Amended in Assembly August 19, 2016

Amended in Assembly June 16, 2016

Amended in Assembly May 17, 2016

Amended in Senate January 4, 2016

Senate BillNo. 488


Introduced by Senator Block

February 26, 2015


An act to amend Sections 1722, 1751.5, 15001, 15008, 15010, 15011, 15013, 15017, 15020, 15027, 15027.1, 15028, 15031, 15036, 15053, 15056, 15060, and 15062 of, to add Sections 15009.1 and 15059.2 to, to repeal Section 15015 of, and to repeal and add Section 15016 of, the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 488, as amended, Block. Public insurance adjusters.

Existing law, the Public Insurance Adjusters Act, sets forth various requirements with respect to operation as a public insurance adjuster in this state, including, but not limited to, that the person be licensed and licensing qualifications and application requirements for public insurance adjusters, nonresident public insurance adjusters, and interim public insurance adjusters. Any person who knowingly falsifies the fingerprints or photographs submitted as part of the application process is guilty of a felony, and any person who violates any other provision governing public insurance adjusters is guilty of a misdemeanor punishable by a fine not to exceed $500 or by imprisonment in a county jail not to exceed one year, or by both that fine and imprisonment. Existing law prescribes a schedule for various public insurance adjuster application, license, and license renewal fees.

This bill would revise and recast the above provisions by, among other things, expanding the categories of persons exempt from the act to include, among others, a person who negotiates or settles claims arising under a life or health insurance policy or an annuity contract and a person who settles subrogation claims between insurers. The bill would make certain categories of persons who are exempt from the existing act, subject to the act, thereby requiring those persons to seek licensure in order to practice as a licensee under the act. The bill would place additional eligibility requirements on applicants for a nonresident license. The bill would also repeal the provisions relating to an interim license, and would instead create an apprentice public insurance adjuster license to facilitate the training necessary to ensure reasonable competency in the responsibilities and duties of a public insurance adjuster, and would set forth the various terms and conditions of the license. The bill would make an apprentice public insurance adjuster subject to a felony conviction if he or she knowingly falsifies the fingerprints or photographs submitted as part of his or her application for a license. The bill would also change various public insurance adjuster application, license, and renewal fees, as prescribed.

Existing law requires an individual who holds a public insurance adjuster license and who is not exempt, as specified, to satisfactorily complete a minimum of 24 hours of continuing education courses pertinent to the duties and responsibilities of a public insurance adjuster license, to be reported to the Insurance Commissioner on a biennial basis in conjunction with his or her license renewal cycle.

This bill would require a person who fails to meet those continuing education and reporting requirements, and who has not been granted an extension of time by the commissioner within which to comply, to have his or her license placed on inactive status until he or she demonstrates to the satisfaction of the commissioner that he or she has complied with all of those requirements, as specified. The bill would also prohibit a licensee who is placed on inactive status from performing specified activities.

Because the bill would create new crimes, the bill would impose a state-mandated local program.

begin insert

This bill also would incorporate additional changes in Sections 1722 and 1751.5 of the Insurance Code proposed by AB 2588, to be operative if AB 2588 and this bill are both enacted and become effective on or before January 1, 2017, and this bill is enacted last.

end insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

The Legislature finds and declares that the
2changes to the fee amounts in this act codify the current fees
3charged by the Department of Insurance. The fees in the current
4statutes, as noted in Sections 15031 and 15060 of the Insurance
5Code, do not reflect the incremental increases approved by the
6Insurance Commissioner pursuant to Section 12978 of the
7Insurance Code since 1985.

8

SEC. 2.  

Section 1722 of the Insurance Code is amended to
9read:

10

1722.  

If a natural person while licensed pursuant to the
11provisions of this chapter or Chapter 6 (commencing with Section
121760), Chapter 7 (commencing with Section 1800), or Chapter 8
13(commencing with Section 1831) of this part, Part 5 (commencing
14with Section 12140) of Division 2, or Chapter 2 (commencing
15with Section 15000) of Division 5 enters the military service of
16the United States and is in that service at a time prescribed for the
17filing of a renewal application, the filing of that application is
18waived, and the license held by that licensee at the time of his or
19her entry into military service shall remain in force during the
20period of that military service and until the end of the license year
21in which he or she is released from that service but not for less
22than six months after that release. During that period the person
23may secure a license of the type held by him or her on his or her
24entry into military service upon the filing of an application and
25paying the fee therefor without the necessity of taking an
26examination or paying a penalty.

27begin insert

begin insertSEC. 2.5.end insert  

end insert

begin insertSection 1722 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
28read:end insert

29

1722.  

