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Coverage Related to Business and Property Damage Losses, Including but not Limited to Those Arising Out of Vandalism and Looting PDF CB 2020-15

Consumer Resources


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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Listed below are some common homeowners insurance definitions.

Actual Cash Value: Replacement cost less depreciation, considering the age and condition of your property.

Additional Living Expenses: Pays expenses over and above your normal living costs (motel rooms, restaurant meals, and laundry service) while your home is being repaired or rebuilt after damage from an insured loss.

Agent: A representative who sells insurance for one or more companies.

Application: A signed request for insurance, giving information about the prospective policyholder

Appraisal: An evaluation of your property.

Binder: A temporary or preliminary agreement, which provides coverage until a policy can be written or delivered.

Broker: A licensed person or organization you can pay to shop for insurance on your behalf.

Builders Risk: Coverage for a home under construction. Claim payments are based on the percentage completed at time of loss. This coverage must be changed to a homeowners policy upon completion of the building.

Cancellation: Termination of a policy before its normal expiration date.

Claim: Your request for the insurance company to pay you an amount under the terms of your policy.

Claims Adjuster: A person an insurance company hires to settle claims. The adjuster could either be a company employee or under contract with the company.

Coinsurance Clause: An agreement with the insurance company in which you agree to carry insurance on your property in an amount equal to a certain percentage of its actual cash value.

Covered Expenses: The losses or conditions the policy will pay for.

Deductible: The dollar amount you must pay out-of-pocket for each claim before the insurance company begins paying.

Depreciation: Decrease in home or property value due to age or wear and tear.

Earthquake Insurance: A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by an earthquake. Standard home insurance policies do not cover earthquake insurance.

Endorsement: Amendment to the policy used to add, change, or delete coverage. Also referred to as a "rider."

Exclusions: Specific situations or circumstances listed in your policy describing when benefits will not be paid. Typical homeowners insurance exclusions are earthquake, sewer backup/sump pump failure, ordinance or law, and intentional loss.

Floater: Additional coverage for personal property such as jewelry, artwork, or antiques not otherwise included in the homeowners policy, or included for a nominal coverage amount. The coverage "floats" or moves with the property. Also called "Scheduled Personal Property Endorsement."

Flood Insurance: A type of catastrophic coverage available for an additional premium to repair or replace your property/personal belongings when damaged by rising water. Standard home insurance policies do not cover flood insurance. If your property is located on a flood plain, your lender may require you to purchase flood insurance.

Full Replacement Policy: A homeowners policy that pays the full replacement cost (up to the policy maximum) to repair or restore damaged property.

Guaranteed Replacement Cost Coverage: Endorsement that lets you replace your home without subtracting for depreciation, even if it costs more than the policy limit. Most companies limit the guaranteed replacement cost to 125%.

HO Forms: Homeowners insurance polices are sometimes referred to by the kind of form used and the specific perils they cover. Examples are HO2, HO3, HO4, HO5, HO6, and HO8.

Home Inventory: A detailed list of personal possessions and any information (including pictures or videos) that could help identify lost or destroyed items.

Illinois FAIR (Fair Access to Insurance Requirements) Plan: A not-for-profit property insurance association that offers insurance to individuals who have been refused coverage by at least three insurance companies.

Illinois Insurance Guaranty Fund: A fund that pays an insurer's claims when the company is insolvent. All Illinois-licensed insurance companies belong to the Illinois Guaranty Fund.

Inflation Guard Endorsement: A special endorsement that increases the face amount of a homeowners policy on a regular basis to compensate for the increasing costs of home construction.

Inspection Report: A report filed by an individual employed by the insurance company or credit agency, giving general information on the physical condition of the property.

Insured: The policyholder or person(s) protected in case of a loss/claim.

Insurer: The insurance company.

Lapsed Policy: A policy that has terminated for non-payment of premiums.

Liability Coverage: Insurance protection that pays for claims or judgments brought against the insured.

Market Value: A real estate term for the current value of your home if you were to sell it. Market value includes the price of land, and is not generally used when settling insurance claims.

Mine Subsidence Insurance: Pays when an underground mine shifts, causing damage to your property. Insurance companies must offer mine subsidence insurance in counties where mines are under one percent or more of the land. Underground mines are common in central and southern Illinois, but other areas of the state may be affected as well. You must sign a rejection form to remove this coverage if you live in a county where mine subsidence insurance is required.

Non-Bound Application: There is no coverage involved and you pay no money. The insurance agent submits the application to the company to find out whether or not you will be accepted.

