Bill
HB 3426
The bill raises caps and expands reimbursements for public adjusters, strengthens repair matching, and broadens claims practices in Illinois property insurance.
Status and timeline
- Introduced by Rep. Brad Stephens (filed Feb 26, 2025; first read Feb 18, 2025).
- Committee activity March–April 2025 (hearings, favorable report).
- Passed the originating chamber on third reading on May 6, 2025 (record votes noted); transmitted to the other chamber and subject to further rules/committee referral.
- Amends multiple provisions of the Illinois Insurance Code (215 ILCS 5/Sections 154.6, 155, 397.1, 1570, 1575, 1590).
Main purpose
- Modify claims-handling, fee, and public-adjuster rules in Illinois insurance law. Key changes increase statutory fee caps, expand what public adjusters can be reimbursed for, tighten replacement-cost repair obligations, and change certain procedural thresholds for insurer payment.
Key provisions and substantive changes
- Attorney-fee cap increase: Raises one of the statutory caps on attorney/claimant recovery in insurer litigation from $60,000 to $240,000 (amendment to Section 155). The court may award reasonable attorney fees and costs when insurer conduct (e.g., vexatious delay) meets statutory standards; one of the maximum statutory dollar caps is increased to $240,000.
- Certificate-before-payment threshold: Where a required certificate is needed before an insurer may pay a fire/explosion claim for a structure, the recoverable-loss threshold triggering that requirement is increased from $25,000 to $100,000 (synopsis language).
- Replacement-cost/repair matching: When replacement of an item for covered real‑property loss is required and the replacement does not match adjacent items (quality, color, size), the insurer must replace with material of like kind and quality so as to conform to a reasonably uniform appearance. Applies to interior and exterior covered losses (amendment to Section 154.6).
- Public adjuster compensation and expense reimbursement:
- Expenses reimbursed to a public adjuster are excluded from the 10% cap on a public adjuster’s salary/fee/commission/compensation.
- Reimbursable expenses are not limited to emergency mitigation and must be reimbursed regardless of whether the expense is covered under the insured’s policy.
- Policies must be individually underwritten for personal/family/household use (language included).
- The named insured’s public adjuster and the named insured’s attorney are explicitly included as designees (for purposes of designation/representation).
- Other consumer-protection and claims-practice clarifications: Adds/clarifies acts constituting improper claims practices (e.g., replacement-cost consequences, investigation standards, repairer licensing verification).
Who is affected
- Insurers writing property and casualty insurance in Illinois — increased potential liability exposure (larger attorney-fee cap, broader reimbursable expenses, repair/matching obligations).
- Insureds and claimants — strengthened repair/replace and reimbursement rights; broader scope for public adjuster reimbursement and representation.
- Public adjusters and insureds’ attorneys — expanded reimbursable expense protections and clearer recognition as designees.
- Repairers/vehicle shops — continued/clarified verification/licensing requirements under claims standards.
- Potential downstream effect: insurers may factor changes into underwriting, reserves, or premiums.
Potential impacts and considerations
- Financial exposure: higher statutory cap on recoverable fees and broader reimbursable expenses could increase claim costs and litigation risk for insurers.
- Consumer protections: improves prospects for better-matching repairs and broader reimbursement of adjuster-related expenses for insureds.
- Administrative: insurers must adopt practices to meet matching and reimbursement requirements and to track new descriptive thresholds (e.g., $100,000 certificate trigger).
- Implementation and litigation: precise scope of “expenses” and how reimbursement interacts with policy terms could be clarified by future regulation or court interpretation.
Sections amended (selected): 215 ILCS 5/154.6, 5/155, 5/397.1, 5/1570, 5/1575, 5/1590.
Compiled from official sources — confirm details with the bill’s official record.
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