AB 597: New Public Adjuster Regulations in California

California Assembly Bill 597, which took effect on January 1, 2026, represents the most significant overhaul of public adjuster regulation in California in over a decade. The bill amends several sections of the California Insurance Code governing how public adjusters contract with policyholders, what fees they may charge, when they may solicit business, and how long policyholders have to cancel a contract after signing. For consumers navigating insurance claims — particularly after a disaster — these protections are substantial and worth understanding in detail.

The legislation was introduced in response to concerns about aggressive solicitation practices and unclear contract terms that left some policyholders locked into agreements they did not fully understand. While the vast majority of licensed public adjusters operate ethically and provide valuable services, the new law establishes baseline standards that protect consumers from the few who do not.

What AB 597 Changes: An Overview

AB 597 addresses four primary areas of public adjuster regulation: contract content requirements, fee calculation restrictions, solicitation prohibitions, and cancellation rights. Each of these changes is designed to ensure that policyholders enter into public adjuster agreements with full knowledge of what they are agreeing to, that they are not paying for work they did not need, and that they have meaningful time to reconsider.

New Contract Requirements: Specificity and Transparency

Prior to AB 597, California law required public adjuster contracts to include basic information such as the adjuster’s license number, the fee percentage, and a cancellation notice. The new law goes significantly further, requiring that every public adjuster contract must now describe the specific services the adjuster will perform and the specific coverages the adjuster will address on behalf of the policyholder.

This is an important change. Under the old framework, a public adjuster could sign a broad contract covering “all claims arising from” a loss event without specifying whether the adjuster would be handling the dwelling claim, the contents claim, the additional living expense claim, or all three. The policyholder might not realize until later that the adjuster intended to collect a fee on every coverage line — including coverages the policyholder could have handled independently.

Under AB 597, the contract must clearly identify:

• The specific services to be performed— such as damage inspection, scope of loss preparation, estimate review, negotiation with the insurer, or coordination with contractors and experts
• The specific coverages to be addressed— such as Coverage A (dwelling), Coverage B (other structures), Coverage C (personal property), Coverage D (loss of use), or specific endorsements like ordinance or law coverage

This specificity benefits policyholders in several ways. It prevents scope creep, where an adjuster expands the engagement to collect fees on coverages that required little or no effort. It also creates a clear record if a dispute arises about what the adjuster was retained to do. Policyholders should review any public adjuster contract carefully to ensure the scope matches their actual needs.

Fee Prohibition: No Fees on Pre-Contract Payments

One of the most significant provisions of AB 597 is the prohibition on public adjusters basing their fee on amounts the insurer paid before the date of the contract. This addresses a practice that, while not universal, was a source of legitimate consumer complaints: a policyholder would receive an initial payment from the insurer, then hire a public adjuster, and the adjuster would calculate the fee based on the totalsettlement — including money the insurer had already paid before the adjuster was ever involved.

Under the new law, the public adjuster’s fee can only be calculated on the amounts recovered afterthe contract date. If an insurer paid $50,000 before the policyholder hired a public adjuster, and the adjuster subsequently negotiated an additional $150,000, the fee applies only to the $150,000 — not the full $200,000.

This provision aligns California with the principle that a public adjuster’s fee should reflect the value the adjuster actually adds to the claim. A public adjuster who is confident in the value of their services should have no difficulty operating under this framework, because the fee is tied directly to the additional recovery they produce.

Practical Implications of the Fee Restriction

Policyholders should be aware of how this provision interacts with the claims timeline:

• Document all payments received before hiring a public adjuster. Keep copies of every check, direct deposit confirmation, or payment summary from the insurer. These pre-contract payments are excluded from the fee calculation.
• The contract date matters. The fee prohibition is tied to the date the contract is executed, not the date the loss occurred or the date the adjuster began work. Ensure the contract date is clearly documented.
• Advance payments and emergency payments count. If the insurer provided advance payments for additional living expenses, emergency repairs, or partial dwelling payments before the contract date, those amounts should be excluded from the fee base.

Solicitation Prohibition During a Loss-Producing Occurrence

AB 597 prohibits public adjusters from soliciting business from a policyholder during a “loss-producing occurrence.” This means a public adjuster cannot approach a homeowner while a fire is still burning, while flood waters are still rising, or while an earthquake aftershock sequence is still active and initiate contact for the purpose of securing a contract.

The solicitation prohibition is narrowly targeted at the timing of the contact, not at the existence of the adjuster’s services. A policyholder who independently seeks out a public adjuster during a loss event is not affected by this prohibition. The law restricts unsolicited contact initiated by the adjuster — door knocking at evacuation centers, cold calling homeowners in active disaster zones, or similar outreach during the emergency itself.

This provision reflects a reasonable concern about vulnerable consumers making hasty decisions under extreme duress. When a homeowner is watching their neighborhood burn or is standing in several inches of water, they are not in a position to carefully evaluate a contract or compare options. The cooling-off period that follows (discussed below) works in tandem with this provision to ensure that when a policyholder does hire a public adjuster, the decision is informed and deliberate.