If a natural person while licensed pursuant to the
30provisions of this chapter orbegin delete Chaptersend deletebegin insert Chapterend insert 6 (commencing
P4    1with Section 1760),begin insert Chapterend insert 7 (commencing with Section 1800),
2orbegin insert Chapterend insert 8 (commencing with Section 1831) of this part,begin delete orend delete Part
35 (commencing with Section 12140) of Divisionbegin delete 2end deletebegin insert 2, or Chapter
41 (commencing with Section 14000) or Chapter 2 (commencing
5with Section 15000) of Division 5end insert
enters the military service of the
6United States and is inbegin delete suchend deletebegin insert thatend insert service at a time prescribed for
7the filing of a renewal application, the filing ofbegin delete suchend deletebegin insert thatend insert
8 application is waived, and the license held bybegin delete suchend deletebegin insert thatend insert licensee
9at the time of hisbegin insert or herend insert entry into military service shall remain in
10force during the period ofbegin delete suchend deletebegin insert thatend insert military service and until the
11end of the license year in which hebegin insert or sheend insert is released frombegin delete suchend delete
12begin insert thatend insert service but not for less than six months afterbegin delete suchend deletebegin insert thatend insert release.
13Duringbegin delete such period suchend deletebegin insert that period, thatend insert person may secure a
14license of the type held by himbegin insert or herend insert on hisbegin insert or herend insert entry into
15military service upon the filing of an application and paying the
16fee therefor without the necessity of takingbegin delete anyend deletebegin insert anend insert examination or
17payingbegin delete anyend deletebegin insert aend insert penalty.

18

SEC. 3.  

Section 1751.5 of the Insurance Code is amended to
19read:

20

1751.5.  

The fees required by this chapter and by Chapter 6
21(commencing with Section 1760), Chapter 7 (commencing with
22Section 1800), and Chapter 8 (commencing with Section 1831) of
23this part, and by Chapter 2 (commencing with Section 15000) of
24Division 5 are filing fees, no portion of which shall be refunded
25whether or not the application is acted upon or the examination is
26taken.

27begin insert

begin insertSEC. 3.5.end insert  

end insert

begin insertSection 1751.5 of the end insertbegin insertInsurance Codeend insertbegin insert is amended to
28read:end insert

29

1751.5.  

The fees required by this chapter and by Chapter 6
30(commencing with Section 1760), Chapter 7 (commencing with
31Section 1800), and Chapter 8 (commencing with Section 1831) of
32thisbegin delete partend deletebegin insert part, and by Chapter 1 (commencing with Section 14000)
33and Chapter 2 (commencing with Section 15000) of Division 5end insert
are
34filing fees, no portion of which shall be refunded whether or not
35the application is acted upon or the examination is taken.

36

SEC. 4.  

Section 15001 of the Insurance Code is amended to
37read:

38

15001.  

As used in this chapter, the following terms have the
39following meanings:

P5    1(a) “Apprentice public insurance adjuster” means a person who
2is qualified in all respects as a public adjuster, except as to
3experience, education, or training.

4(b) “Business entity” means a corporation, association,
5partnership, limited liability company, limited liability partnership,
6or other legal entity.

7(c) “Catastrophic disaster” means an event that results in large
8numbers of deaths and injuries; causes extensive damage or
9destruction of facilities that provide and sustain human needs;
10produces an overwhelming demand on state and local response
11resources and mechanisms; causes a severe long-term effect on
12general economic activity; and severely affects state, local, and
13private sector capabilities to begin and sustain response activities.
14A catastrophic disaster shall be declared by the President of the
15United States or the Governor of the state or district in which the
16disaster occurred.

17(d) “Commissioner” means the Insurance Commissioner.

18(e) “Department” means the Department of Insurance.

19(f) “Fingerprints” means an impression of the lines on the finger
20taken for the purposes of identification.

21(g) “Home state” means the District of Columbia and any state
22or territory of the United States in which the public insurance
23adjuster’s principal place of residence or principal place of business
24is located. If neither the state in which the public insurance adjuster
25maintains the principal place of residence nor the state in which
26the public insurance adjuster maintains the principal place of
27business has a substantially similar law governing public insurance
28adjusters, the public insurance adjuster may declare another state
29in which it becomes licensed and acts as a public insurance adjuster
30to be the “home state.”

31(h) “Licensee” means a person licensed under this chapter.

32(i) “Person” includes any individual, firm, company, association,
33organization, partnership, limited liability company, and
34corporation.

35

SEC. 5.  

Section 15008 of the Insurance Code is amended to
36read:

37

15008.  

This chapter does not apply to any of the following:

38(a) An attorney at law admitted to practice in this state, when
39performing his or her duties as an attorney at law.

P6    1(b) Photographers, estimators, appraisers, engineers, and
2arbitrators, who are employed exclusively by a public insurance
3adjuster for the purpose of furnishing technical assistance to a
4licensed public insurance adjuster.

5(c) A person who negotiates or settles claims arising under a
6life or health insurance policy or an annuity contract.

