Can a Public Adjuster Be a Contractor in Illinois?

Yes, a public adjuster can also act as a contractor in Illinois. Illinois is one of the few states that explicitly permits this dual role. However, this freedom also comes with some strong rules and regulations.

Countless people opt for this dual role without learning about the limitations. We explain the freedoms, limitations, potential profit, and fines. Want the brief version? We've got you  covered:

• Illinois explicitly allows contractors to act as licensed public adjusters on the same claim
• Without a license, contractors cannot legally negotiate coverage or insurance settlements
• Unlicensed public adjusting can void contracts and strip you of the right to recover payment
• Becoming a licensed public adjuster requires passing a Pearson VUE exam, a $50,000 surety bond, and NIPR application
• Licensed contractor-adjusters can earn 10% to 30% commission on top of repair revenue
• Full written financial disclosure is required before any client signs a public adjuster contract
• Public adjuster fees on personal residence claims are capped at 10% under Public Act 103-0216
• Illinois is more permissive on the dual role than most states across the U.S.

Can a Contractor Also Be a Public Adjuster in Illinois?

Yes, you can be a contractor and a public adjuster in Illinois. Illinois law does not prohibit a contractor from also holding a public adjuster license. In fact, Illinois is one of the most permissive states in the country on this issue.

A contracting company and a public adjusting firm can be owned by the same individual or entity. Employees can work across both businesses. Referral relationships between the two firms are permitted.

What matters is that the relationship should be fully disclosed to the insured before they sign anything. The legal authority is Article XLV of the Illinois Insurance Code and 50 Illinois Administrative Code Part 3118, both updated significantly by Public Act 103-0216 effective January 1, 2024.

What Contractors Can and Cannot Do Without a PA License

A contractor without a public adjuster license has a clearly defined boundary under Illinois law. Crossing it puts every contract and every unpaid invoice at risk.

What a Contractor Can Do Without a PA License

There are certain freedoms that every contractor gets even without a PA license. These freedoms include:

• Assessing property damage and preparing a repair estimate
• Discussing the physical scope of repairs with the homeowner
• Completing repairs once an insurance claim has been settled
• Referring a homeowner to a licensed public adjuster or attorney

What a Contractor Cannot Do Without a PA License

Without a public insurance adjuster license, a contractor CANNOT:

• Explain or interpret what is covered under the homeowner's insurance policy
• Negotiate a claim settlement with the insurance company on behalf of the insured
• Advocate for a higher payout from the insurer
• Solicit insurance claims on behalf of a homeowner after a loss event
• Sign agreements that grant the contractor rights to the insured's claim proceeds without proper licensure and contract approval

Under Section 1515 of the Illinois Insurance Code, only two parties can legally discuss a policyholder's coverage rights and negotiate with the insurer on their behalf:

• a licensed public adjuster
• an attorney

Any contractor who takes on that role without a license is in direct violation of state law. There are only two ways to avoid this violation:

1.  Do not act as a public adjuster
2. Get a public adjuster license

Some people opt for the second option because it also has added benefits.

Benefits of the Contractor and Public Adjuster Dual Role

A licensed contractor-adjuster can assess the damage, negotiate the settlement on the insured's behalf, and then recommend their own firm for the repair work. The revenue model compounds at every stage of the claim.

Financial Benefits

The main reason people opt for a dual role is revenue and financial benefits. For example:

• Public adjusters earn commissions of 10% to 30% of the insurance settlement on top of any repair revenue.
• On a $60,000 storm claim, a 15% commission adds $9,000 before a single shingle is nailed.
• Catastrophic loss claims can settle at $150,000 or more, generating $15,000 to $45,000 in commission alone.

According to our and the Labor Bureau's stats, the average Illinois public adjuster earns around $67,000 annually. Contractor-adjusters who control both the claim and the repair often exceed that figure in a single active storm season.

Business and Competitive Benefits

Being a contracter-adjuster gives you a competitive edge. This happens because:

• You become the advocate first and the contractor second, building deeper client trust.
• Homeowners who feel represented fairly refer aggressively within their networks.
• The dual credential sets you apart from contractors who can only discuss damage.
• You control the scope of work from claim assessment through final repair, reducing scope disputes and change orders.

Illinois is one of the few states that explicitly allows this arrangement. That makes the credential far more valuable here than in states where the dual role is banned.

Client Benefits That Drive Your Reputation

There are even more benefits to the dual role when you're good at it. Since a contractor can also act as an adjuster:

• Clients get a single point of contact who understands both the construction scope and the insurance coverage.
• A contractor with adjusting knowledge fights harder for complete recovery, including line items that a general public adjuster without construction experience might miss.
• Clients move from loss to repaired property faster with fewer hand-offs between professionals.