Non-renewal: A notice of the insurance company’s refusal to renew your policy prior to the end of the policy term.

Peril: Event causing damage to your property (for example: fire, tornado, theft, or vandalism).

Personal Property: Personal belongings such as furniture, appliances, clothes, jewelry, and bicycles.

Private Mortgage Insurance (PMI): Insurance that provides financial protection to your lender if you default on your mortgage payment. By purchasing PMI, a homebuyer may be able to obtain a mortgage with little or no down payment.

Policy: The contract form issued by the company to explain the coverage provided. It is a legal document.

Premium: The price charged for insurance.

Public Adjuster: A person you can hire to help settle a claim with an insurance company. A public adjuster may be hired to handle a complex or difficult loss negotiation. Generally, the public adjuster receives a percentage of the settlement reached. In Illinois, a public adjuster must be licensed with the Department of Insurance.

Real Property: Property considered to be immovable, such as land and things affixed to it.

Replacement Cost: A determination of the cost to replace contents, rebuild your home, or repair damages with materials of like kind and quality, without subtracting for depreciation.

Settlement: After negotiating, the amount you accept from the insurance company as full payment for your loss.

Sewer Back-up and Sump Pump Overflow Coverage: Coverage available for an additional premium to your homeowners insurance policy that pays for damage to your finished basement caused by water or waterborne material which backs up through a sewer, drain or overflow or is discharged from a sump pump overflow. Water seepage is not covered.

Title Insurance: Protection against any defect in the title to your property. Title insurance can be paid for by either the buyer or seller and is usually paid for when the home is purchased.

Umbrella Liability Insurance: A policy that "floats" above your other coverage. You must carry a certain amount of underlying liability coverage before you may buy an umbrella policy. This coverage kicks in if you are sued for an amount greater than the limits of your homeowners policy.

Watercraft Endorsement: Applies to small motorboats and sailboats and broadens your personal liability and medical payments coverage on them. If your watercraft exceeds a specified length, you will need a separate boat owners or yacht policy.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov

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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department. If your homeowner’s insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:

  • rescission - when the company voids your policy back to the beginning. There is no coverage at all and the company will return the money you paid;
  • cancellation - when the company terminates your policy before the expiration date;
  • nonrenewal - when the company terminates your policy at the expiration date.

A company’s duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. Furthermore, your rights and your insurer’s responsibilities depend upon the nature of the policy, as well as the length for which the policy has been in effect. This fact sheet explains what happens when your private homeowner’s insurance policy is being nonrenewed at its expiration date.

Is My Policy a Private Homeowner’s Policy?

A private homeowner’s policy is sometimes referred to as a “policy of fire and extended coverage insurance.” These policies cover real property that is used principally for residential purposes, usually including a building that houses up to 4 families. Typically, the policies also cover any household or personal property that is commonly used for daily life. If your policy is not for residential purposes, but rather covers a commercial building, the following information may not be applicable.

Why Can My Insurer Nonrenew My Policy?

A company may nonrenew your private homeowner’s policy for different reasons depending upon the duration that your policy has been in force. If your policy has been continuously active less than 5 years, please see Nonrenewal of Private Homeowner’s Insurance Policy Active for Less Than 5 Years.  If your policy has been continuously active for 5 or more years, please see the appropriate section below labeledNonrenewal of Private Homeowner’s Insurance Policy Active for 5 or More Years.

Nonrenewal of Private Homeowner’s Insurance Policy Active for Less Than 5 Years

Reason for Nonrenewal

A company may nonrenew your homeowner’s policy for any reason except age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants.

If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.

A company is prohibited from nonrenewing your homewowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.

Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.

Notice

The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:

  1. You have the right to appeal the nonrenewal as explained below under Hearing Rights.
  2. You may be eligible to buy insurance from the Illinois FAIR Plan Association if you cannot find coverage elsewhere.

Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.

Mailing Time

The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:

  • At least 30 days before the nonrenewal date if the policy has been in force less than 5 years

The company must keep proofthat it mailed your notice, but it does not have to show proof that you received it.

Hearing Rights

If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.

If your hearing is granted, we will send you written notice about the time and date of the hearing.