7(d) A person who settles subrogation claims between insurers.

8

SEC. 6.  

Section 15009.1 is added to the Insurance Code, to
9read:

10

15009.1.  

(a) The applicant shall complete a 20-hour
11prelicensing course of study for the lines of authority for a public
12insurance adjuster license.

13(b) An applicant who resides in another state that does not
14license public insurance adjusters is eligible to designate California
15as his or her home state. He or she is required to complete the
16prelicensing education, pass the public insurance adjuster
17examination, and meet the license application requirements before
18a license can be issued.

19(c) An applicant licensed as a public insurance adjuster in
20another state is exempt from completing a prelicensing education
21course to apply for a California public insurance adjuster license
22if, at the time of application, the applicant’s out-of-state license is
23current or was canceled within 90 calendar days.

24

SEC. 7.  

Section 15010 of the Insurance Code is amended to
25read:

26

15010.  

An application shall be verified and shall include all
27of the following:

28(a) The full name and business address of the applicant.

29(b) The name under which the applicant intends to do business.

30(c) A statement as to the general nature of the business in which
31the applicant intends to engage.

32(d) If the applicant is a person other than an individual, the full
33name and resident address of each of its partners, officers, and
34directors.

35(e) Two photographs, not older than six months, of the applicant,
36of a type prescribed by the commissioner, and one classifiable set
37of his or her fingerprints, to be sent to a live scan fingerprint
38provider as directed by the department, if fingerprints are not
39submitted in person with a live scan fingerprinting service provider
40certified by the Department of Justice.

P7    1(f) A verified statement of his or her experience qualifications.

2(g) Other information, evidence, statements, or documents as
3may be required by the commissioner.

4

SEC. 8.  

Section 15011 of the Insurance Code is amended to
5read:

6

15011.  

Before an application for a license is granted, the
7applicant shall meet all of the following requirements:

8(a) Be at least 18 years of age.

9(b) Shall not have committed acts or crimes constituting grounds
10for denial of licensure under Section 1668 or 1669.

11(c) Shall have at least two years’ experience in the handling of
12loss claims under insurance contracts as determined by regulations
13adopted by the commissioner, and be competent to transact
14business and discharge the responsibilities of a public insurance
15adjuster in a manner as to safeguard the interests of the public. A
16person who has been licensed as an apprentice public insurance
17adjuster, as set forth in Section 15016, for 12 full months, shall be
18considered to have met the two-year experience requirement.

19(d) Maintain an office in the State of California with public
20access during regular business hours.

21(e) Pass an exam given by the commissioner in regard to
22property loss adjusting.

23(f) Post a surety bond executed by a surety company authorized
24to do business in this state in the sum of twenty thousand dollars
25($20,000).

26(g) For an organization applicant, designate a licensed individual
27public insurance adjuster to be responsible for the organization’s
28compliance with the insurance laws, rules, and regulations of this
29state.

30(h) For an organization applicant, authorize only licensed
31individual public insurance adjusters to exercise authority under
32the organization’s license.

33(i) Comply with any requirement to file supplementary
34documents, affidavits, and statements as may be necessary to obtain
35a full disclosure of the information that will aid the commissioner
36in determining whether the prerequisites for the license have been
37met.

38

SEC. 9.  

Section 15013 of the Insurance Code is amended to
39read:

P8    1

15013.  

Each applicant for a license as a public insurance
2adjuster shall, prior to issuance of the license, personally take and
3pass, to the satisfaction of the commissioner, an examination given
4by the department as follows:

5(a) The examination shall be prescribed by the commissioner
6and shall be of sufficient scope to reasonably test the applicant’s
7knowledge, among other things, of basic insurance theory, essential
8elements of contracts, technical competence in the handling of the
9various lines for which the applicant is being tested, claims ethics
10and knowledge of the Unfair Practices Act, and the duties and
11responsibilities of public insurance adjusters under the law.

12(b) The examination shall be given to applicants under the
13supervision of the department or the department’s examination
14contractor and shall be in written form.

15(c) The commissioner shall, within a reasonable period of time,
16not to exceed 30 days, transmit the results of the examination and
17action taken on the application to the applicant.

18(d) In the event an applicant who is otherwise qualified fails the
19examination, the commissioner may administer a reexamination.

20(e) The examination shall be given at those times and places
21within the state as the commissioner deems reasonably necessary
22to serve the convenience of the department and applicants.

23

SEC. 10.  

Section 15015 of the Insurance Code is repealed.

24

SEC. 11.  

Section 15016 of the Insurance Code is repealed.

25

SEC. 12.  

Section 15016 is added to the Insurance Code, to
26read:

27

15016.  

(a) The apprentice public insurance adjuster license is
28a license to facilitate the training necessary to ensure reasonable
29competency to fulfill the responsibilities of a public insurance
30adjuster as defined in Section 15007.

