Unauthorized Practice of Law

I discussed the Lon Smith Roofing class action case against a contractor accused of practicing public adjusting in, Unauthorized Practice of Public Adjusting and the Lon Smith Roofing Case Should Scare Contractors and Roofers with Contingent Contracts. An appellate court reaffirmed the dangers contractors face when negotiating claims and benefits with insurance companies and contracting to do what many consider either the unauthorized practice of law or the unauthorized practice of public adjusting.
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Joey Childress and yours truly will present a seminar of water damage claims at the National Association of Public Insurance Adjusters Convention in San Antonio next week. I discussed how public adjusters can register and even get a discount for attending in Are You a Public Adjuster Who Wants to Be Better at Helping Policyholders and Make More Money Doing So?
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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.


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Public Adjusters in Texas walk a fine line when it comes to assisting homeowners and avoiding the pitfalls of the unauthorized practice of law. In February of this year, the Texas Court of Appeals in Houston ruled that even though a public adjuster violated the statutory requirement of having his license number included in his contract with the property owner, the contract was still enforceable and he could still collect his percentage. The Court also confirmed the rules regarding the unauthorized practice of law. In International Risk Control, LLC v. Seascape Owners Association, Inc.,1 a public adjusting firm was sued by its former client to avoid paying fees associated with the settlement paid by Texas Windstorm Insurance Association (“TWIA”). The property owner claimed the contract with the public adjuster was against public policy and violated Texas laws against the unauthorized practice of law.

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Public adjusters should adjust first party claims and not third party liability claims. To do otherwise is the practice of law. I am warning public adjusters about this topic because of an email I received:

Chip, good morning. we need your input on Public Adjusters doing 3rd party claims. In several of your presentations I have heard, Public Adjusters are not allowed to do 3rd party claims. Other FAPIA members said the contrary. Please clarify. Please see the string of emails below in chronological order from the most recent to the latest. Thank you.


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