For More Information

Call our Consumer Services Section at (312) 814-2420 or our Consumer Assistance Hotline toll free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov/

Nonrenewal of Private Homeowner’s Insurance Policy Active for 5 or More Years

Reason for Nonrenewal

A company may elect to not renew your homeowner’s policy for a limited set of reasons if it provides 30 days written notice, or for nearly any reason if it provides you with 60 days written notice (the limited reasons for 30 days notice are available below).  In either case, your insurer may not nonrenew your policy for reasons of age or location of the property, or the age, gender, race, color, ancestry, marital status or occupation of the occupants.  If the company nonrenews your policy because the property condition has declined, the company must allow you time (not more than 90 days) to make required repairs.

Furthermore, a company is prohibited from nonrenewing your homeowner's policy based solely on credit report information. If credit information from your credit report is used to nonrenew your insurance policy, the insurer must provide you with the name of the national credit bureau that supplied the information so that you can get a free copy of your credit report. For more information about credit scoring, see our fact sheet entitled Understanding How Insurers Use Credit Information.

Effective January 1, 2003, an insurer is prohibited from nonrenewing your homeowner’s policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.

30 days written notice

When the company has mailed written notice of nonrenewal of a policy that has been in effect 5 years or more only 30 days before the nonrenewal date, an insurer may only decide to nonrenew your policy for the following reasons:

  1. The insured initially obtained the policy through giving misleading or incorrect information to the insurer; or
  2. A significant change has occurred such that there is a measurably greater chance an unfortunate event will affect the property. 

For all other reasons, your company must mail you written notice 60 days in advance of nonrenewal.

Notice

The company must send you a written notice explaining why it is nonrenewing your policy. The notice must clearly articulate the specific reason(s) for nonrenewal. The company may not simply state “fraud” or “misrepresentation,” but rather provide factual basis for such reason(s). The notice must also explain two important items:

  1. You have the right to appeal the nonrenewal as explained below under Hearing Rights.
  2. You may be eligible to buy insurance from the Illinois FAIR Plan Association if you cannot find coverage elsewhere.

Note: If your insurer merges or restructures with another company, or if your insurer reclassifies your policy (possibly due to an excess of claims), the company must mail you a notice about the change 60 days prior to a change in your policy.

Mailing Time

The company must mail a nonrenewal notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your nonrenewal notice:

  • At least 30 days before the nonrenewal date only if the reason for nonrenewal is one of the limited reasons above; or
  • For almost any other reason, at least 60 days before the nonrenewal date.

The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.

Hearing Rights

If you believe your company failed to follow the required steps when nonrenewing your policy, you may appeal the nonrenewal to the Director of Insurance. To do so, you must mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the expiration date, explaining in detail why you believe the company has improperly nonrenewed your policy.

If your hearing is granted, we will send you written notice about the time and date of the hearing.

For More Information

Call our Consumer Assistance Hotline Toll Free at (866) 445-5364 or visit us on our website at insurance.illinois.gov


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Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

During the past few years, a growing number of Illinois residents have become concerned about mold in their homes or businesses. This fact sheet is designed to give you some general information about mold, and how Illinois insurers are responding to mold concerns. This information can generally apply to renters, condo owners, and business properties, as well as to homeowners.

Can Mold Become A Problem In My Home?

Yes. Molds will grow where conditions allow. Molds require two things to grow – a food source and moisture. Food sources can be anything from dry wall and insulation to carpeting or mattresses. Moisture can come from many sources, including high humidity levels, leaky pipes or appliance hoses, neglected or inadequately repaired roofs, improperly maintained air conditioners, landscape and drainage problems, etc.

Should I Be Concerned About Mold In My Home?

Yes. Indoor mold growth is unsanitary and undesirable. If you can see or smell mold inside your home, you should take steps to eliminate the cause and clean up and remove the mold.

If left unchecked mold growth can become more serious and may cause health-related problems and structural damage to your home.

Are Molds a Health Concern?

According to the Centers for Disease Control, exposure to mold does not necessarily result in a health problem. Molds have existed for thousands of years and there are over 100,000 kinds of mold. Most people touch, eat, or breathe some mold every day without ill effects. There is even mold in fresh air.

If mold growth is active, extensive, and persistent, it has the potential to cause health problems, the most common of which are allergic reactions such as wheezing, sneezing, coughing, eye irritation, etc.

While many people seldom experience ill effects from mold exposure, some individuals are more sensitive to molds than others. The same amount of mold may cause health problems in one person, but not in another. The Illinois Department of Public Health identifies those who may be at greater risk for more severe symptoms or illness as individuals with existing respiratory conditions such as allergies, asthma, or chemical sensitivities; individuals with weakened immune systems; infants and young children; and the elderly.