31(b) The apprentice public insurance adjuster license is subject
32to the following terms and conditions:

33(1) The applicant shall submit, with an application for an initial
34apprentice public insurance adjuster license, an attestation or
35certification from a licensed public insurance adjuster assuming
36responsibility for all actions of that applicant.

37(2) The apprentice public insurance adjuster is authorized to
38adjust claims only in California.

39(3) The applicant is required to qualify under subdivisions (a)
40and (b) of Section 15011.

P9    1(4) The applicant is required to pay a license fee of one hundred
2dollars ($100).

3(5) The applicant is required to comply with any requirement
4to file supplementary documents, affidavits, and statements as may
5be necessary to obtain a full disclosure of the information that will
6aid the commissioner in determining whether the prerequisites for
7the license have been met.

8(6) The apprentice public insurance adjuster shall not be required
9to take and successfully complete the prescribed public insurance
10adjuster examination.

11(7) The licensee shall at all times be an employee of a public
12insurance adjuster and be subject to training, direction, and control
13by a licensed public insurance adjuster.

14(8) The apprentice public insurance adjuster license is for a
15period not to exceed 12 months, and the license shall not be
16renewed.

17(9) The licensee is restricted to participation in factual
18investigation, tentative closing, and solicitation of losses subject
19to the review and final determination of a licensed public insurance
20adjuster.

21(10) The licensee shall be subject to suspension, revocation, or
22conditions in accordance with Section 1668.

23(11) The applicant shall submit two photographs, not older than
24six months, of the applicant, of a type prescribed by the
25commissioner, and one classifiable set of his or her fingerprints,
26to be sent to a live scan fingerprint provider as directed by the
27department, if fingerprints are not submitted in person with a live
28scan fingerprinting service provider certified by the Department
29of Justice.

30(12) The apprentice public insurance adjuster shall complete
31the 20-hour prelicensing education course of study as defined in
32Section 15009.1 during the license period.

33

SEC. 13.  

Section 15017 of the Insurance Code is amended to
34read:

35

15017.  

(a) A nonresident license shall be issued by the
36commissioner to qualified persons who meet the requirements set
37forth in Section 15011, and who have appointed the commissioner
38as an agent for service of process in this state.

P10   1(b) Unless denied licensure pursuant to Sections 15018, 15018.5,
2and 15019, a nonresident person shall receive a nonresident public
3insurance adjuster license if all of the following apply:

4(1) The person is currently licensed in good standing as a public
5insurance adjuster in his or her home state.

6(2) The person has paid the fees required by Section 15060.

7(3) The person has provided proof of financial responsibility as
8required by Section 15033.

9(4) The individual has submitted to the commissioner the
10completed application for licensure.

11(5) The person’s home state awards nonresident public insurance
12adjuster licenses to residents of California on the same basis.

13

SEC. 14.  

Section 15020 of the Insurance Code is amended to
14read:

15

15020.  

The form and content of the license shall be determined
16by the commissioner.

17

SEC. 15.  

Section 15027 of the Insurance Code is amended to
18read:

19

15027.  

(a) A licensee shall not, directly or indirectly, act within
20this state as a public insurance adjuster without having first entered
21into a contract, in writing, on a form approved by the insurance
22commissioner and executed in duplicate by the public adjuster and
23the insured or a duly authorized representative. One original
24contract shall be kept on file by the licensee, available at all times
25for inspection, without notice, by the commissioner or his or her
26duly authorized representative, and one original contract shall be
27given to the insured.

28(b) The written contract between the licensee and the insured
29shall contain each of the following:

30(1) Title of “Public Adjuster Contract.”

31(2) The name, business name, license number, telephone
32number, and address of the licensee.

33(3) The name and address of the insured.

34(4) A description of the loss and its location, if applicable.

35(5) The name of the insurer and the policy number, if known.

36(6) The full salary, fee, commission, or other consideration the
37licensee is to receive for services under the contract.

38(7) A public adjuster’s fee, commission, or other valuable
39consideration shall not cause the insured to receive less than any
P11   1amount paid to the insured by the insurer prior to the date of the
2written contract between the insured and the public adjuster.

3(8) A description of the services to be provided to the insured.

4(9) Signatures of the licensee and the insured.

5(10) The date the contract was signed by the licensee and the
6date the contract was signed by the insured.

7(11) The following statement: “As a public adjuster, I am
8required by the California Insurance Code to post a surety bond
9in the sum of $20,000 to cover certain kinds of claims made by
10you, the insured. If you have any questions concerning the surety
11bond, you may contact the California Department of Insurance
12Licensing Hotline at 1-800-967-9331 or www.insurance.ca.gov.”

13(12) A statement of the compensation to the licensee, including
14the percentage and base to which the percentage applies.

