PSA: Beware of Texas Roofers and Contractors Illegally Adjusting Insurance Claims

UPDATE: Texas approved two new bills related to insurance claims that went into effect on September 1, 2019. These bills will significantly impact policyholders, contractors, and insurance companies moving forward. The bills specifically address regulations for roofers and contractors in Texas with involvement in insurance claims. Read the full details here.

According to the Texas Department of Insurance (TDI), you should be wary of roofers and contractors who offer to handle your insurance claim or claim to be an insurance specialist.

In 2012, TDI issued a bulletin here addressing illegal acts by roofing companies and contractors:

It has come to the attention of the Texas Department of Insurance that a number of contractors, roofing companies, and other individuals and entities not licensed by the department have been advertising or performing acts that would require them to hold a public insurance adjuster license.

In Texas, only licensed public adjusters (or attorneys) are allowed to adjust or negotiate insurance claims on behalf of policyholders.

Find a Public Adjuster(877) 202-0204

Despite this requirement, some roofers or contractors may offer to handle your insurance claim, putting policyholders at risk.

The bulletin further explains:

The department takes seriously the harm unlicensed individuals and entities can cause on the marketplace when they prey on unsuspecting consumers and the industry. I urge insurers, agents, adjusters, and consumers to help call attention to and halt attempts by unlicensed persons to negotiate insurance claims, and I encourage everyone to report these practices to the department and the TDI Fraud Unit (1-800-252-3439 – Report Fraud).

Because of these changes to Texas insurance law, it’s illegal for roofers and contractors to handle your insurance claim. You should be wary of contractors that offer to handle your insurance claim.

Risks & Dangers of Contractors Illegally Handling Claims

When you let a contractor handle your claim, you’re exposing yourself to significant risk.

Even if a roofer or contractor means well, they’re not legally allowed to handle your insurance claim, nor are they capable of responsibly handling your claim. They often overlook important damages if they are just trying to replace your roof.

Worse, some contractors deliberately seek to manage your insurance claim to commit fraud. They want to perform substandard repairs while pocketing the insurance money for themselves.

Here’s how the Texas Department of Insurance explains the risks:

These unlicensed individuals often prey on unknowing consumers by promising to ‘work’ insurance claims to achieve a higher settlement.

Roofers and contractors cannot adjust insurance claims because there’s a conflict of interest. They want to make money on the repairs, but don’t have the licensing or training required to negotiate with your insurance company.

When you let a contractor handle your claim, the contractor receives funds for the repairs from the insurance settlement. In this situation, the company is serving its own interests for the repair project – not the interests of the client.

• Risk #1: Substandard Repairs & Botched Work: Contractors who are breaking the law are more likely to be dishonest, inflate the cost of repairs, skip town, or botch an insurance settlement – potentially leaving you with a hefty bill or unrepaired property. In some cases, contractors have taken money from insurance companies, then simply flee town, leaving you with an unrepaired home and no insurance payout.
• Risk #2: Insurers Are Not Obligated to Communicate with Your Contractor: Your insurance company is not legally obligated to communicate with your chosen contractor, and insurers are advised not to negotiate claims with contractors.
• Risk #3: Inexperienced or Incapable Contractors: Even when contractors have good intentions, they don’t have the expertise to interpret policy language. You could miss substantial compensation because of an inexperienced or incapable contractor.
• Risk #4: Legal Concerns: Even if contractors do have the expertise to interpret policy language, they’re not legally allowed to manage your claim! This could cause you to miss a large portion of your claim settlement.
• Risk #5: Dishonest Contractors Preying on Vulnerable Populations: Many contractors who advertise themselves as insurance claim experts are dishonest. Some prey on disaster-struck areas or households that don’t speak English as a first language, taking advantage of vulnerable people. These dishonest contractors take money out of your pocket at a time when you need it most.

Much of the value that Public Adjusters are able to obtain on a claim comes from the policy language – like interpreting local code statutes.

A Public Adjuster can press for “code upgrades” for increased cost of construction, for example, potentially adding thousands to your claim. A roofer or contractor, even if they do know how to interpret policy language, would be violating the law.

