6 Things You Need to Know About the Unauthorized Practice of Public Adjusting (UPPA)

Unlicensed Contractor With Homeowner

Public adjusters are licensed insurance industry professionals authorized to work on insurance claims for policyholders. This license requires training on how to interpret insurance policies and how to handle the claim process in each state.

The Unauthorized Practice of Public Adjusting, or UPPA, is when someone other than a licensed public adjuster attempts to manage your claim.

Some contractors have been caught engaging in the Unauthorized Practice of Public Adjusting, for example, offering to handle your claim from start to finish – only to perform substandard repairs and pocket the difference.

Today, we’re explaining everything you need to know about the Unauthorized Practice of Public Adjusting.

1) What is the Unauthorized Practice of Public Adjusting (UPPA)?

The Unauthorized Practice of Public Adjusting, or UPPA, occurs when an unlicensed individual attempts to act as a public adjuster for your insurance claim.

Most states have strict laws governing how public adjusters operate. Public adjusters must pass an exam and receive a license. Some states also require continuing education. It’s a strict certification process designed to protect homeowners and policyholders. “Ethics” is often a required ongoing education that helps to insure you are represented in the proper fashion when hiring a public adjuster.

Some individuals avoid these requirements and act as unauthorized public adjusters. They engage in the Unauthorized Practice of Public Adjusting, or UPPA.

2) What Are Licensed Public Adjusters Allowed to Do?

By law, public adjusters are the only professionals other than attorneys that are allowed to manage certain aspects of your insurance claim in most states.

Some of the things a public adjuster is allowed to do that an unlicensed public adjuster is not include:

  • Manage a residential or commercial property insurance claim for a policyholder
  • Interpret your insurance policy to help you understand the terms of your “contract” with your insurance company
  • Adjust, negotiate, and settle property claims

If an individual offers to manage your insurance claim and the individual is not licensed as a public adjuster, then they could be engaging in the Unauthorized Practice of Public Adjusting.

3) Why Would Someone Pretend to Be a Public Adjuster?

Individuals may pretend to be a public adjuster for personal profit.

A malicious contractor, for example, could approach vulnerable homeowners after a natural disaster and offer to manage their roofing claim from start to finish.

In some cases, the contractor may even offer to pay the homeowner’s deductible or give the homeowner a cut of the insurance claim payout.

In reality, the malicious contractor plans to:

  • Perform subpar repairs on the property using low-quality materials
  • Charge the insurer the full price for repairs
  • Pocket the difference

In some cases, the contractor doesn’t even bother to repair the property: some contractors simply take the insurance payout and leave town, effectively stealing money from insurers and policyholders.

4) Texas is the Most UPPA-Prone State in America

The Unauthorized Practice of Public Adjusting is particularly common in states prone to natural disasters.

Overall, Texas has more incidents of UPPA than any other state.

Homeowners in Texas may fall victim to UPPA after a hurricane, tornado, flooding or hailstorm. Hail season often sees the most complaints from homeowners regarding this as roofing contractors attempt to get roofs covered for their clients.

After a natural disaster, homeowners may be approached by “storm chasing” contractors – including roofers, tradespeople, restoration companies, and others. These contractors may offer to manage your claim and act as a public adjuster. In reality, they plan to engage in UPPA.

After a natural disaster, many home and business owners are vulnerable. Some have severe home or commercial property damage. Many are unsure what to do or how to manage a claim. Insurers and restoration companies may be bombarded, making it difficult to proceed. Storm chasing contractors use UPPA to prey on these unsuspecting homeowners.

5) UPPA Leads to Higher Insurance Premiums for Everyone

Both insurance companies and homeowners lose when contractors engage in the Unauthorized Practice of Public Adjusting.

If left unpunished, the contractors who engaged in UPPA are the only ones who win from the practice.

When contractors perform substandard work or disappear with a claim payout, insurers may raise rates to compensate for the loss. Policyholders pay higher rates via increased premiums and deductibles. In some cases, insurers reduce coverage options for policyholders, making the insurance experience worse for everyone involved.

For all of these reasons, it’s important to hold contractors who engage in UPPA accountable. File a report to your state’s Department of Insurance or Attorney General’s office. They’ll want to hear about any incidents of UPPA – and hold those individuals accountable.

6) Not All UPPA Contractors Have Malicious Intentions

Some contractors engage in UPPA without intending to act maliciously. However, they’re still not authorized to manage your insurance claim.

Some contractors simply want to expedite your claim instead of stealing your money.

However, even when a contractor means well, they’re not the right person to manage your claim. Contractors rarely have the expertise to navigate complex insurance claims. Plus, contractors have a conflict of interest: they want to make money from your claim, which gives them an incentive to overcharge the insurance company and perform substandard repairs on your property.

Ultimately, even if a contractor means well, it’s not a good idea to let a contractor manage your insurance claim and engage in the Unauthorized Practice of Public Adjusting.

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