15(13) A statement that the insured has the right to cancel the
16contract within three business days of signing it and being provided
17the signed contract.

18(c) A contract covered by this section shall not contain a contract
19term that does any of the following:

20(1) Allows the licensee’s fee to be collected when money is due
21from an insurer, but not paid, or allows a licensee to collect the
22entire fee from the first payment issued by an insurer, rather than
23as a percentage of each payment issued by an insurer.

24(2) Requires the insured to authorize an insurer to issue a
25payment only in the name of the licensee.

26(3) Imposes late fees or collection costs on the insured.

27(d) A licensee shall not solicit or attempt to solicit a client for
28employment during a loss-producing occurrence. A loss-producing
29occurrence continues to exist when any of the following conditions
30exist at the property that is subject to solicitation:

31(1) Any of the circumstances that caused the loss are present at
32the property where the solicitation would otherwise take place.

33(2) Emergency responders are present at the property where the
34solicitation would otherwise take place.

35(3) An evacuation order is still in effect at the property where
36the solicitation would otherwise take place.

37(e) A licensee or any other person or entity offering, for a fee,
38service regulated by this chapter shall not solicit a policyholder
39for employment or initiate any contact with a policyholder between
P12   1the hours of 6 p.m. and 8 a.m., unless requested by the
2policyholder.

3(f) A licensee shall not use any form of contract other than that
4approved by the commissioner and that contains each of the
5following:

6(1) A provision allowing the client to cancel the contract by
7written notice sent or delivered by certified mail, return receipt
8requested, or other form of mailing that provides proof of mailing,
9to the licensee by midnight of the third business day after the day
10on which the client signs a contract that complies with this section
11and is provided a copy of that signed contract. Each copy of the
12contract shall contain a completed form, captioned “Notice of
13Cancellation,” that shall be placed at the end of the contract and
14be separated from the remainder of the contract by a printed line.
15Nothing shall be printed on the reverse side of the notice form.
16The notice form shall be completed by the licensee, and shall
17contain in type of at least 10-point the following statement written
18in the same language, e.g., Spanish, as used in the contract:

19
20Notice of Cancellation
21


24

 

 

   

 (Date of Contract)
9P13  23

 

25You may cancel this contract within three business days from
26the above date that you signed the contract and you were provided
27with a copy of that signed contract, except that, as it pertains to a
28disaster as defined in Section 15001, your right to cancel is five
29calendar days without any penalty or obligation to pay your public
30adjuster, other than for reimbursement of moneys paid by your
31public adjuster for out-of-pocket emergency expenses for you or
32on your behalf. If your public adjuster seeks reimbursement from
33you for out-of-pocket emergency expenses, your public adjuster
34shall provide you with an itemized statement of those emergency
35expenses advanced to you or on your behalf if the cancellation is
36made within the first three business days after the contract was
37signed by you and you were provided a copy of the signed contract.
38Nothing in this contract permits your public adjuster to recover
39any costs, except for out-of-pocket emergency expenses advanced
40to you.

P13   1If you cancel, any money or other consideration paid by you will
2be returned within five business days following the receipt of your
3cancellation notice, and any security interest arising out of the
4transaction will be canceled.

5To cancel this contract, mail or deliver by certified mail, return
6 receipt requested, or other form of mailing that provides proof of
7mailing, a signed and dated copy of this cancellation notice, or
8any other written notice, or send a telegram to:

 

   

(name of public adjuster)
at

   

(address of public adjuster’s place of business)

   

not later than midnight of   

 (Date)

I hereby cancel this contract   

 (Date)

   

(Client’s signature)
P13  23

 

24(2) The statement “WE REPRESENT THE INSURED ONLY”
25prominently displayed in at least 10-point type.

26(3) A provision disclosing the percentage of the insured’s claim,
27or other fee, that the licensee will charge for his or her services.
28The licensee shall obtain the initials of the insured next to this
29provision.

30(4) A conspicuous statement in at least 10-point type in
31immediate proximity to the space reserved for the client’s signature,
32as follows: “You may cancel this contract at any time before
33midnight of the third business day after the date of this contract.
34See the notice of cancellation form at the end of this contract for
35an explanation of this right.”

36(g) A licensee shall not knowingly make any false report to his
37or her employer or divulge to any other person, except as he or
38she may be required by law to do so, any information acquired by
39him or her except at the direction of the employer or a client for
40whom the information is obtained.

P14   1(h) A licensee shall not use a badge in connection with the
2official activities of the licensee’s business.

3(i) A licensee shall not permit an employee or agent in his or
4her own name to advertise, engage clients, furnish reports, or
5present bills to clients, or in any manner whatever to conduct
6business for which a license is required under this chapter.

7(j) Pursuant to subdivisions (a) and (c) of Section 15006, the
8commissioner shall have the authority to enforce the provisions
9of this chapter and prosecute violations thereunder committed by
10unlicensed persons or entities that hold themselves out or act as
11public insurance adjusters.

