Property insurance companies will no longer be allowed to prevent their policyholders from hiring public adjusters.

Louisiana Gov. John Bel Edwards announced Monday that he signed into law a bill from Sen. Royce Duplessis, D-New Orleans, and Rep. Ray Garafalo, R-Chalmette, that prohibits insurers from inserting anti-public adjuster clauses into property insurance policies. The law will take effect on Aug. 1.

In most cases when a person files an insurance claim, the insurance company assigns a claims adjuster to assess the property damage and calculate the payout amount based on the levels of coverage spelled out in that person’s policy. 

Instead of using the company’s adjuster, a policyholder can hire a third-party public adjuster to assess the damage. The difference between the two is that a public adjuster works directly for the policyholder and not for the insurance company. In some cases, this can result in a higher payout for the policyholder.

Over the past few years, some insurance companies have been adding language into homeowner policies to prohibit their clients from using the services of a public adjuster.  Louisiana Insurance Commissioner Jim Donelon issued a directive last year to try to put a stop to that trend, but an administrative law judge overruled his directive, prompting legislators to act on the matter.