In recent years, insurance companies have been dealing with claims being filed and handled by non-insureds. Traditionally, the ability to negotiate claims on an insured’s behalf was undertaken by a “public adjuster” or attorney. Now, repair shops, construction companies, and “short pay” businesses are taking over that role. Contractors and the like rely on two propositions to claim the right to handle insureds claims: (1) “Assignment of Benefits” agreements, and (2) Pepsi-Cola Metro. Bottling Co., Inc. v. Emps. Ins. Co. of Wausau. (2022 WI App 45, ¶ 15, 404 Wis. 2d 337, 349, 979 N.W.2d 627, 632, aff'd, 2023 WI 42, ¶ 15, 407 Wis. 2d 384, 990 N.W.2d 267).
Contractors claim that the Pepsi case gives them the right to have an insured assign their post-loss benefits to them. These assignment agreements are typically broad and assign “rights” ranging from recovering alleged amounts owed, attorney fees, and administrative work outside the scope of the repair or service being provided to the insured. Following the assignment, the assignee sues the relevant insurance company, typically for breach of contract and bad faith.
Companies that utilize assignment of benefits misread the application of Pepsi and disregard well-established Wisconsin law.
Background on Wis. Ch. 629
Wisconsin State Chapter 629 governs the conduct of public adjusters. Wisconsin defines a “public adjuster” as any person who, for compensation, acts on behalf of an insured in negotiating or settling a claim for loss or damage under an insurance policy. (Wis. Stat. § 629.01(5)). One of the most important consumer-protection provisions appears in Wis. Stat. § 629.07, which strictly provides that a public adjuster may not request or accept an assignment of insurance policy proceeds under any circumstances, and an insurer is under no obligation to honor such assignments. This provision prevents an adjuster from taking ownership or control of the insured’s claim or insurance benefits, and it ensures that claim payments flow directly to the insured rather than to the adjuster.
To protect consumers, Wisconsin further requires that public adjusters only provide services to an insured pursuant to a written contract that contains mandatory terms. (Wis. Stat. § 629.04(a)–(h)). The contract must clearly identify the adjuster, must include the adjuster’s license information, must accurately describe the loss and the date of the loss, must specify the exact services to be performed, must state the amount or percentage of compensation, and must contain multiple disclosures, including statements concerning the insured’s right to cancel and the adjuster’s obligation to act solely in the insured’s interest. (Id). The law also includes prohibited provisions, including requiring the insured to authorize an insurer to issue a check only in the name of the public adjuster. (Id at (2)(a).
In the matter, In re Joshua Lesley, the Office of the Commissioner of Insurance (OCI) and the Division of Hearings and Appeals determined that a dwelling contractor had been illegally acting as a public adjuster by combining repair work with claim-handling functions reserved for licensed adjusters. (OCI Case No. 25-C46339 (Wis. Div. Hearings & Appeals, 2025)). The contractor used a standard Assignment of Benefits that transferred all insurance proceeds to himself, marketed “insurance claim support,” submitted his own inflated repair estimate to the insurer, and repeatedly negotiated with the insurer to “get closer” to his number. (Id at 2, 5). The court held that this conduct constituted “adjusting services” under Wis. Stat. § 629.01(1) because he prepared, submitted, and attempted to negotiate a first-party claim for compensation. The court stressed that “public-adjuster” status is determined by conduct, not title. (emphasis added) (Id at 9).
Homeowners should exercise extreme caution when entering into agreements with service providers for deals that sound too good to be true. If someone is promising to repair your car with more expensive parts, or removing trees from your yard for “free,” you may be entering into an agreement with unintended consequences.
Proper Application of Pepsi
In Pepsi-Cola Metro. Bottling Co., Inc. v. Emps. Ins. Co. of Wausau, the court narrowly held: a valid post-loss assignment transfers a right to recovery after an insurer’s liability has already become fixed. (2022 WI App 45, ¶ 15, 404 Wis. 2d 337, 349, 979 N.W.2d 627, 632, aff'd, 2023 WI 42, ¶ 15, 407 Wis. 2d 384, 990 N.W.2d 267).
Pepsi only allows the assignment of the right to recover for a post-loss claim and does not assign the policy as a whole. In other words, contractors do not become a party to the insurance contract. The ability to sue for breach of contract and bad faith as an assignee is currently being litigated, but statutory protections may be on the horizon.
Looking Ahead
As of the date of writing, Wisconsin courts have not fully ruled on the issues outlined above. The Wisconsin Legislature has taken notice of these illicit business practices. Senate Bill 531 (Assembly Bill 473) was introduced in October 2025 by Senators Felzkowski, Nass, Dassler-Alfheim, and Spreitzer. The Bill would create Wis. Stat. § 632.11. If passed, the bill would create requirements and restrictions to assignment of benefits contracts for residential contractors and provide a penalty for violations. As of January 30, 2026, the bill passed the Senate and Assembly and will be sent to the Governor for signature.
Conclusion
The “repair first, negotiate later” business model is harmful to insureds, insurers, the courts, and generally against public policy. The flaw with the approach is straightforward: what happens when a homeowner or vehicle policy does not cover the loss? Contractors’ options would be to stop work or pursue payment directly from the insured.