Do Homeowners Insurance Policies Cover Mold Damage?

It depends on what caused the mold and the policy coverage you have. Molds need water or moisture to grow, but not all causes of water damage are covered by homeowners insurance policies.

For example, standard homeowners policies do not cover water damage caused by “maintenance” problems, such as continuous or repeated water seepage or leakage, humidity or condensation problems, or landscaping or drainage problems. Homeowners policies also exclude water damage caused by floods. Therefore, if one of these water or moisture problems results in mold, it would probably not be covered by your policy.

Standard homeowners policies do cover some types of sudden and accidental water losses, including burst pipes, and sometimes sewer back up or sump pump failure if you have that coverage. However, even if your policy covers these types of water damage, some companies have begun to specifically exclude or limit coverage for mold that results.

In Illinois, if mold results from water damage following a covered fire or lightning loss, the mold damage would be covered, and the total of all damages, including the mold, is subject to the full policy limit.

How Do I Know if My Homeowners Policy Will Cover Mold?

Read your policy and all endorsements. Some companies have taken steps to avoid or limit their exposure to mold claims by:

  • Excluding all coverage for mold-related damage (except mold that results from a covered fire/lightning loss as stated above).
  • Excluding all coverage for mold-related claims, but offering buy-back endorsements, which provide some mold coverage if you pay extra money.
  • Providing a limited amount of coverage for mold-related claims, either by limiting the amount of money available to pay mold-related claims (e.g. $5000); or by paying for some mold-related expenses, such as clean-up, and excluding others, such as remediation and testing.
  • Providing coverage for mold-related claims in the policy and increasing the price of the policy to pay for anticipated costs.
  • Placing tighter restrictions on what kinds of homes they will insure, such as refusing to insure homes that have suffered previous water damage, or homes that are built of certain construction materials such as synthetic stucco.


If you’re unsure whether you have mold coverage or the amount of coverage you have, contact your insurance agent or company for further explanations.

Regardless of whether your insurance pays for any mold claims, you should take steps now to prevent mold growth in your home due to maintenance issues, and act quickly when water losses occur.

What Can I Do to Prevent Mold from Growing in My Home?

Since mold needs a food source and moisture to grow, the best thing you can do is to prevent moisture problems that allow mold to grow.

There are many sources of information listed at the bottom of this fact sheet that explain in more detail how to prevent moisture problems, but here are a few things to get you started:

  • Maintain lower levels of humidity in your home (preferably between 30-50%) by: venting bathrooms and dryers to the outside; using air conditioners and de-humidifiers; increasing ventilation by adding crawlspace and attic vents; using exhaust fans when cooking, dishwashing, and cleaning, etc.
  • Add insulation to reduce the potential for condensation on cold surfaces such as windows, pipes, exterior walls, roofs, or floors.
  • Inspect your home regularly for indications and sources of indoor moisture such as leaking pipes, appliance hoses, showers, tubs, sinks and toilets. Replace plastic hoses with steel-reinforced hoses. Check windows, doors, attics and ceilings for leaks or evidence of water stains or odors, particularly after rains. Fix plumbing, flashing, and roof leaks right away.
  • Don't carpet bathrooms, basements, kitchens or other areas prone to moisture. Clean bathrooms often with mold killing products and keep surfaces dry.
  • Cover dirt in crawlspaces with a moisture barrier plastic sheeting.
  • Prevent water from entering basements and crawlspaces by repairing holes and cracks in walls and foundation. Use landscaping to direct water away from your foundation.
  • Clean and maintain your gutters and make sure drainpipes carry water several feet away from your home.
  • Watch your utility bills. An abnormally high water bill could signal a water leak.
  • Before you travel, turn off the water at the main valve. Have a trusted friend or neighbor check the inside and outside of your home periodically while you're away.

What Should I Do if I Have a Water Loss in My Home?

Contact your insurance company right away to report the water claim even if you are unsure whether your insurance policy covers the water loss and/or resulting mold. Have your policy number handy and be prepared to answer questions about the extent and severity of the water damage. 

Regardless of whether your insurance policy covers the water loss or resulting mold, you should take immediate action to protect your property and prevent mold growth that could cause further damage.