Extended Five-Day Cancellation Right During a State of Emergency

California law has long provided policyholders with the right to cancel a public adjuster contract within a specified window after signing. AB 597 extends this cancellation period to five business days when the contract is entered into during a declared state of emergency. This extended window applies regardless of whether the policyholder sought out the adjuster or the adjuster initiated contact (outside the prohibited solicitation window).

The five-day cancellation right is a meaningful protection. After a major disaster, policyholders are often overwhelmed, sleep-deprived, and facing enormous pressure to make decisions quickly. The extended cancellation window ensures that a policyholder who signs a contract in the immediate aftermath of a catastrophe has adequate time to:

• Read the contract carefully and understand the fee structure
• Consult with family, friends, or an attorney
• Compare the terms offered by other public adjusters
• Evaluate whether a public adjuster is even necessary for the specific claim (some straightforward claims may not require professional representation)
• Research the adjuster’s license status, disciplinary history, and reputation

The cancellation must be in writing and is effective upon mailing or delivery to the public adjuster within the five-business-day window. Upon cancellation, the public adjuster is entitled to no fee for any services performed during the cancellation period.

How AB 597 Protects Consumers: The Bigger Picture

Taken together, the four pillars of AB 597 create a framework that protects policyholders at every stage of the public adjuster relationship:

• Before the contract: The solicitation prohibition prevents adjusters from pressuring policyholders during the most vulnerable moments of a disaster.
• At the time of contracting: The specificity requirements ensure policyholders understand exactly what services they are purchasing and which coverages are included.
• After signing: The extended cancellation window gives policyholders time to reconsider without financial penalty.
• At settlement: The fee prohibition on pre-contract payments ensures policyholders pay only for the value the adjuster actually adds.

What to Look for in a Public Adjuster Contract After AB 597

With the new law in effect, policyholders should review any public adjuster contract with the following checklist in mind:

• Does the contract list specific services?It should describe what the adjuster will do — inspect damage, prepare estimates, negotiate with the insurer, coordinate with experts, etc.
• Does the contract identify specific coverages? Look for references to Coverage A (dwelling), Coverage B (other structures), Coverage C (personal property), Coverage D (loss of use/ALE), and any applicable endorsements.
• How is the fee calculated? The contract should clearly state that the fee is based on amounts recovered after the contract date, not on the total settlement including pre-contract payments. For more on fee structures, see the public adjuster fees guide.
• Is the cancellation right clearly stated? The contract must include notice of the right to cancel, the timeframe (including the extended five-day period during a state of emergency), and instructions for exercising that right.
• Is the adjuster’s license number included? This was already required before AB 597 and remains mandatory. Verify the license with the California Department of Insurance. For more on unlicensed adjuster risks, see the separate guide.
• Are there any provisions for additional fees? Some contracts include clauses for administrative fees, cancellation penalties, or charges for specific services beyond the contingency percentage. These should be clearly disclosed.

The Role of Public Adjusters Remains Vital

It is important to emphasize that AB 597 is not anti-public adjuster legislation. Licensed public adjusters serve a critical function in the insurance ecosystem. They are the only licensed professionals whose sole obligation is to the policyholder. Insurance companies have teams of adjusters, engineers, attorneys, and consultants working on their behalf. A skilled public adjuster levels the playing field, ensuring the policyholder’s claim is properly documented, accurately valued, and fairly negotiated.

The California insurance crisis — driven by wildfire exposure, carrier withdrawals, and increasing claim complexity — has made public adjusters more important than ever. As more homeowners are pushed onto the FAIR Plan or surplus lines policies, the claims process has become more fragmented and harder to navigate. Public adjusters with expertise in these complex coverage scenarios provide significant value to policyholders who would otherwise be at a substantial disadvantage.

AB 597 strengthens the profession by raising standards. Public adjusters who already operated with clear contracts, transparent fee structures, and ethical solicitation practices will notice little change. The law targets the margins — the unclear contracts, the fees on work not performed, the high-pressure tactics during disasters — and in doing so, protects both consumers and the reputation of the profession itself.

Enforcement and Consequences

The California Department of Insurance (CDI) is responsible for enforcing public adjuster regulations, including the new requirements under AB 597. Violations can result in disciplinary action against the adjuster’s license, including suspension or revocation. Policyholders who believe a public adjuster has violated the provisions of AB 597 — for example, by charging fees on pre-contract payments, failing to specify services in the contract, or soliciting during a loss event — can file a complaint with CDI.

Additionally, a contract that fails to comply with the statutory requirements may be voidable. If a public adjuster’s contract does not include the required specificity about services and coverages, the policyholder may have grounds to challenge the enforceability of the agreement. This is another reason why policyholders should carefully review contracts before signing and retain copies of all documentation.

Key Takeaways for Policyholders

• AB 597 requires public adjuster contracts to describe the specific services and specific coverages the adjuster will handle. Vague or overly broad contracts do not comply.
• Public adjuster fees cannot be based on amounts the insurer paid before the contract date. The fee applies only to additional recovery.
• Public adjusters cannot solicit policyholders during a loss-producing occurrence. The prohibition targets unsolicited contact during the emergency, not general advertising.
• During a declared state of emergency, policyholders have five business days to cancel a public adjuster contract without penalty.
• These protections work together to ensure policyholders make informed decisions and pay only for value received.