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 caps 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 the insurance settlement proceeds actually received by the insured; and

2. Collected by the public adjuster after the insured has received the insurance settlement proceeds from the insurer;

(b) A public adjuster may receive a commission for services provided under this subtitle consisting of:

1. An hourly fee;

2. A flat rate;

3. A percentage of the total amount paid by the insurer to resolve 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 noncatastrophic claims:

i. Two and one-half percent (2.5%) of the first twenty-five thousand dollars ($25,000) of the total insurance recovery of the insured; and

ii. Ten percent (10%) of the total insurance recovery of the insured that exceeds twenty-five thousand dollars ($25,000); or

b. For catastrophic claims, ten percent (10%) of the total insurance recovery of the insured.

3. As used in subparagraph 2.b. of this paragraph, “catastrophic claims” means claims resulting from a catastrophe, as defined in KRS 304.9-


(2) If an insurer, not later than seventy-two (72) hours after the date on which a loss or damage is reported to the insurer, either pays or commits in writing to pay the policy limit of the insurance 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 resolve a claim;

(b) Inform the insured that the claim 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 prior to when the claim 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 passed in one state have a way of being copied into the insurance laws of other states.   

A Thought About Proposed Legislation   

Laws are like sausages, it is better not to see them being made.

—Otto von Bismarck