Co-authored by: Jon Biller
Connecticut has clarified how public adjuster fees are calculated and when they can be collected. The General Assembly’s 2025 update to C.G.S. § 38a-726 (effective October 1, 2025) fixes an alleged ambiguity in subsection (b) that fueled avoidable disputes between policyholders, public adjusters, and insurers.
Our office worked alongside industry professionals, including the Connecticut Association of Public Insurance Adjusters (CAPIA), to support this clarification. The result is a statute that now mirrors real-world claims practice and the Department of Insurance’s long-standing interpretation.
C.G.S. § 38a-726 now confirms in subsection (b) that a public adjuster’s fee is to be calculated based only on the amount of the insurance settlement proceeds actually paid by the insurer. It verifies that said fees may be collected after the insurer has paid those proceeds.
The former subsection (b) tied fees to proceeds “actually received by the insured,” which created disputes over whether an adjuster could be paid when checks were issued jointly to mortgagees, deposited in escrow, or otherwise delayed from reaching the insured’s personal account. The clarification states, “(b) Any fee charged to an insured by a public adjuster shall be based only on the amount of the insurance settlement proceeds actually paid by the insurer on the account of a loss and shall be collected by such public adjuster after the insurer has paid such settlement proceeds.” Conn. Gen. Stat. Ann. § 38a-726.
Prior to the passage of the recent clarification, a Superior Court judge limited the public adjuster’s fee to only a percentage of what the insured netted after applying some of the insurance proceeds to pay off their mortgage. A public adjuster is entitled to a fee based on what the insurance company pays on account of the loss, however, not what the insured receives after they use the insurance money for purposes other than a repair. The clarified statute addresses any ambiguity or interpretation limiting the public adjuster’s fee.
The 2025 language eliminates that ambiguity by keying both calculation and collection timing to payment by the insurer.
Our office assisted in proposing the changes in Raised Bill 1270 and met with Connecticut legislators. As Executive Counsel for CAPIA, Brianna Robert and Jon Biller helped explain, in plain terms, how public adjusters are paid and why the “actually received by the insured” phrasing was unworkable, especially where mortgagees or other payees are involved. Our firm and CAPIA emphasized that the bill would codify longstanding industry practice and align with the Connecticut Department of Insurance’s historic interpretation.
What This Means
- Fees are measured by the amount the insurer pays in loss settlement proceeds.
- Public Adjusters may collect after the insurer pays, avoiding delays caused by mortgage servicing or escrow logistics.
- Subsection (a) still bars fees when policy limits are offered within 30 days after a covered fire loss.
Although not discussed in the clarified statute, the Connecticut Insurance Department has approved the practice of insurers paying the public adjuster directly. By providing direct payment to the public adjuster, the insurer is able to distribute the remaining funds to the insured without including the public adjuster on the payment.
The 2025 amendment to § 38a-726(b) confirms and codifies longstanding legal practices: calculate a public adjuster’s fee on the settlement dollars the insurer pays and collect after the insurer pays, regardless of who the funds are paid to. Where the parties agree, the insurer can pay the public adjuster directly, allowing the remaining insurance funds to be paid directly to the insured without inclusion of the public adjuster.
Assisting in the drafting and passage of legislation that impacts insureds and their representatives is one of the ways our office helps our property insurance clients. Our office was pleased to be able to support the testimony that helped get this clarification enacted.