Find a Public Adjuster(877) 202-0204

Public Adjusters Expertly Manage Your Claim & Maximize Compensation

If you need help managing your insurance claim, don’t trust your claim to a contractor. Instead, hire a public adjuster.

Public adjusters put the client’s interests first while negotiating with the insurance company:

• Public adjusters are licensed by the Texas Department of Insurance as claims adjusters. They’re permitted to negotiate with your insurance company for a higher settlement.
• Roofers and contractors are not licensed by TDI and are not permitted to serve as public adjusters. Contractors work for themselves – not you.

Be Wary of Roofers that Advertise Themselves as ‘Insurance Claim Specialists’

Roofers may ask homeowners to sign a document allowing the insurance company to pay the roofer directly and giving them authority to “handle your insurance claim”

Many Texas contractors advertise themselves as “insurance claim specialists,” suggesting they’ll maximize your payout and save you money if you sign your claim to them.

These companies claim to be experts at negotiating with insurance companies. They claim to help homeowners get a better payout from their insurance company.

These roofing companies ask homeowners to sign a contract giving the roofing company the right to negotiate the insurance claim

Sometimes, these roofing companies cross the line.

Lon Smith Roofing and Construction Forced to Return Millions to Homeowners After Illegally Acting as Claims Adjuster

Lon Smith Roofing and Construction, one of the largest roofing contractors in North Texas, appeared to cross the line while fixing the roofs of thousands of clients over the past decade – and now they’ve been forced to return millions of dollars to Texas homeowners after a huge class action lawsuit.

In 2011, two homeowners agreed to hire Lon Smith Roofing and Construction, also known as A-1, to repair hail damage.

The homeowners were asked to sign a document allowing their insurance company to make payment for repairs directly to Lon Smith Roofing and Construction.

Lon Smith Roofing and Construction completed the repairs. The homeowners thought everything was fine.

However, the roofer failed to reach an agreement with the insurance company on the final price of the settlement. The insurance company denied the claim entirely, claiming Lon Smith Roofing and Construction had completed repairs before an agent had inspected the damage.

When the insurance company refused to make payment, the homeowners filed suit against Lon Smith Roofing in federal court.

The federal court ruled the written agreement between the homeowners and Lon Smith Roofing was “illegal, void and unenforceable” because it violated provisions of Texas Insurance Code Section 4102.

This was just the beginning of trouble for Lon Smith Roofing.

Later in 2013, two more Texas homeowners filed a class action lawsuit against Lon Smith Roofing on behalf of Texas residents who had signed similar contracts with the contractor.

The homeowners won – and won big.

The federal court found that Lon Smith Roofing had asked homeowners to sign a contract allowing payment to be made directly to the roofer. These contracts, however, went too far: they allowed the company to act “as an unlicensed insurance adjuster…in violation of Insurance Code”.

Facing a multi-million dollar problem, Lon Smith Roofing appealed the decision.

The Texas Supreme Court denied Lon’s appeal, forcing the company to return money from thousands of claims.

Steve Hill Roofing & Construction Accused of Misappropriating Insurance Claim Funds

In July 2018, Texas roofing company Steve Hill Roofing & Construction was accused of misappropriating funds from a roofing insurance claim.

In 2013, the company agreed to repair the roof of Janet and Robert Spracklen after a hailstorm.

The roofing company allegedly asked the Spracklens to sign a document allowing them to manage the claim on their behalf.

That document seems innocuous, but it had specific wording allowing Hill to handle the claim:

This agreement is for FULL SCOPE OF INSURANCE ESTIMATE AND UPGRADES and is subject to insurance company approval. By signing this agreement the homeowner authorizes Hill Roofing . [sic] to pursue homeowner’s best interests for all repairs at a price agreeable to the insurance company and Hill Roofing, and at NO ADDITIONAL COST TO HOMEOWNER EXCEPT THE INSURANCE DEDUCTIBLE AND UPGRADES. The final price agreed to between the insurance company and Hill Roofing shall be the final contract price.

