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.
The Texas Department of Insurance (TDI) continually warns home and business owners to be wary of roofers and contractors that advertise to handle your insurance claim.
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.
This is a problem, that continues to negatively affect Texas residents and the intended purpose of home and commercial insurance policies. In Texas, only licensed public adjusters (or attorneys) are allowed to adjust or negotiate insurance claims on behalf of policyholders.
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).
Be Advised of The Potential Risks & Dangers This Illegal Activity Presents
That same bulletin by TDI states:
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.
The roofer or contractor is the one who receives funds for repairs from the insurance settlement. The company is serving its own interests for the repair project – not the interests of the client.
- 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.
- Your insurance company is not legally obligated to communicate with your chosen contractor, and insurers are advised not to negotiate claims with contractors.
- Contractors don’t have the experience and expertise to interpret policy language, and even if they do, they are not legally allowed to. So you could be missing out on a large portion of a claim settlement.
Much of the value that Public Adjusters are able to obtain on a claim comes from the policy language. For instance, local code statutes. A Public Adjuster can press for “code upgrades” for increased cost of construction. A roofer or contractor, even if they do know how to interpret policy language, would be violating the law.
A Public Adjuster, puts 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 and 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’.
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 that 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 that 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.
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 here, 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.
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.