Legislation Update: Two New Indiana Statutes Will Impact Tort and Insurance Cases

John C. Trimble


During the 2023 legislative session, the state of Indiana passed two statutes of great interest to those who practice in the tort and insurance arena. Both took effect July 31, 2023. We bring them to your attention and encourage you to read the statutes. If any of us at Lewis Wagner may answer any questions you may have about the statutes, do not hesitate to contact us.

I.C. 24-12-4-2 Civil Proceeding Advance Payment Contracts (CPAP) Is a new law that further regulates the ability of lawsuit funding companies to loan money to plaintiffs where the loan is secured by a promise made by the plaintiff to repay the loan out of the proceeds of a future settlement or judgment. For years lawsuit funding companies have scoured civil dockets looking for plaintiffs who might wish to get an advance payment of their bodily injury claim. Quite often the loans have been made without the knowledge of the plaintiff attorney and without consultation about the strengths and weaknesses of the particular case. Almost always the CPAP contains high interest rates that compound month over month so that the amount due at settlement may be substantially higher than what was borrowed. To make matters worse, predatory lenders will often return to the plaintiff and offer to advance more money by “refinancing” the CPAP. All of this goes on without the knowledge of the court or the defendant.

It is well know to defense attorneys and insurers that the pressure presented by these loans can prompt a plaintiff to lie about liability facts or exaggerate their damages in order to assure themselves of success in the lawsuit. Consequently, many defense counsel regularly inquire of the plaintiff in discovery to determine the existence of a CPAP. Some plaintiffs resist disclosing this information, and the fight over the discoverability of the CPAP’s terms can be expensive. More importantly, the existence of a CPAP can dramatically impact the ability to settle a case. Many of us have seen cases that could not settle because the amount owed under the CPAP was more than the value of the case. Or, the amount owed is so much that the plaintiff attorney who typically charges a one-third contingency fee cannot take a full fee because the net amount would be insufficient to satisfy the loan obligation.

Because of the problems presented by CPAPs the Indiana Legislature in 2016 and 2017 passed statutes that tightly regulated the terms, content, and rules of lawsuit loan behavior. Now, IC 24-12-3-2 requires that a loan provider notify plaintiff and defense counsel of the existence of the CPAP and also allows it to be obtained in discovery unless the court agrees to excuse the provider from production. This will not solve all of the problems of CPAPs, but at least defendants and their insurers will know about them and have access to the terms.  See the entire statute here.

I.C. 27-1-27-1 et seq is a statute that addresses the licensing, contracting, and behavior of Public Adjusters. While a statute has existed for years, the 2023 amendments radically overhaul the statute to reduce or prevent behavior that had been viewed as abusive by the insurance industry. Public Adjusters are licensed insurance adjusters who are hired by an insured after a loss to assist the insured in documenting, presenting, and settling an insurance claim for damage to property. They almost always work on a contingency fee of 10-18%, and some in the insurance industry believe that the contingency fee can prompt an insured to submit and inflated claim so that the Public Adjuster can be paid a fee and still make the insured whole.

It is not unusual after a wind or hail storm or fire for Public Adjuster representatives to go door to door in a neighborhood to solicit clients. Alternatively, many restoration and roofing companies will go door to door and then recommend a public adjuster to the homeowner. The relationship and financial dealings between the roofing company and Public Adjuster are not always disclosed. There have even been instances of Public Adjusters owning roofing companies.

The changes to the existing statute are extensive. New disclosure requirements have been added. Certain financial connections between the Public adjuster and attorneys and contractors are prohibited and must be disclosed. Further, consumers have now been provided a time frame within which to repudiate and cancel an agreement.

If you are in a position to deal with Public Adjusters, this statute is worthy of your time.  See the entire statute here.