California Insurance Bill – The Fight Over Public Adjuster Fees and Homeowner Payouts

What’s the real cost of AB 597? The proposed California bill is stirring up heated debates. Depending on who you ask, it’s either a game-changer or a disaster waiting to happen. On the surface, it’s all about “transparency” and reining in shady contracts. But dig a little deeper, and you’ll see just how much is at stake for homeowners, public adjusters, and even the insurance industry.

Here’s the breakdown.

The Big Idea Behind AB 597

AB 597 wants to change how public adjusters get paid after disasters like wildfires. Right now, adjusters can base their fees on everything the homeowner receives from insurers — even advance payments made before the adjuster was hired. This bill? It flips the script. It says fees can only be calculated on money received after the adjuster signs that contract.

Sounds harmless enough, right? But an innocent tweak like this could ripple across the entire claims process.

Put simply, AB 597 would shrink the amount of money adjusters can base their fee on. So, to earn the same as before, they’d need to raise their percentage. If they don’t, they’d make less on every case—even if they do the same amount of work.

Now, think about the homeowners. Higher fees might mean fewer people can afford to hire adjusters. And here’s the kicker — homeowners might collect less from insurance companies because they lack the professional muscle to negotiate claims.

Who wins there?

Policyholders vs. Public Adjusters vs. Insurers

It’s easy to see who’s for and against the bill.

Who likes it?

• Big insurers. Groups like the Personal Insurance Federation of California (representing major insurance players) are all-in. To them, the bill is about “protecting” consumers from excessive fees. But critics argue it’s just a clever way to dodge bigger payouts.
• Certain consumer groups, like the Eaton Fire Survivors Network. They claim the bill supports disaster survivors and aligns with their interests.

Who doesn’t?

• Public adjusters. Firms like Sunpoint Public Adjusters say their entire business model would take a hit.
• Consumer advocacy organizations like United Policyholders. They argue homeowners are the real losers here since higher fees discourage people from hiring the experts who actually help win fair settlements.

Put plainly, insurers are smiling. Adjusters? Not so much.

Example Time — How This Could Work

Picture this.

A homeowner loses their house in a wildfire. Their insurance company sends an advance payment of $100,000 for emergency expenses while they assess the total damage. The homeowner hires a public adjuster to help with the rest. After months of negotiations, they secure an additional $400,000 in payouts.

Under the current rules, the adjuster charges 10% of the full $500,000. That’s $50,000.

But under AB 597? The adjuster can only charge a percentage of the $400,000—money received after the contract was signed. If the adjuster wants to maintain the same $50,000 income, they’d have to charge 12.5% instead of 10%. And many adjusters say the real number might hit 20%.

Does that sound “fair”? Depends on who you’re asking.

The Cost of Recovery

Now, zoom out. What does this mean for wildfire recovery overall? Here are the key takeaways.

• Higher Fees Mean Fewer Adjusters Hired

Homeowners may avoid hiring professional help, worried about steep rates. Without that guidance, they might leave money on the table during claims negotiations.

• Lower Insurance Payouts for Victims

Public adjusters are skilled at maximizing claims. If fewer people use them, insurers might save money—but at the expense of disaster victims getting shortchanged.

• Public Adjusters Could Exit the Industry

If the model becomes economically unsustainable, many small or solo adjuster businesses might shut down. Who picks up the slack then?

Does the bill help consumers win? Or just make recovery harder when they need it most?

Timeline — AB 597 at a Glance

Here’s how we got here.

1. January 7, 2025 — Massive firestorms hit California. Thousands of homes are ravaged. Victims scramble to file insurance claims.
2. Early 2025 — Complaints about adjuster contracts pile up. The California Department of Insurance sponsors AB 597 to push for more transparency.
3. July 2025 — The bill passes the Senate Insurance Committee.
4. August 2025 — AB 597 heads to the Senate Appropriations Committee for critical hearings. If it clears this hurdle, it could soon reach the governor’s desk.

What happens next is anybody’s guess.

Unintended Consequences?

Regulations like AB 597 are meant to protect consumers. But even well-intentioned ideas can backfire. Will this bill lead to higher costs for disaster victims? Will fewer people hire adjusters and lose out on fair insurance payouts?

The stakes are high. Making recovery harder for fire victims isn’t just bad policy. It’s cruel.

AB 597 may promise “transparency,” but for many, it’s adding more uncertainty to an already difficult process. Who will bear the brunt of these changes? The numbers don’t lie. It’s not going to be the insurers.

Brace yourselves, California.