This month a Texas Court of Appeals upheld an important ruling against a contractor who was involved in the Unauthorized Practice of Public Adjusting (UPPA).
Lon Smith Roofing & Construction entered in to a contract with Gerald and Beatriz Reyelts. In their contract the roofer asserted that Lon Smith was being retained “to pursue homeowners’” best interest for all repairs, at a price agreeable to the insurance company” and to work out “the final price agreed between the insurance company” and Lon Smith. And that “the homeowner is responsible for paying the deductible and for any upgrades. “The final price agreed to between the insurance company and LSRC shall be the final contract.”
The company replaced the roof without notifying the insurance company and then sent a bill to the insurance company for payment. The insurance company denied the claim citing policy language which required the homeowner to allow the insurance company to inspect the damages.
Lon Smith Roofing then billed the homeowner multiple times demanding payment for their services. The homeowners asserted that based on the contract it was the roofing company’s responsibility to notify the insurance company. The judge eventually ruled in the homeowners’ favor. Additionally, under Texas law (as is in other states) a person who negotiates and adjusts an insurance contract for the insured homeowner must be a public adjuster or attorney. It is a crime for a person other the homeowner to adjust a claim when they are not licensed. That fact alone was enough for the judge to state the contract that the homeowners had with the contractor was invalid. At the time that the original contract was signed that was the only law broken but as of today the law is that a contractor cannot also be public adjuster. This is done in order to eliminate a conflict of interest on the claim (so even if he was licensed to negotiate and adjust ha claim a contractor could not legally be the client’s roofer).
Lon Smith Roofing appealed the verdict and two public adjuster associations stepped in to help with the appeal process. They worked with the client’s attorney in drafting and filing the brief that the appeals court reviewed in making their decision. The ruling markedly referenced a brief that was written by Brian Goodman, on behalf of a National Association which uses membership dues and donations to offset the expense of legislative and legal proceedings that could potentially impact consumers.
So how does this affect the consumer, the contractor and the public adjuster?
By upholding this ruling the court has chosen to protect the consumer. The consumer should not have to worry about their claim being in unlicensed hands. An unlicensed person can not review an insurance policy and cannot prioritize the consumer’s best interest when that person is acting illegally. This will directly and positively impact consumers by ensuring that they are using a licensed and potentially bonded adjuster who is knowledgeable and by making sure the insurance proceeds are in control by the consumer not the person practicing the unauthorized practice of public adjusting.
The contractor can focus on what the contractor does best: repair, restore, and build.
The public adjuster can work in tandem with a contractor instead of in competition. The public adjuster can focus on negotiating adjusting, submitting insurance forms and reviewing the policy without the concern of contractor’s improperly representing the insured and jeopardizing a valid claim.
The insurance industry benefits by not having to increase premiums because of fraud or incompetence perpetuated by those who are illegally operating as a public adjuster.