Essentially, you keep your clients more happy and improve your reputation more quickly. It all starts with getting just one public adjuster license. Join our PA classes and start your journey today!

Risks of the Contractor and Public Adjuster Dual Role

The dual role is legal in Illinois, but it carries real risks if not managed with strict compliance. Cutting corners on disclosure or fee rules puts your license, your contracts, and your revenue at risk simultaneously.

Compliance Risks

Two roles also means two sets of compliance standards. You'll have to meet both to operate legally. You will be at a compliance risk if you:

• Fail to disclose the financial relationship between your adjusting firm and contracting firm before the client signs, in violation of Section 1575(d) of the IL Insurance Code.
• Vary your public adjuster fee based on whether the client uses your affiliated contractor violates Rule 3118.90, which results in contract rejection by the IDOI.
• Allow the contractor to pay your public adjuster fee in exchange for client referral, which is prohibited under IDOI Company Bulletin 2024-16 as a fee waiver scheme.

Any contract that violates Section 1515 or Section 1575 of the Illinois Insurance Code is null and void, meaning you cannot enforce payment or a mechanics lien.

Reputation and Relationship Risks

There are certain reputational risk as well that you must be prepared for. This includes repuation risks like:

• Clients who feel steered toward your contracting firm may question whether you negotiated the best settlement for them or the best scope for yourself.
• A single complaint to the IDOI can trigger a regulatory investigation of both your adjusting license and your contracting business simultaneously.
• Insurance company representatives are aware of the dual role arrangement in Illinois and may scrutinize claims handled by contractor-adjusters more closely.

Operational Risks

The final set of risks is more personal and something you have to manage. These include problems like:

• Managing two licensed roles requires disciplined recordkeeping under Section 1585 of the Illinois Insurance Code. Every transaction must be fully documented for every client file
• Unlicensed employees or subcontractors cannot perform public adjusting activities on your behalf. Section 1590(c) prohibits allowing any unlicensed representative to conduct business that requires a license.
• Failing to renew your public adjuster license every 2 years, or falling out of CE compliance, immediately strips your legal authority to adjust claims while your contracting work continues.

Disclosure Rules for the Dual Role in Illinois

Illinois law requires full written financial disclosure to every client before they sign anything. This is not optional and a vague general statement does not satisfy the requirement.

Under Section 1575(d) of the Illinois Insurance Code, the disclosure must cover:

• Any ownership interest you hold in any contracting, salvage, or repair firm involved in the claim
• Any compensation you expect to receive from the contractor if the client uses their services
• Any shared employees between your adjusting and contracting operations
• Any referral fee arrangement between the two businesses in either direction

Every client must also receive the Consumer Rights Notice before signing. This notice states clearly that the client is not required to use your recommended contractor and has the right to get quotes from any vendor of their choice.

All disclosures and the Consumer Rights Notice must be delivered before the insured signs the public adjuster contract. Not after. Not at the same time. Before.

Fee Structure and Commission

As a licensed public adjuster, your fee is a percentage of the insurance settlement and must be stated precisely in your written contract.

• Residential claims (personal residence): capped at 10% of the net insurance settlement paid by the insurer under Public Act 103-0216 effective January 1, 2024
• Commercial property claims: no statutory cap, but fees must still be fully disclosed and agreed upon in writing
• Typical market commission range in Illinois: 10% to 30% depending on claim complexity and settlement size
• Fees may never include the deductible amount: Commission is calculated on net claim payment from the insurer only
• All expense reimbursements must be itemized by type with dollar estimates in the contract. Additional expenses require written client approval before they are incurred

What Happens When a Contractor Acts as an Unlicensed Public Adjuster

The consequences are immediate and financially devastating. In Power Dry of Chicago, Inc. v. Bean (No. 2-21-0043, Ill. App. Feb. 28, 2022), an Illinois appellate court ruled that a restoration contractor acting as an unlicensed public adjuster had entered into a void and unenforceable contract.

The contractor could not enforce a mechanics lien and could not recover payment for services already performed. The contract was null and void from the start. Beyond lost payment, the penalties under Illinois law include:

• Fines up to $10,000 per violation
• Total fines up to $100,000 for patterns of violations
• Injunctive action by the Illinois Attorney General to immediately stop the practice
• Misappropriating claim funds as an unlicensed adjuster is a Class 4 felony under Section 1610 of the Illinois Insurance Code

Restoration contractors who:

• Explain policy coverage
• Talk to insurance adjusters about settlement values
• Sign assignment of benefit agreements that grant them rights to claim proceeds

Are almost certainly operating in unlicensed public adjuster territory. The compliant solution is to get the license or stop those activities entirely.