12(k) For purposes of this section, “business day” shall have the
13same meaning given to that term in subdivision (e) of Section
141689.5 of the Civil Code, as in effect on the operative date of this
15statute.

16(l) The contract and the notice of cancellation set forth in
17paragraph (1) of subdivision (f) shall be written in the same
18language, e.g., Spanish, as principally used in the negotiation of
19the contract.

20(m) Within five business days after a contract has been canceled,
21the licensee shall tender to the client any payments made by the
22client and any note or other evidence of indebtedness, including
23an itemized statement of all amounts tendered to the client.

24(n) The licensee is not entitled to compensation for services
25performed prior to cancellation, other than for reimbursement of
26moneys paid by the licensee for out-of-pocket emergency expenses
27for the client or on behalf of the client. If the licensee seeks
28reimbursement from the client for out-of-pocket emergency
29expenses, and if the cancellation is made within the first three
30business days after the contract was initiated, the licensee shall
31provide the client with an itemized statement of those emergency
32expenses advanced to the client or on behalf of the client by the
33licensee. Nothing in this subdivision shall permit the licensee to
34recover any costs, except for out-of-pocket emergency expenses
35advanced to the client. Any security interest shall be canceled upon
36cancellation of the contract.

37(o) Notice of cancellation given by the client need not take the
38particular form specified in paragraph (1) of subdivision (f). Notice
39of cancellation, however expressed, is effective if it indicates the
40intention of the client not to be bound by the contract.

P15   1(p) Cancellation occurs when the client gives written notice of
2cancellation by certified mail, return receipt requested, or other
3form of mailing that provides proof of mailing, to the licensee at
4the address specified in the contract.

5(q) Notice of cancellation, if given by mail, is effective when
6sent by certified mail, return receipt requested, or other form of
7mailing that provides proof of mailing, properly addressed with
8postage prepaid.

9(r) Until the licensee has complied with this section, the client
10may cancel the contract.

11(s) The contracts shall be executed in duplicate. The licensee
12shall retain one original contract, and shall provide the insured
13with an original contract.

14(t) The licensee shall provide the client with an original contract
15and notice of cancellation at the time the client signs the contract.

16(u) Any confession of judgment or waiver of the provisions of
17this chapter shall be deemed contrary to public policy and shall be
18void and unenforceable.

19(v) Prior to the signing of the contract, the licensee shall provide
20the insured with a separate printed disclosure document in the
21following form that bears the name and license number of the
22licensee:

23
24“DISCLOSURE
25

26There are three types of insurance adjusters that could be
27involved in the processing of your insurance claim. The definitions
28of the three types are as follows:

29(1) Public adjusters means the insurance adjusters who do not
30work for your insurance company. They work for you, the insured,
31to assist in the preparation, presentation, and settlement of your
32claim. You hire them by signing a contract and agreeing to pay
33them a fee or commission based on a percentage of the settlement,
34or other method of compensation. Public adjusters are required to
35be licensed, bonded, and tested by the State of California to
36represent your interest only.

37(2) Company adjusters means the insurance adjusters who are
38employees of your insurance company. They represent your
39insurance company and are paid by your insurance company. They
P16   1will not charge you a fee and are not individually licensed or tested
2by the State of California.

3(3) Independent adjusters means the insurance adjusters who
4are hired on a contract basis by your insurance company to
5represent the company in the settlement of the claim. They are
6paid by your insurance company. They will not charge you a fee.

7You have the right, but are not required, to use the services of
8a public adjuster in the preparation and handling of your insurance
9claim.

10Public adjusters cannot solicit your business while the loss is
11underway, or between the hours of 6 p.m. and 8 a.m.

12Your “Public Adjuster Contract,” with a public adjuster
13representing you, should clearly indicate the amount of the fee you
14will be paying to your public adjuster. Your contract, with this fee
15 percentage, should be acknowledged by your initials on the “Public
16Adjuster Contract.” The salary, fee, commission, or other
17consideration is to be paid by you (the insured), not the insurance
18company (insurer).

19You have the right to cancel the contract with your public
20adjuster, without any penalty or obligation, within three business
21days from the date the contract is signed. If the contract was
22established from a catastrophic disaster as defined in subdivision
23(c) of Section 15001, the insured has the right to cancel within five
24calendar days.

25If you cancel the contract with your public adjuster, any money
26or other consideration paid by you will be returned within five
27business days following the receipt of your cancellation notice,
28and any security interest arising out of the transaction will be
29canceled.

30To cancel the contract with your public adjuster, mail or deliver
31by certified mail, return receipt requested, or other form of mailing
32that provides proof of mailing, a signed and dated copy of the
33cancellation notice, or any other written notice, or send a telegram
34to the public adjuster at the address in the contract.

