Unlicensed Adjusters: When Your Claim Is Handled by Someone Without a License

Who Is Adjusting Your Claim?

When you file an insurance claim in California, you expect the person evaluating your damage, determining your coverage, and calculating your payment to be a qualified, licensed professional. In many cases, they are not. The use of unlicensed adjusters — particularly out-of-state independent contractors brought in during catastrophe events — is a widespread problem that the California Department of Insurance (CDI) has historically failed to address despite having a legal duty to do so.

California's Adjuster Licensing Requirements

California requires insurance adjusters to hold a valid license. The licensing framework distinguishes between several types:

• Staff adjusters— employed directly by the insurance company. Their employer's license covers their adjusting activity.
• Independent adjusters— hired by insurers on a contract basis to handle claims. These individuals must hold their own California adjuster license or work under a licensed firm.
• Public Adjusters— licensed by CDI to represent policyholders (not insurers) in the claims process. Public Adjusters are the only type of adjuster who works exclusively for the policyholder.

California Insurance Code §14021 et seq. governs adjuster licensing. An individual who adjusts claims in California without a proper license is operating illegally. The insurance company that hires them is also potentially in violation for using unlicensed personnel to handle claims.

The Catastrophe Problem

The most serious unlicensed adjuster problems occur after major catastrophes — wildfires, earthquakes, hurricanes — when insurers need hundreds or thousands of adjusters deployed quickly. California does not have enough locally licensed independent adjusters to handle a major event, so insurers bring in contractors from other states.

Many of these out-of-state adjusters:

• Hold licenses in their home state but not in California
• Have no familiarity with California insurance law, the Fair Claims Settlement Practices Regulations, or California-specific coverage issues
• Are paid on a per-claim or time-based basis that incentivizes speed over thoroughness
• Have minimal supervision from the carrier's licensed staff
• May have limited experience with the specific type of loss (a hail adjuster from Texas handling a California wildfire claim)

Why This Matters for Your Claim

An unlicensed adjuster handling your claim creates several concrete problems:

They May Not Know California Law

California's insurance regulations are among the most consumer-protective in the country. The Fair Claims Settlement Practices Regulations impose specific duties on insurers regarding timelines, documentation, communication, and payment. An adjuster from Florida or Texas may not know that California requires the insurer to pay undisputed amounts within 30 days, or that the insurer cannot condition payment on a release of other claims, or that the policyholder has the right to choose their own contractor.

They May Underpay Systematically

Out-of-state adjusters typically write estimates using Xactimate at their home-state pricing or at rates the insurer has pre-set — rates that may not reflect California's significantly higher labor and material costs. A Texas-based adjuster writing a scope for a Los Angeles wildfire claim may apply pricing that is 30-40% below what the work actually costs in that market.

They Have No Accountability

A licensed California adjuster can have their license disciplined or revoked by CDI for misconduct. An unlicensed out-of-state contractor has no California license to lose. Once they finish the catastrophe deployment and return to their home state, there is no practical mechanism for holding them accountable for errors or misconduct on your claim.

They May Miss California-Specific Coverage

California has unique coverage requirements and policyholder protections that out-of-state adjusters may not be aware of — including ordinance or law coverage, extended replacement cost provisions, the prejudice requirement for policy condition violations, and specific debris removal and landscaping provisions in the standard fire policy.

CDI's Duty to Act

The California Department of Insurance has a statutory duty to enforce adjuster licensing requirements. This is not discretionary — it is a mandatory obligation. Despite this, CDI has historically failed to enforce licensing requirements against insurers who deploy unlicensed adjusters during catastrophes.

In Eisenberg v. Jones, a lawsuit was filed against CDI arguing that the Department had a mandatory duty to act against the widespread use of unlicensed adjusters and had failed to do so for years. The complaint alleged that CDI's failure to enforce licensing requirements was not a matter of prosecutorial discretion but a dereliction of a mandatory statutory duty. The use of out-of-state independent contractors was described as “rife with problems for insureds.”

This lawsuit highlighted a systemic problem: the regulatory agency charged with protecting policyholders was allowing insurers to use unqualified, unaccountable personnel to handle claims worth hundreds of thousands or millions of dollars.

How to Identify an Unlicensed Adjuster

• Ask for their California license number.Every licensed adjuster should be able to provide one. If they cannot, or if they say their “company” is licensed but they personally are not, that is a red flag.
• Check the CDI license lookup tool.You can verify any adjuster's license status at the CDI website.
• Note their contact information. An adjuster with an out-of-state phone number, no local office, and a temporary address is likely deployed for a catastrophe and may not hold a California license.
• Ask if they are a staff adjuster or independent contractor.Staff adjusters operate under the carrier's license. Independent adjusters need their own.

What You Can Do

If you discover that an unlicensed adjuster is handling your claim:

• Request a licensed adjuster. Put the request in writing to the insurance company. State that you want your claim handled by a properly licensed California adjuster who is familiar with California insurance law and the Fair Claims regulations.
• File a CDI complaint.Report the use of unlicensed adjusters to the California Department of Insurance. While CDI's enforcement has been inconsistent, complaints create a record and can trigger investigation. See our guide on filing a CDI complaint.
• Get independent representation. A licensed Public Adjuster working on your behalf can ensure that California law is properly applied to your claim regardless of who the insurer assigns on their side.
• Document everything the unlicensed adjuster does. If the claim is later disputed, the fact that it was handled by an unlicensed adjuster who missed California- specific coverage or applied incorrect pricing can support a bad faith argument.

The Broader Problem

The unlicensed adjuster problem is part of a larger pattern in which insurers treat claims handling as a cost center to be minimized rather than a contractual obligation to be fulfilled. Using unlicensed, out-of-state contractors saves the insurer money (these adjusters typically work for lower day-rates than California-licensed professionals), accelerates file closure (because the adjusters are incentivized to close files quickly, not thoroughly), and reduces accountability (because there is no license for CDI to discipline).

For policyholders, the consequences are underpayment, missed coverage, improper denials, and the feeling that the person handling their claim does not know what they are doing — because in many cases, they do not.

A Note on This Information

This article is educational and does not constitute legal advice. Adjuster licensing requirements vary by state and by the type of adjusting being performed. If you believe your claim was mishandled by an unlicensed adjuster, consult with a licensed attorney or Public Adjuster in California.