SACRAMENTO, Calif. — State lawmakers are debating a bill that could impact how insurance policyholders get help with filing an insurance claim.

When disaster strikes and an someone needs to file a claim, some policyholders hire a public insurance adjuster to help them navigate the process and act as an advocate.

“Public adjusters are licensed by virtually every state as advocates for policyholders,” said Gregg Clifford, CEO of SunPoint Public Adjusters. “It’s the exact opposite of what insurance company adjusters do. Because the insurance company adjuster is there to represent the insurance company and their interests, and the states have recognized that there’s an inequality there, so they license a group of adjusters called public adjusters—to help the public.”

However, a California state lawmaker says some adjusters take advantage of clients in their most vulnerable moments – and he wants to change the law to fix that.

“We can’t allow a few bad actors in this industry to harm our consumers. This is a consumer protection bill,” said Assemblymember John Harabedian (D-Pasadena), presenting his bill AB 597 Wednesday to the Senate Insurance Committee.

His district includes Altadena and other areas damaged in January by the Eaton Fire. He says lots of homeowners insurance policyholders who lost their homes hired public adjusters to help them navigate the claims process and get as much of a payout as possible from their insurance company.

Clifford says people in his profession help wildfire victims.

“Public adjusters typically work on a contingency of what they collect, and so if you get nothing, they get paid nothing,” he told ABC10 Wednesday. “We bring in this vast array of experts…We come into the picture, we present the claim to the insurance company, we say, ‘This is what’s owed under the policy. This is why we feel the values are correct.’ And we force the insurance companies to pay what’s rightfully owed, in opposed to what they just want to offer as a to-see-if-you-walk-away number.”

However, Harabedian thinks California needs to strengthen its laws around how public adjusters can conduct business.

“A lot of public adjusters will sign up – I mean, using the word ‘ambulance chaser’ in this circumstance is apt – sign up lots of cases…whether there’s merit or not, and you get a percentage on the whole thing…There’s easy money to be taken. And then you just kind of figure out, ‘Okay, of the 50 I just signed up during a disaster, maybe 10 actually get me some real money,’” Harabedian said to committee members. “I think a lot of people who sign up public adjusters don’t know that that’s what they’re getting into…I can show you the contracts; very ambiguous language.”

State law already regulates how public adjusters can conduct business, but Harabedian wants to make their contracts more transparent and straightforward when it comes to disaster situations, “ensuring policyholders know exactly what they are paying for,” he said. “It would prevent public adjusters from charging fees on monies paid out before the public adjuster was involved.”

Clifford, testifying in opposition to the bill at the hearing, said the changes in the bill might ultimately make it harder for fire victims to hire public adjusters, leaving insurance companies to get their way.

“It’s why so many insurance companies are supporting (AB 597), because it gives them an opportunity to not pay what they’re supposed to pay,” Clifford told the committee. “I’ve been doing this for 30 years. They’re going to take every opportunity they can to be more profitable for their shareholders.”

 He said he’s in favor of more transparency and consumer protections but doesn’t think this bill does it the right way.

AB 597 passed through the committee. Its supporters include the California Insurance Commissioner Ricardo Lara, insurance industry lobbying groups, the Eaton Survivors Network and LA County Board of Supervisors. See who else supports and opposes the bill in the Senate Insurance Committee analysis HERE.

The bill goes next to the Senate Appropriations Committee.

The To the Point team spent months investigating California’s home insurance crisis, hearing from homeowners, lawmakers and the Insurance Commissioner. You can stream the special investigation right now on the ABC10+ TV streaming app.

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