Public Adjuster Scams: How to Spot Fraud and Protect Yourself
After a property loss, homeowners are vulnerable. Fraudulent operators know this and target disaster victims with deceptive schemes — from unlicensed adjusters to contractors who illegally handle your claim. This guide covers every major category of public adjuster fraud, with real enforcement examples and steps you can take to protect yourself.
Public adjusting fraud harms homeowners in two ways: it can result in a voided or reduced insurance claim, and it can leave you paying fees to someone who provided no legitimate service. Knowing the warning signs before you sign anything is your best protection.
Before you sign any public adjuster contract
Verify the adjuster's license using the PA license lookup tool. A legitimate public adjuster will always provide their state license number — and it will be verifiable on your state's Department of Insurance website.
Unlicensed Operators
Posing as public adjusters without a license
Unlicensed operators use vague titles — "claim consultant," "insurance expert," "loss specialist," "storm damage advocate" — to avoid the scrutiny that comes with the term "public adjuster." These titles are not regulated, so anyone can use them regardless of qualifications. Meanwhile, the work they perform — evaluating damage, preparing estimates, negotiating with insurers — is the legal definition of public adjusting and requires a license in most states.
How to spot them: Ask directly, "What is your public adjuster license number and what state issued it?" A legitimate PA will answer immediately. An unlicensed operator will deflect, change the subject, or claim their title exempts them from licensing requirements.
Tip: Use the license lookup tool to verify any adjuster's license in your state. The National Association of Insurance Commissioners (NAIC) maintains public license records across all 50 states plus DC.
Contractors Illegally Adjusting Claims
The most common violation nationwide
Roofers, restoration companies, and general contractors frequently offer to "handle everything with your insurance company." This is illegal in virtually every state that licenses public adjusters. Negotiating with an insurer on a homeowner's behalf, filing claim forms, or preparing claim valuations constitutes public adjusting — and requires a PA license.
The warning signs are easy to recognize: the contractor asks you to sign a document giving them authority to communicate with your insurer, offers to "get you the maximum settlement," or says their fee will come out of whatever the insurance company pays.
Florida Law: Unlicensed public adjusting is a third-degree felony under Fla. Stat. §§ 626.854 and 626.8738, punishable by up to 5 years in prison and a $5,000 fine per violation. Contractors who negotiate insurance claims without a PA license are regularly prosecuted under these statutes.
Learn more about the exact legal boundaries: Contractor vs Public Adjuster — What's Legal and What's Not.
Dual-Role Violations
Adjusting the claim and doing the repairs
A dual-role violation occurs when a licensed public adjuster also performs or contracts the repair work on the same claim they are adjusting. The conflict of interest is fundamental: a PA whose income also depends on the repair contract has a financial incentive to inflate the insurance claim value — regardless of what is actually owed.
This practice is explicitly prohibited in Florida under Fla. Stat. § 626.8795, which bars a PA from having any financial interest in the repair or replacement work on any claim they adjust. The National Association of Public Insurance Adjusters (NAPIA) Code of Ethics also prohibits it.
What to watch for: The same person or company that inspects your damage and prepares your claim also wants to be the one doing the repairs. Even if they hold a valid PA license, this arrangement is illegal in Florida and ethically prohibited everywhere.
If your PA is also the one offering to do your roof repairs, see: verify contractor licensing (RooferRate — coming soon).
Kickback Schemes
Referral fees between PAs and contractors
Kickback schemes involve under-the-table referral payments between public adjusters and contractors — where the PA steers clients to a specific contractor in exchange for a fee, or a contractor funnels clients to a specific PA. Both sides benefit financially from the arrangement, and the homeowner receives no benefit from the referral — and may actually be harmed if the referred contractor is not the best option.
These arrangements are prohibited under Texas Insurance Code § 4102.158, which bars a PA from accepting compensation from a contractor in connection with a claim. Similar anti-kickback provisions exist in most states with PA licensing laws.
Warning signs of a kickback scheme:
- - Your PA insists you use one specific contractor and resists alternatives
- - A contractor refers you to a specific PA with unusual urgency or insistence
- - The PA or contractor cannot explain the basis for the referral recommendation
- - The contractor and PA seem to work together as a packaged offering
Fee Gouging During Disasters
Above-cap fees after declared catastrophes
After a hurricane, tornado, or wildfire, "storm chasers" descend on disaster areas and pressure homeowners into signing PA contracts quickly — often before the homeowner fully understands the scope of damage or their coverage. Some of these operators charge fees that exceed state-mandated caps that apply during declared emergencies.
Several states cap PA fees during declared catastrophes. Florida limits public adjuster fees to 10% of the insurance settlement during declared states of emergency (compared to a typical maximum of 20% on non-catastrophe claims). Louisiana also imposes a 10% cap during declared disasters. Charging above these caps is a violation of state law, regardless of what the contract says.
Storm chaser tactics to watch for: High-pressure on-the-spot signing, claims that the offer is "only available today," unusually high percentage fees with buried contract language, or discouragement from reading the contract carefully.
Know the fee norms for your state before signing: Check your state's licensing and fee rules.
Embezzlement
Misappropriating insurance settlement funds
The most serious category: a public adjuster who intercepts or misappropriates insurance settlement funds that belong to the homeowner. This can happen when claim checks are made out jointly to the PA and the homeowner — or when the PA convinces the homeowner to direct payments through the PA's account.
Real Case: Los Angeles County
A Los Angeles County public adjuster was sentenced to 7 years in federal prison for embezzling approximately $400,000 from wildfire victims. The scheme involved cashing insurance claim checks that were meant for the homeowners — funds intended to repair fire-damaged properties. The victims, already displaced by wildfire, faced additional years of displacement while the legal process played out.
Warning signs of embezzlement risk:
- The PA asks for insurance checks to be made out to them, or co-signed over to their firm
- Unexplained delays in receiving settlement funds after the insurer has confirmed payment
- The PA becomes difficult to reach after a settlement is issued
- Vague or non-existent accounting of how settlement funds were distributed
Best practice: Your insurance company should make settlement checks payable to you directly. If a PA requests that checks be directed to their firm, contact your state's Department of Insurance before complying.
Red Flags — Walk Away If You See These
- • Cannot or will not provide a state public adjuster license number
- • Pressures you to sign immediately, especially right after a disaster
- • Uses vague titles like "claim consultant," "insurance specialist," or "loss expert"
- • Offers to do the repairs AND adjust your claim
- • Insists you must use their specific contractor referral
- • Asks for insurance checks to be made out to them rather than you
- • Fee percentage is unusually high — especially above your state's catastrophe cap
- • Discourages you from reading the contract or seeking a second opinion
What To Do If You Suspect Fraud
Verify the license immediately
Use the PA license lookup tool to check the person's name and license number. If the license does not exist, is expired, or belongs to a different person, stop all dealings immediately.
Do not sign anything additional and do not transfer funds
If you have already signed a contract, review it carefully and consider consulting an attorney before taking further action. Do not authorize any additional payments or claim check redirections.
File a complaint with your state Department of Insurance
Each state's DOI investigates complaints about unlicensed adjusting, fraud, and other violations. Find the right agency using the license lookup tool — it includes links to each state's licensing portal.
Report the violation here to help protect other homeowners
Submit a report and we will help direct you to the appropriate authority in your state. Your report may help identify patterns of fraud that harm other disaster victims.
Verify Public Adjuster Licensing by State
Verify a license or report a problem
Use our tools to check that anyone handling your claim is properly licensed — and report violations to help protect other homeowners.