When pursuing a claim with your insurer you should make sure the person you choose to assist you has the proper license to represent you. For property owners looking for help to file a claim it can be difficult to know exactly who has the right to speak to the insurance company on their behalf. It’s understood that an attorney can represent you in any aspect of your claim but licensed public adjusters are able to assist prior to a denial. In Texas, you can’t just have any one representing your interests to the insurance company. You need a licensed attorney or licensed insurance adjuster to have it done the right way. Thankfully, Texas courts have made rulings and statutes have been enacted to assist the public with making sure they are represented and their rights are protected.

Lawyers Practice Law

The practice of law is not confined to cases conducted in court; in fact, the major portion of the practice of many lawyers consists of work done outside the courts, and for centuries it has been recognized that the practice of law can safely be entrusted only to those who have satisfied the standards of academic and legal learning required of members of the legal profession.1

Public Adjusters Adjust Claims

The Texas Department of Insurance provides licenses to Public Adjusters so they will be able to assist you with your claim. The license allows public insurance adjusters to (1) advise clients to seek the services of a licensed attorney if they have questions relating to their legal rights under a policy; (2) measure and document first party claims under property insurance policies and present them to insurance companies on behalf of clients; (3) discuss the measurement and documentation presented to the insurance company with representatives of the insurance companies; and (4) advise clients that valuations placed on first party property insurance claims by insurance companies is or is not accurate.2

There Is A Difference

A contract that contemplated a third party providing estimates of property damage to the party suffering such damage and presenting the necessary paperwork and data to the insured party’s insurance company does not constitute the practice of law as "these procedures are required in every adjuster contract before the insured can collect on an insurance policy." Further, these duties are "endorsed by the Texas Insurance Code." See, e.g., Tex. Ins. Code § 4102.001(3). The Texas Insurance Code defines a public insurance adjuster as a person who "acts on behalf of an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property.” The court of appeals held that the public insurance adjuster’s contract to prepare and present insurance claims to the insurer on the insured’s behalf in exchange for a commission did not require the adjuster’s firm to engage in the unauthorized practice of law, and thus the contract was not rendered illegal, against public policy, or unenforceable by any such unauthorized practice, where the contract essentially contemplated that that adjuster’s firm would provide estimates of the property damage and present the necessary paperwork and data to the insurer.

When a homeowner needs help with filing a claim, it’s good to know that they have licensed attorneys and public adjusters to act as their advocates. There are several instances where folks are engaged in the unauthorized practice of law and the unauthorized practice of public adjusting. So, it helps to make sure you have a licensed professional on your side.


1 Hughes v. Fort Worth Nat’l Bank, 164 S.W.2d 231 (Tex. Civ. App. 1942, writ ref’d).
2 Unauthorized Practice of Law Committee v. Jansen, 816 S.W.2d 813 (Tex. App.—Houston [14th Dist.] 1991, writ denied).

 

  • Nyanza – Excellent post. One should always encourage others to freely seek appropriate help for whatever concerns them, or that they are curious about.

    From a concerned perspective – In the truly “fair game” construction market – Contractors win both non-insurance funded work, and insurance funded work.

    Regarding insurance funded construction projects; Conversations on the phone with insurers representatives are not “on behalf of the insured”, by any means.

    Conversations are on behalf of irreducible business and reconstruction needs, and all that that means for contractors behalf.

    Mature and honest Insurers and Adjusters in Texas consistently realize that across the state, as does the Texas Department of Insurance.

    In 2014 – As in the last 22 years – We have yet to meet an honest and ethical insurer or adjuster that understands simply discussing, reasoning with, and proving safe and sound construction business protocols – means that we are communicating business/fair market issues “on behalf of the insured” somehow.

    Some public adjusters here are twisting natural consumer-to-contractor-to-insurer market dynamics into something else – and telling the public otherwise. And are loaded up with business accordingly.

    The Texas Department of Insurance does not agree with them.

    TDI clearly states – “Contractors are not listed among the persons exempt from the licensing requirement in Insurance Code §4102.002 (formerly Article 21.07-5 §3(B)).”

    “Chapter 4102 does not prohibit contractors from providing estimates or discussing those estimates and other technical information with an insurer or its adjuster.”

    https://www.tdi.state.tx.us/bulletins/2005/b-0060-05.html

    (Interestingly – Insurers “Preferred Contractors” can “negotiate” with insurance adjusters all day long for their business needs – until their virtual employers say otherwise.)

    In defense of the doing the right thing – Public adjusters that publicly claim that contractors are to win insurance related work, and then unquestionably turn their clients over to them – because of their imagined perception of law – are in real danger of illegal practice of law and deceptive business practices..Are they not?

  • Aaron Stutman

    Does this apply in Pennsylvania? We are having issues with contractors and we need documentation showing property owners that lawyers and public adjusters are the only ones able to assist with property claims.

  • mac mcintyre

    ….are there any real rules as to how an “appraiser” ( in texas) must conduct his assessment??? other than with a disinterested 3rd party attitude as well as bring integrity, experience and knowledge to the claim…our position is always do whatever it takes to make the policyholder ..”WHOLE”…that means we never settle for a “repair” on a roof…thanks ..Mc

  • paul

    Hi there…is it necerssary to register for fsp licence in order to represent some one on his/her claim?