A buried provision in South Carolina's insurance adjuster bill directly limits how auto service businesses can be compensated for handling customer insurance claims.
Most auto service owners in South Carolina don't realize that a provision buried in S0196—a bill focused on insurance adjusters—directly affects how their businesses can collect payment if they handle insurance claims for customers. If you operate as or hire a public adjuster, this law changes the rules on the money you can make from settlements.
Effective immediately upon the Governor's signature on May 19, 2026, Section 38-92-120(E) of South Carolina law imposes a hard cap: public adjusters cannot collect more than 10% of any insurance settlement they help secure for a customer. That's a statutory maximum—you cannot negotiate higher, regardless of the complexity or value of the claim.
The law also prohibits upfront fees or retainers. You cannot ask a customer to pay anything before the insurance claim settles. This means every engagement is structured as deferred compensation: you work first, get paid only after the settlement arrives, and your payment is capped at one-tenth of what the customer receives.
If your auto service business currently operates as a public adjuster—handling insurance claims on behalf of customers in exchange for a fee—you are directly bound by this cap. If you hire or contract with a public adjuster to handle claims for your shop's customers, that person is also bound by it.
The provision applies to any small business that takes on the role of a public adjuster under South Carolina law, whether full-time or as part of a broader service offering.
This is a structural revenue limit. Unlike hourly billing or flat fees, you cannot price your claims-handling work based on time, complexity, or risk. Your maximum compensation is fixed at 10% of the settlement amount, regardless of how much work the claim requires or how long it takes to resolve.
The prohibition on upfront fees also affects cash flow. You must front all costs and labor without advance payment from the customer. If a settlement takes months or years to finalize, you wait for your compensation.
If your business model currently relies on retainers, upfront fees, or percentage-based compensation above 10%, you'll need to restructure how you price and collect payment for claims-handling services.
Review your current service agreements and fee structures if you handle insurance claims. If you're considering adding or expanding claims-handling services, factor in the 10% cap and deferred-payment structure as hard constraints on revenue.
The law is effective as of May 19, 2026. If you have questions about how this applies to your specific business model, consulting a South Carolina business attorney familiar with insurance law is advisable.
Source: S0196, Section 38-92-120(E), State of South Carolina.