INS CD-PUBLIC ADJUSTERS & FEES
HB3426 amends the Illinois Insurance Code to change several rules governing property insurance claims, attorney-fee awards in insurance litigation, and public adjuster conduct. The bill raises the cap on one category of attorney-fee award in vexatious insurance-delay cases from $60,000 to $240,000, and increases the fire-or-explosion payment certificate threshold from $25,000 to $100,000 for insured structures before an insurer may pay a claim without the required certificate from local officials.
The bill also adds or clarifies standards for first-party property claims based on replacement cost. It requires insurers to replace damaged items with like kind and quality so the repaired property has a reasonably uniform appearance when replacement items do not match adjacent items in quality, color, or size, and it applies this to both interior and exterior losses. In addition, it expands and clarifies public adjuster rules by excluding reimbursable expenses from the 10% fee cap, allowing reimbursement of expenses even if not covered by the policy, requiring certain disclosures and contract terms, and naming the insured’s public adjuster and attorney as possible designees for receipt of proceeds in personal-residence claims.
If enacted, HB3426 would amend Sections 154.6, 155, 397.1, 1570, 1575, and 1590 of the Illinois Insurance Code. It would increase potential attorney-fee exposure for insurers in certain bad-faith or vexatious-delay cases, raise the dollar threshold for local tax/demolition certificates tied to fire or explosion claims, and impose more detailed claim-handling obligations on insurers for matching repairs in property losses. The bill would also materially revise the regulation of public adjusters by changing compensation, reimbursement, disclosure, contract, and payment-delivery rules affecting insurers, insured property owners, public adjusters, and related service providers.
No committee transcripts or recorded votes were provided, so there is no direct evidence of legislative debate or formal support/opposition in the available materials. Based on the bill text alone, the measure appears designed to strengthen policyholder protections and public-adjuster rights while also increasing insurer obligations and potential litigation costs. The overall policy direction suggests likely support from consumer-advocacy or public-adjuster interests and likely concern from insurers and property-casualty industry stakeholders.
The main points of contention are likely to be the higher attorney-fee cap, the expanded matching-repair requirement, and the broader reimbursement rules for public adjusters. Insurers may view these changes as increasing claim costs, litigation exposure, and administrative burdens, while supporters may argue they ensure fuller property restoration and fairer compensation for claim handling after catastrophic losses. The public-adjuster provisions are especially notable because they loosen the treatment of reimbursable expenses, expand disclosure and contract requirements, and allow the insured’s attorney and public adjuster to receive proceeds in certain cases, all of which could draw scrutiny over consumer protection versus increased transaction costs.