Mold can start to grow as soon as 24-48 hours after a water problem occurs. Mold will probably not grow if you clean up the water immediately and stop the source of the leak. Here are some steps you can take:

  • Immediately stop the source of leaking or flooding by shutting off the water or contacting a plumber if necessary. If the loss is covered by insurance, your policy allows you to make reasonable and necessary repairs to protect the property. However you should not make large structural or permanent repairs until your insurer has inspected the damage.
  • Remove excess water with mops and/or a wet vacuum. If there is a lot of water damage, you may want to contact a water extraction/drying company for immediate action. If many homes are affected, you may be placed on a waiting list.
  • Dry the damaged areas and items as soon as possible (preferably within 24-48 hours) by moving rugs, pulling up areas of wet carpet, and removing wallboard and flooring materials. Increase circulation by opening closet and cabinet doors, moving furniture away from the walls, and running fans.
  • Keep all removed and damaged materials for your insurance company to view. Keep all receipts, photos and other relevant information necessary to document the loss and expenses you incurred to minimize the damage.

Should I Have My Home Tested for Mold?

Testing for mold is difficult, time-consuming, and expensive. The Illinois Department of Public Health does not currently recommend mold testing since there are no standards about how much mold is acceptable, and testing cannot determine which, if any, health problems will occur.

In most cases, if you can see mold, don’t waste the time or money testing it. Instead, fix the source of the moisture problem, and clean up the mold.

Should I Move out of My Home if I Discover a Mold Problem?

If you are concerned about possible health risks from mold growth in your home, you should consult a physician. While experts agree that there is no current scientific evidence that links specific levels of mold to serious health problems, some individuals appear to be more susceptible to mold allergies and problems than others.

If your homeowners insurance policy provides coverage for mold-related loss, you and your insurance company will discuss the need for you or a family member to move out of the house. If you need to move out, discuss with your insurer how much money is available for additional living expenses (ALE) and whether that amount is in addition to other mold coverage. Additional living expenses are limited under most policies and only cover amounts over and above your normal living expenses.

How Should I Clean Mold That is Growing in My Home?

The Illinois Department of Public Health, the Centers for Disease Control (CDC) and the federal Environmental Protection Agency, as well as other authorities, have consumer brochures and web sites that explain how best to clean up mold from your home. See their contact information at the bottom of this fact sheet. However, here are some general tips:

First, make sure that the cause of the moisture or water problem has been permanently fixed. If it hasn’t, the mold growth may recur.

  • You probably shouldn't clean the area yourself if you are pregnant, have asthma, other respiratory or pulmonary problems, or a weakened immune system.
  • Ventilate the area well by opening doors and windows.
  • Start with a non-ammonia soap or detergent and hot water or a commercial cleaner. Thoroughly scrub all contaminated surfaces. Rinse with clean water.
  • Clean and disinfect non-porous surfaces, such as tile, wood and concrete floors and walls, with a bleach mixture (one part bleach to ten parts water). Wear protective gloves, a dust mask or respirator, and eye protection and don't ever mix bleach with ammonia or products containing ammonia since the vapors would be toxic.
  • Apply the bleach solution by wiping it on with a sponge or rag. Be sure to wet the studs, wall cavities, and floors thoroughly.
  • Allow the bleach solution to dry naturally for a 6-8 hour period.
  • Porous, moist, fibrous materials, such as sheet rock, insulation, and paper should probably be discarded if they harbor mold.

If I Can't Clean or Remove the Mold Myself, How Should I Choose a Mold Remediator?

Currently, mold remediators are not required to be licensed and there are no standards or certifications for mold remediation specialists or other indoor air quality contractors. Because there is no state or federal oversight of these contractors, you should be cautious about signing contracts and avoid being taken advantage of by unscrupulous mold remediators. Here are some tips when choosing someone to clean up and remove any mold in your home:

  • Even if you don't have insurance coverage for mold, your insurance company may be a good resource. Ask your insurance company or agent if they have a list of recommended specialists, but keep in mind that the final choice is yours to make.
  • Ask the contractor how experienced he is in removing mold from homes and make sure that he has any necessary safety equipment to do the job.
  • Ask the contractor to give you a list of references and proof of education in mold remediation and related areas.
  • Ask to see written company operating procedures and proof that the company carries insurance.
  • Obtain a written contract that includes estimated completion dates for various stages of the work.
  • Diligently monitor and supervise the remediation and repair process to ensure that work is progressing and completed in a timely fashion.

The remediation and repair of your home can cost thousands of dollars. Therefore it is important to be selective in your choice of a mold remediation specialist.

What if I Have a Complaint About My Homeowners Insurance Policy or Claim as It Relates to Mold?

Call the Department of Insurance Consumer Assistance Hotline toll free at (866) 445-5364 or visit our website at:http://insurance.illinois.gov.

