HB510 Alabama 2012 Session

Summary

Primary Sponsor

Steve McMillan

Republican

Session

Regular Session 2012

Title

Insurance Department, adjusters, public adjusters licensed and regulated, adjustment of claims on behalf of insured party, license fees, Sec. 27-4-2 am'd.

Summary

HB510 creates a licensing and regulatory framework for public adjusters in Alabama, aligning state law with a model act to protect insureds in first‑party claims.

What This Bill Does

The bill establishes rules to license and regulate public adjusters (both individuals and business entities), including education, exams, background checks, and ongoing education. It requires a financial guarantee (bond or letter of credit) of at least $20,000, fingerprint-based background checks, and a home-state designations for nonresidents. It also imposes written contract requirements, disclosure of conflicts, escrow handling, recordkeeping, and ethics standards to protect insureds; it creates enforcement mechanisms, penalties, and fee schedules, and allows the commissioner to issue rules and phased implementations.

Who It Affects

• Public adjusters (individuals and business entities) who must obtain and maintain licensure, meet educational, financial, and conduct requirements, and follow regulated practices.
• Policyholders/insureds who hire public adjusters, who gain written contracts, disclosure of fees and conflicts, escrow protections, cancellation rights, and clearer expectations in the claim process.

Key Provisions

• Defines 'public adjuster' and sets scope to assist insureds with first‑party claims, while excluding certain professionals (e.g., attorneys under specific circumstances).
• Requires licensure for public adjusters, including residency/home-state rules for residents and nonresidents, plus a designated responsible person for business entities.
• Mandates prelicensing education (20 hours), a written examination, and continuing education (24 hours every two years, including 3 hours of ethics).
• Imposes a minimum financial responsibility via a $20,000 bond or irrevocable letter of credit, with rules on termination notices and renewal.
• Requires fingerprint-based criminal history checks for applicants and certain key personnel, with centralized NAIC/ FBI processing and confidentiality protections.
• Introduces contract requirements: written contracts with specific content, cancellation rights, restrictions on certain fee structures, and clear disclosures of any financial interests or conflicts.
• Establishes escrow/trust accounts for funds received on behalf of insureds, in insured’s home state or loss location, with non-interest bearing requirements.
• Sets standards of conduct and prohibits misrepresentation, conflicts of interest without disclosure, unlicensed activities, and practicing law; outlines penalties up to $10,000 per violation and license actions (probation, suspension, revocation).
• Adds reporting requirements of administrative actions and criminal actions to the commissioner, and provides for civil action remedies by the state or affected parties.
• Updates 27-4-2 to include license fees and related charges for public adjusters and reorganizes related fee schedules.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Department