35You have the right to, and may, communicate with your
36insurance company at any time if you feel the need during the
37claims process.

38If you have any concerns or questions, the officers at the
39California Department of Insurance Consumer Hotline are there
P17   1to help you. Please contact them at 1-800-927-HELP (4357) or
2www.insurance.ca.gov.”
3


4(w) No later than three business days after the cancellation has
5expired, the public adjuster shall notify the insurer, its adjuster, or
6its attorney, that he or she has entered into a written contract with
7the insured.

8(x) If the licensee misrepresents or conceals a material fact from
9the insured prior to execution of the contract, the insured is entitled
10to rescind the contract without time limit.

11(y) Notwithstanding any other provision of this section, if a
12property loss is included in an area that is subject to a catastrophic
13disaster, as defined in Section 15001, the insured shall have the
14right to cancel a contract with a public adjuster within five calendar
15days of signing it and being provided a copy of the signed contract.

16

SEC. 16.  

Section 15027.1 of the Insurance Code is amended
17to read:

18

15027.1.  

(a) In addition to the restrictions in subdivision (e)
19of Section 15027, a licensee shall not solicit a contract of
20engagement for residential properties under this chapter that are
21included in an area subject to a catastrophic disaster until seven
22calendar days have elapsed from the conclusion of a loss-producing
23occurrence as defined in subdivision (d) of Section 15027.

24(b) Subdivision (a) shall not apply if the licensee is contacted
25directly by the insured or the insured’s representative.

26(c) Nothing in subdivision (a) shall prohibit a licensee from
27providing a policyholder, without making personal contact with
28the policyholder, with accurate written materials explaining
29services provided by public insurance adjusters.

30

SEC. 17.  

Section 15028 of the Insurance Code is amended to
31read:

32

15028.  

No person licensed as a public insurance adjuster shall
33do any of the following:

34(a) Use any misrepresentation to solicit a contract or agreement
35to adjust a claim.

36(b) Solicit or accept remuneration from, or have a financial
37interest in, any salvage, repair or other firm which obtains business
38in connection with any claim he or she has a contract or agreement
39to adjust.

P18   1(c) Advance moneys to any potential client or insured in order
2to obtain business.

3(d) Offer to pay a fee, commission, or other valuable
4consideration, exceeding one hundred dollars ($100), to a person
5for referring a loss unless he or she employs that person to so act
6for him or her and that person is licensed to act as an adjuster under
7the provisions of this chapter.

8(e) Permit an employee or agent, in his or her own name, to
9advertise, engage clients, furnish reports, present bills to clients,
10or in any manner conduct business for which a license is required
11pursuant to this chapter.

12

SEC. 18.  

Section 15031 of the Insurance Code is amended to
13read:

14

15031.  

(a) A licensee shall not conduct a business under a
15fictitious or other business name unless and until he or she has
16obtained the written authorization of the commissioner to do so.

17(b) The commissioner shall not authorize the use of a fictitious
18or other business name that is so similar to that of a public officer
19or agency or that is used by another licensee that the public may
20be confused or misled thereby.

21(c) The authorization shall require, as a condition precedent to
22the use of a fictitious name, that the licensee comply with Section
231724.5.

24(d) A licensee desiring to conduct his or her business under
25more than one fictitious name shall obtain the authorization of the
26commissioner in a manner prescribed in this section for the use of
27additional fictitious names.

28(e) The licensee shall pay a fee of twenty-five dollars ($25) for
29each authorization to use an additional fictitious name and for each
30change in the use of a fictitious business name. If the original
31license is issued in a nonfictitious name and authorization is
32requested to have the license reissued in a fictitious business name,
33the licensee shall pay a fee of twenty-five dollars ($25) for that
34authorization.

35

SEC. 19.  

Section 15036 of the Insurance Code is amended to
36read:

37

15036.  

In lieu of the surety bond required by this chapter there
38may be deposited with the State of California the sum of twenty
39thousand dollars ($20,000) in cash, or evidence of deposit of the
40sum of twenty thousand dollars ($20,000) in banks authorized to
P19   1do business in this state and insured by the Federal Deposit
2Insurance Corporation, or investment certificates or share accounts
3in the amount of twenty thousand dollars ($20,000) issued by a
4savings association doing business in this state and insured by the
5Federal Deposit Insurance Corporation, or evidence of a certificate
6of funds or share account of the sum of twenty thousand dollars
7($20,000) in a credit union as defined in Section 14002 of the
8Financial Code whose share deposits are guaranteed by the
9National Credit Union Administration or guaranteed by any other
10agency approved by the Department of Business Oversight.

11

SEC. 20.  

Section 15053 of the Insurance Code is amended to
12read:

13

15053.  