Where Can I Get More Information About Mold and Its Health Effects or Clean Up?

  • Federal Emergency Management Agency (FEMA)


Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

Fires and natural disasters are unforeseen and unpredictable, and the recovery process can be overwhelming.  If your property or home was insured you will have to work through your company’s claims process, and you may be approached by an “insurance adjuster” who claims he or she can obtain a more favorable settlement from your insurance company.  You should always be suspicious of any individual offering a service or benefit that sounds or appears “too good to be true” and contact the Department before entering into a contract or formal agreement that raises questions or suspicion.

This fact sheet provides information about public adjusters and answers some frequently asked questions.  For more information please visit insurance.illinois.gov or call the Department toll-free at (866) 445-5364.

What is an adjuster?

There are three types of insurance adjusters:

  • A “company adjuster" is an employee of your insurance company. They represent the interest of the insurance company and are paid by the insurance company. They will not charge you a fee.
  • An “independent adjuster" is hired on a contract basis by your insurance company to represent the insurance company's interest in the settlement of your claim. They are paid by your insurance company. They will not charge you a fee.
  • A “public adjuster" does not work for any insurance company, is not a public employee, and does not work on behalf of the State of Illinois, Department of Insurance, or any other public agency. They work for you to assist in the preparation, presentation and settlement of your claim. You hire a public adjuster by signing a contract agreeing to pay a fee or commission based on a percentage of your settlement, or other method of compensation.

Do I have to hire a public adjuster to deal with my insurance company?

No. Many consumer find that the services offered by public adjusters can be performed, for free, by trained insurance company staff.  You may wish to speak with Department staff before engaging the services of a public adjuster.

Your insurance company also has knowledgeable claim adjusters who are available to assist you with the claim process.

Is a public adjuster’s fee covered in my insurance policy?

No.  Insurance policies do not cover the fees of a public adjuster.

How does a public adjuster get paid?

You must pay for the services provided by a public adjuster.  Typically, public adjuster’s charge a fee equal to a certain percentage of the claim paid by your insurance company.  In other words, after your insurance company settles your insurance claim, the public adjuster could take a percentage of that settlement. 

Are public adjuster fees negotiable?

Yes.  All fees charged by the public adjuster can and should be negotiated.

Who will my insurance company work with after I hire a public adjuster?

Once you sign a contract with a public adjuster, the public adjuster will notify your insurance company, who will then send all correspondence to your public adjuster.  You should ask the public adjuster to routinely update you on the progress of your claim. The insurance proceeds will be sent to you and you must then give the adjuster the fee that you agreed to on the contract with him.

Do I have to sign a contract with a public adjuster?

Yes. Illinois law requires the public adjuster to provide you with a written contract which has been approved by the Director of Insurance.The contract should specify the services the public adjuster will provide for you and any salary, fee, commission, compensation or other consideration he or she will receive for those services. The contract you sign with the public adjuster is binding and can only be canceled by certified mail within 5 business days after the date the contract was signed.

Are there restrictions on when a public adjuster can solicit me?

Yes.  A public adjuster cannot solicit you while a “loss-producing occurrence,” such as a fire, is continuing or while the fire department or its representatives are engaged at your property.  A public adjuster is also prohibited from soliciting your business between the hours of 7:00 p.m. and 8:00 a.m.  If a public adjuster approaches you during these times you should report him or her to the Department. 

Are there standards of conduct that a public adjuster must follow?

Yes.  A public adjuster is required to serve with objectivity and complete loyalty for your interests alone and to render to you such information, counsel, and service as will best serve your insurance claim needs and interests.

Does a public adjuster have to be licensed?

Yes.  Illinois law requires public adjusters to be licensed with the Department of Insurance. Contact the Department at (866) 445-5364 to verify that the public adjuster is licensed and in good standing before signing any contract.

Where can I find more information?

Useful information on insurance coverage and how to handle the insurance claims process can be found in the Department’s consumer fact sheet entitled “When Disaster Strikes – What to do After an Insured Homeowners Loss.”  The fact sheet can be found on the Department’s website, insurance.illinois.gov, or by clicking here

Trained insurance professionals are also available to assist you for free at the Department of Insurance, which can be reached toll-free at (866) 445-5364.

For More Information

Call our Consumer Services Section at (312) 814-2420 or Our Consumer Assistance Hotline Toll Free at (866) 445-5364 Or visit us on our website at http://insurance.illinois.gov