed as a storm-claim bill, but its practical effect appears to mostly impact public adjusters, restoration companies, and contractors. The bill broadly defines “adjusting” as investigating or negotiating settlement of a property and casualty insurance claim and expands the definition of “adjuster” to include those who “directly or indirectly” solicit, investigate, or advise insureds about their claims on an adjuster’s behalf. The bill excludes insurer employees and managing general agents from that definition, so long as their compensation is not tied to claim outcomes. Resultantly, the bill places new limits on policyholder-side participants without regulating insurer-vendor relationships in the same way.
What The Bill Changes
Perhaps the most significant change the bill proposes is a strict separation between claim adjustment and restoration work. SB1206 states that an adjuster may not participate “directly or indirectly” in the restoration, reconstruction, or repair of property that is the subject of a claim adjusted by that adjuster. This broad language raises the question as to what kind of business relationship may be treated as improper “indirect” participation, including affiliated companies, referral fees, lead-generation arrangements, shared marketing, or repeated reciprocal referrals.
Insurers will likely argue that this language is needed to prevent collusion and inflated estimates. But the bill appears notably one-sided, targeting policyholder-side relationships while ignoring insurers. We know all too well that “I’ll scratch your back,” repeat-player arrangements are common on the insurer side of claims handling, from engineers to appraisers to independent adjusters and remediation companies. If the goal of this bill is truly to prevent collusion and incorrect estimates, leaving insurer-side relationships largely outside that anti-collusion framework is a mistake.
The bill has several other practical provisions public adjusters should note. It prohibits adjusters and contractors from proposing representation while the loss is ongoing or while fire or other public safety services are responding. It states an adjuster may not endorse claim payment instruments without the insured’s direct endorsement and signature. It also prevents contractors from negotiating claim settlements, discussing coverage, or making deductible-waiver or reduction promises, although they can communicate with insurers about actual damages with the insured’s permission as long as they don’t receive compensation for that communication.
If (or, more likely at this point, when) SB1206 becomes law, public adjusters and contractors in Arizona should revisit their referral relationships, restoration-company arrangements, field practices, and claim-handling procedures. Practically speaking, SB1206 draws a sharper line between the role of a contractor and the role of a public adjuster. However, it leaves unresolved how closely they may work together when a policyholder needs both repair expertise and claim advocacy.
This bill is in line with a broader national movement to regulate and narrow the role of public adjusters in property insurance claims. While some of these efforts address real issues, consumer “protection” should not leave policyholders without advocates in their corner. As always, Melin Law Group is available to help Arizona policyholders understand their rights when their claims are delayed, underpaid, or unfairly denied.