A person who knowingly falsifies the fingerprints or
14photographs submitted under subdivision (f) of Section 15010 or
15paragraph (12) of subdivision (b) of Section 15016 is guilty of a
16felony. A person who violates any of the other provisions of this
17chapter is guilty of a misdemeanor punishable by a fine not to
18exceed five hundred dollars ($500) or by imprisonment in a county
19jail not to exceed one year, or by both that fine and imprisonment.

20

SEC. 21.  

Section 15056 of the Insurance Code is amended to
21read:

22

15056.  

(a) Except as otherwise provided in this article, an
23expired license or branch office certificate may be renewed at any
24time within one year after its expiration on the filing of an
25application for renewal on a form prescribed by the commissioner,
26and the payment of a renewal fee in effect on the actual renewal
27date. If the license or certificate is renewed after its expiration, the
28licensee, as a condition precedent to renewal, shall also pay the
29delinquency fee prescribed by this chapter. Renewal under this
30section shall be effective on the date on which the application is
31filed, on the date on which the renewal fee is paid, or on the date
32on which the delinquency fee, if any, is paid, whichever occurs
33last. If so renewed, the license or certificate shall continue in effect
34through the date provided in Section 15054 that next occurs after
35the effective date of the renewal, when it shall expire if it is not
36again renewed.

37(b) Renewal of a license or certificate does not prohibit the
38bringing of disciplinary proceedings for an act committed before
39the effective date of the renewal.

P20   1

SEC. 22.  

Section 15059.2 is added to the Insurance Code, to
2read:

3

15059.2.  

A person who fails to meet the requirements imposed
4by Section 15059.1, and who has not been granted an extension
5of time by the commissioner within which to comply, shall have
6his or her license placed on inactive status until he or she
7demonstrates to the satisfaction of the commissioner that he or she
8has complied with all of the requirements of this article and all
9other applicable law. A licensee placed on inactive status may not
10perform the activities described in Section 1631. If a person cannot
11perform the requirements of this article due to a disability or
12inactivity due to special circumstances, the commissioner shall
13provide a procedure for the person to place his or her license on
14inactive status until the person demonstrates to the satisfaction of
15the commissioner that he or she has complied with all of the
16 requirements of this article for the period of disability or inactivity.

17

SEC. 23.  

Section 15060 of the Insurance Code is amended to
18read:

19

15060.  

The amount of fees prescribed by this chapter is that
20in the following schedule:

21(a) The fee for the qualifying examination for an original license
22is sixty-two dollars ($62).

23(b) The application fee for an original branch office certificate
24is thirty-five dollars ($35).

25(c) The fee for an original license application is two hundred
26forty dollars ($240). If the license will expire less than one year
27after its issuance, then the fee is an amount equal to 50 percent of
28the renewal fee in effect on the last regular renewal date before
29the date on which the license is issued.

30(d) The renewal fees are as follows:

31(1) For a license as a public insurance adjuster, two hundred
32forty dollars ($240).

33(2) For a branch office certificate, fifty dollars ($50).

34(e) The fee for replacing an identification card is twenty-five
35dollars ($25).

36(f) The delinquency fee shall be 50 percent of the renewal fee
37in effect on the date of expiration.

38(g) The fee for reexamination of an applicant is twenty-five
39dollars ($25).

P21   1

SEC. 24.  

Section 15062 of the Insurance Code is amended to
2read:

3

15062.  

Application or license fees shall not be refunded
4pursuant to Section 1751.5.

5begin insert

begin insertSEC. 25.end insert  

end insert
begin insert

(a) Section 2.5 of this bill incorporates amendments
6to Section 1722 of the Insurance Code proposed by both this bill
7and Assembly Bill 2588. It shall only become operative if (1) both
8bills are enacted and become effective on or before January 1,
92017, (2) each bill amends Section 1722 of the Insurance Code,
10and (3) this bill is enacted after Assembly Bill 2588, in which case
11Section 2 of this bill shall not become operative.

12
(b) Section 3.5 of this bill incorporates amendments to Section
131751.5 of the Insurance Code proposed by both this bill and
14Assembly Bill 2588. It shall only become operative if (1) both bills
15are enacted and become effective on or before January 1, 2017,
16(2) each bill amends Section 1751.5 of the Insurance Code, and
17(3) this bill is enacted after Assembly Bill 2588, in which case
18Section 3 of this bill shall not become operative.

end insert
19

begin deleteSEC. 25.end delete
20
begin insertSEC. 26.end insert  

No reimbursement is required by this act pursuant to
21Section 6 of Article XIII B of the California Constitution because
22the only costs that may be incurred by a local agency or school
23district will be incurred because this act creates a new crime or
24infraction, eliminates a crime or infraction, or changes the penalty
25for a crime or infraction, within the meaning of Section 17556 of
26the Government Code, or changes the definition of a crime within
27the meaning of Section 6 of Article XIII B of the California
28Constitution.



O

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