How to Become a Licensed Public Adjuster as a Contractor

The path to becoming a licensed public adjuster is the same for both contractors and non-contractors. You'll have to:

1. Register for the exam through Pearson VUE. Pay the $92 examination fee. You can schedule up to one day before your exam date.
2. Pass the Illinois public adjuster exam. A minimum score of 70% is required. Preparation typically takes several weeks of structured study and understanding of key public adjuster terminologies.
3. Obtain a $50,000 surety bond. Required by the IDOI before your license is issued. The bond amount increased from $20,000 to $50,000 effective January 1, 2024. Upload the bond to the NIPR Attachments Warehouse with your application.
4. Complete fingerprinting. Use an Illinois-approved Live Scan vendor. Results go directly to the Illinois State Police and the FBI. No license is issued until the Department receives the results.
5. Get your public adjuster contract approved. File your contract with the Illinois Director of Insurance before entering into agreements with any insured. The IDOI offers a 2024 contract template and checklist. Contract approval and license issuance are two separate processes. Confirm both before signing your first client.
6. Apply through NIPR and pay the $250 license fee. Submit everything electronically through NIPR. Paper applications are returned without review.

The full process typically takes 4 to 6 weeks from exam registration to license issuance, assuming all documents are submitted correctly the first time.

Public Adjuster School and Exam Prep for Contractors

The exam is difficult for contractors who self-study without structure. The public adjuster study resources span Illinois insurance law, claim procedures, ethics, and industry terminology that most contractors have not encountered in trade training.

That's why 8 out of 10 first-time examinees fail the exam. We've helped countless aspiring adjusters pass the exam and acquire their licenses. Our 3-day course delivers:

• A distilled and effective study guide
• Daily quizzes and in-class practice exams with instant feedback
• Coverage of Illinois regulations and insurance laws from the ground up
• Access to a network of experienced public adjusters and contractors after licensing

We help you build skills that will help you even after the exam. Those skills are what turn a licensed contractor-adjuster into an effective advocate who generates referrals through real results. Join our classes now and kickstart your dual career!

FAQ: Public Adjuster and Contractor in Illinois

Can a contractor act as a public adjuster in Illinois?

Yes. Illinois allows a licensed contractor to also act as a public adjuster on the same claim. The contractor must hold a valid Illinois public adjuster license issued through NIPR before engaging in any adjusting activity. Operating without that license exposes the contractor to voided contracts, fines up to $10,000 per violation, and potential injunctive action by the Illinois Attorney General.

How does a contractor get a public adjuster license in Illinois?

The contractor must pass the Pearson VUE public adjuster exam, obtain a $50,000 surety bond, complete fingerprinting through an approved Live Scan vendor, receive IDOI approval for a public adjuster contract, and apply through NIPR with a $250 fee. The full process typically takes 4 to 6 weeks from exam registration to license issuance.

How hard is the Illinois public adjuster exam?

The exam is multiple choice, requires a 70% passing score, and covers Illinois insurance law, ethics, claim procedures, and policy terminology. Notes are not permitted. Many candidates fail on the first attempt without structured preparation. Contractors Network and Training Center in Chicago reports a 95% pass rate among contractors who complete their 3-day prep course before sitting the exam.

How much can a contractor earn as a licensed public adjuster?

Illinois public adjusters make commissions of 10% to 30% of the insurance settlement. On an $80,000 storm claim at 15%, that is $12,000 in commission before any repair revenue. Contractor-adjusters who control both the claim and the repair work on larger losses can generate total project revenue that significantly exceeds what either role produces alone.

Must I disclose my contracting business to clients as a public adjuster?

Yes, Section 1575(d) of the Illinois Insurance Code requires full written disclosure of every financial interest you hold in any contracting or repair business involved in the claim. The disclosure must be specific about both the nature and the amount of that interest. It must be delivered before the client signs the public adjuster contract, along with the Consumer Rights Notice confirming the client is free to use any contractor they choose.

What are the biggest risks of combining public adjusting and contracting?

The biggest risks are compliance failures around disclosure and fee structure. Failing to disclose the financial relationship, varying your public adjuster fee based on contractor choice, or allowing your contractor to pay your adjusting fee as a client incentive all violate Illinois law and can result in contract voidance and regulatory action.

Bottom Line on Contractors Becoming Public Adjusters

Illinois allows the contractor-adjuster dual role more openly than almost any other state. Done right, it creates a genuinely more valuable service for homeowners, a stronger revenue model for your business, and a competitive position that unlicensed contractors simply cannot match.

On the flipside, a dual-role is harder to manage and achieve, especially when you're inexperienced. 80% of people fail to overcome the first barrier, the public adjuster exam.