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⚠️ Anti-Public Insurance Adjuster Clauses BANNED: Louisiana

Updated: Mar 2, 2023

On January 24, 2022, James J. Donelon, Commissioner of the Louisiana Department of Insurance, issued a directive barring insurers from use of specific language in property insurance policies.

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Why would an insurance company feel the need to attempt to bar it's own policyholder client from hiring a public insurance adjuster?

Table of Contents:

Background on the Issue

Select insurers in specific states have started to add language in property insurance policies that prohibit the policyholder - their client - from using the services of a public insurance adjuster. From the limited public information available on the matter, this trend seems to have originated as early as 2010, in Florida.

A public insurance adjuster is a type of professional that a policyholder can choose to hire to assist them with a property claim. The National Association of Public Insurance Adjusters (NAPIA) provides additional details about what public insurance adjusters do:

Public Adjusters are experts on property loss adjustment who are retained by policyholders to assist in preparing, filing and adjusting insurance claims. Employed exclusively by a policyholder who has sustained an insured loss, these professionals manage every detail of the claim, working closely with the insured to provide the most equitable and prompt settlement possible. A public adjuster [...] exclusively serves the client, not the insurance company.

That's an interesting description, considering many policyholders assume the insurance adjuster assigned to their claim by their insurance company works for them. They do not. I feel that national policyholder advocacy non-profit United Policyholders explains this well:

Insurance adjusters work for the insurance company and are responsible for preparing an estimate of the cost of repair or replacement of the insured’s property loss. Not all adjusters are bad; however, following a major loss event like a major earthquake or wildfire, they may be over-stretched or just plain in over their head. This problem is exacerbated by the need to bring outside adjusters into an area to meet the extraordinary quantity of claims. Generally, for a major event, adjusters may be hired on a contract basis, and even though they are there on behalf of the carrier, they may not be totally up to speed on the insurance companies’ client relationship philosophies and may not deal with you exactly like the seasoned but gentle actor playing the role on the TV commercial.

My point, is that a policyholder should be aware that if they do not actively participate in the documentation, valuation, and adjustment of their claim - or hire a professional to assist them - they are by default wholly relying on the insurance company to unilaterally document, value, and decide coverage and payment amount(s) for the policyholders' claim.

Considering this information, when a move is taken by an insurer to block a policyholder from free choice of hiring a professional to assist them, what does this illustrate about the power dynamic and policyholder experience within the property insurance claim process?

The Directive

Louisiana Attorney Nick Graphia brought this directive (dated January 24, 2022) banning anti-public adjuster clauses to my attention today. Here is an excerpt:

"It has come to the attention of the Louisiana Department of Insurance that some insurers are attempting to prohibit the use of public adjusters by insureds in their policy provisions by endorsements to their policies. The anti-public adjuster clauses attempt to prohibit insureds from hiring, engaging, retaining, contracting with, or otherwise utilizing the services of a public adjuster. The prohibition contained in these endorsements or any other policy provision directly contravenes La. R.S. 22: 1704(E)(2), which grants insureds the right to hire a public adjuster."
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© Louisiana Department of Insurance, Website

Many Louisiana policyholders experienced delays, denials, and other mishandling of their claims from insurers, in the aftermath of Hurricane Ida. Thankfully, this new directive pairs well with consumer protections enacted in Louisiana in 2021:

  • Insurance Reform Bill HB591 (now ACT 345)

  • Insurance Reform Bill HB457 (now ACT 402)

Click here to read more about these acts, courtesy of the American Adjuster Association.


This is yet another reminder to all policyholders that they should be reviewing their full policies at inception and at every renewal to know what language, duties, limits, and exclusions their policy contains. I always say, "Your policy is a contract. Treat it like one!" Most people would not sign a contract without at least reading it, first. The same should be true for your property policy, which is a contract. For Minnesota policyholders, we provide complimentary property policy reviews.

The fact that this anti-public adjuster language is being added to policies at all, and with increasing frequency raises the question: why would an insurance company attempt to block it's own customer from hiring professional assistance for a property claim? I would love to hear a public statement from an insurer that has a version of this clause in one or more of their policies, regarding the matter.

Update 3/1/23: This directive was appealed by a surplus lines insurer and ordered invalid. Read more here.


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