Author: John H. Wilson
In recent years, insurance companies have been dealing with claims being filed and handled by non-insureds. Traditionally, the ability to negotiate claims on an insured’s behalf was undertaken by a “public adjuster” or attorney. Now, repair shops, construction companies, and “short pay” businesses are taking over that role. Contractors and the like rely on two propositions to claim the right to handle insureds claims: (1) “Assignment of Benefits” agreements, and (2) Pepsi-Cola Metro. Bottling Co., Inc. v. Emps. Ins. Co. of Wausau. (2022 WI App 45, ¶ 15, 404 Wis. 2d 337, 349, 979 N.W.2d 627, 632, aff'd, 2023 WI 42, ¶ 15, 407 Wis. 2d 384, 990 N.W.2d 267).
Contractors claim that the Pepsi case gives them the right to have an insured assign their post-loss benefits to them. These assignment agreements are typically broad and assign “rights” ranging from recovering alleged amounts owed, attorney fees, and administrative work outside the scope of the repair or service being provided to the insured. Following the assignment, the assignee sues the relevant insurance company, typically for breach of contract and bad faith.
Companies that utilize assignment of benefits misread the application of Pepsi and disregard well-established Wisconsin law.
Background on Wis. Ch. 629
Wisconsin State Chapter 629 governs the conduct of public adjusters. Wisconsin defines a “public adjuster” as any person who, for compensation, acts on behalf of an insured in negotiating or settling a claim for loss or damage under an insurance policy. (Wis. Stat. § 629.01(5)). One of the most important consumer-protection provisions appears in Wis. Stat. § 629.07, which strictly provides that a public adjuster may not request or accept an assignment of insurance policy proceeds under any circumstances, and an insurer is under no obligation to honor such assignments. This provision prevents an adjuster from taking ownership or control of the insured’s claim or insurance benefits, and it ensures that claim payments flow directly to the insured rather than to the adjuster.
To protect consumers, Wisconsin further requires that public adjusters only provide services to an insured pursuant to a written contract that contains mandatory terms. (Wis. Stat. § 629.04(a)–(h)). The contract must clearly identify the adjuster, must include the adjuster’s license information, must accurately describe the loss and the date of the loss, must specify the exact services to be performed, must state the amount or percentage of compensation, and must contain multiple disclosures, including statements concerning the insured’s right to cancel and the adjuster’s obligation to act solely in the insured’s interest. (Id). The law also includes prohibited provisions, including requiring the insured to authorize an insurer to issue a check only in the name of the public adjuster. (Id at (2)(a).
In the matter, In re Joshua Lesley, the Office of the Commissioner of Insurance (OCI) and the Division of Hearings and Appeals determined that a dwelling contractor had been illegally acting as a public adjuster by combining repair work with claim-handling functions reserved for licensed adjusters. (OCI Case No. 25-C46339 (Wis. Div. Hearings & Appeals, 2025)). The contractor used a standard Assignment of Benefits that transferred all insurance proceeds to himself, marketed “insurance claim support,” submitted his own inflated repair estimate to the insurer, and repeatedly negotiated with the insurer to “get closer” to his number. (Id at 2, 5). The court held that this conduct constituted “adjusting services” under Wis. Stat. § 629.01(1) because he prepared, submitted, and attempted to negotiate a first-party claim for compensation. The court stressed that “public-adjuster” status is determined by conduct, not title. (emphasis added) (Id at 9).
Homeowners should exercise extreme caution when entering into agreements with service providers for deals that sound too good to be true. If someone is promising to repair your car with more expensive parts, or removing trees from your yard for “free,” you may be entering into an agreement with unintended consequences.
Proper Application of Pepsi
In Pepsi-Cola Metro. Bottling Co., Inc. v. Emps. Ins. Co. of Wausau, the court narrowly held: a valid post-loss assignment transfers a right to recovery after an insurer’s liability has already become fixed. (2022 WI App 45, ¶ 15, 404 Wis. 2d 337, 349, 979 N.W.2d 627, 632, aff'd, 2023 WI 42, ¶ 15, 407 Wis. 2d 384, 990 N.W.2d 267).
Pepsi only allows the assignment of the right to recover for a post-loss claim and does not assign the policy as a whole. In other words, contractors do not become a party to the insurance contract. The ability to sue for breach of contract and bad faith as an assignee is currently being litigated, but statutory protections may be on the horizon.
Looking Ahead
As of the date of writing, Wisconsin courts have not fully ruled on the issues outlined above. The Wisconsin Legislature has taken notice of these illicit business practices. Senate Bill 531 (Assembly Bill 473) was introduced in October 2025 by Senators Felzkowski, Nass, Dassler-Alfheim, and Spreitzer. The Bill would create Wis. Stat. § 632.11. If passed, the bill would create requirements and restrictions to assignment of benefits contracts for residential contractors and provide a penalty for violations. As of January 30, 2026, the bill passed the Senate and Assembly and will be sent to the Governor for signature.
Conclusion
The “repair first, negotiate later” business model is harmful to insureds, insurers, the courts, and generally against public policy. The flaw with the approach is straightforward: what happens when a homeowner or vehicle policy does not cover the loss? Contractors’ options would be to stop work or pursue payment directly from the insured.