Hill estimated it would cost $12,960.70 to repair the roof, and the insurance company paid $5,917.33 to cover the repairs. Hill sued the Spracklens to recover the money owed. The case went back and forth across multiple courts,

The court eventually awarded the Spracklens $10,000 in exemplary damages to cover mental anguish, attorney fees, and other costs related to the incident.

Wolfe’s Carpet, Tile & Remodeling Caught Illegally Acting as Public Adjuster

In a July 2018 case, Appellant Wolfe’s Carpet, Tile & remodeling LLC sued Gary and Beverly Bourelle for owing funds related to an insurance contract.

Wolfe alleged the Bourelles owed money after Wolfe performed $40,000 worth of repairs on the Bourelles’ house after Hurricane Harvey.

The Bourelles argued, meanwhile, Wolfe had violated Texas Insurance Code section 4102.051, prohibiting a person from acting as a public insurance adjuster unless that person holds a license.

Wolfe argued they hadn’t explicitly agreed to act as a public adjuster:

On appeal, the appellant asserted that it merely agreed to “discuss” the amount of damages and costs of replacement with the homeowners’ insurance companies but did not agree to “advocate on behalf of a consumer.

Courts rejected this argument, finding Wolfe did act as a public adjuster in violation of Texas Insurance Code section 4102.051:

Rejecting this argument, the court focused on the fact that the parties’ contract authorized the appellant to (1) pursue the homeowners’ “best interest for all repairs”, and (2) settle the final contract price between the insurance company and the appellant. Id. Accordingly, the contract ran afoul of section 4102.051’s prohibition against companies advertising, soliciting business, or holding themselves out as public insurance adjusters.

If a contractor seeks to manage a claim on behalf of a policyholder and gets caught, the contractor could face consequences – as was the case with Wolfe’s Carpet, Tile & Remodeling, LLC vs. Gary and Beverly Bourelle.

Other Texas Roofers Use Similar Tactics – Be Vigilant When Dealing with Roofers or Contractors

Lon Smith Roofing is just one roofing company that allegedly uses illegal claims adjusting tactics. Plenty of other Texas roofers use tactics like this every single day.

These roofers prey on unsuspecting homeowners. They visit homes after a storm has swept through a region, taking advantage of vulnerable Texans.

TDI found that many of these roofers focus specifically on neighborhoods where English is not the primary language, making it even harder for homeowners to understand the contracts they’re signing.

Only a Public Adjuster or Attorney is Allowed to Adjust an Insurance Claim

Roofing companies and contractors are not allowed to adjust insurance claims.

In fact, when it comes to working on behalf of the insured, only two types of professionals are allowed to adjust insurance claims in Texas:

• Licensed Public Adjusters
• Licensed Attorneys

TDI Study Finds Hiring a Public Adjuster Can Raise Insurance Payout by 400%

Hiring a public adjuster might be the best decision you ever make.

The Texas Department of Insurance recently completed a study, analyzing the benefits of hiring a professional claims adjuster.

TDI found that Texas homeowners who hired an attorney or public adjuster increased their settlement “three to four times” compared to claims that didn’t involve a public adjuster or attorney:

That means instead of a $15,000 insurance payout, you could receive $45,000 or $60,000.

Keep in mind that these figures are an average of claims analyzed. That means many of the claims received even more than that.

ClaimsMate is Texas’s Leading Public Adjuster Firm

Do you want to maximize your insurance settlement? Do you want to hold your insurance company to the terms of your insurance contract? Is an insurance company refusing to cover your claim?

Consider working with ClaimsMate.

We’re on the side of homeowners like you – not your insurance company. We negotiate your claim with your insurance company, fighting hard to ensure you receive the highest possible payout for your claim.

Schedule a Free Consultation(877) 202-0204

Our public adjusters are licensed throughout the state of Texas. They have proven experience maximizing insurance claims for clients.

To receive an insurance settlement that’s up to 400% higher than the one initially offered by your insurance company, contact ClaimsMate today.