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 two new bills are called Texas House Bills 2102 and 2103. Both were passed into law and went into effect on September 1, 2019.
Here’s what each law means for policyholders, contractors, and public adjusters.
Texas House Bill 2102: Contractors Cannot Pay Your Deductible
Under the new law created by Texas House Bill 2102, it is illegal for contractors to pay for the homeowner’s deductible in any way, shape, or form.
Specifically, contractors are forbidden from paying for, waiving, absorbing, rebating, crediting, offsetting, or otherwise assisting the policyholder in any other manner to avoid monetary payment of the required insurance deductible.
Contractors are also forbidden from providing goods and services equal to the deductible. Essentially, the contractor cannot agree to cover some or all of the deductible for the customer in any way.
Under this law, a contractor who pays for a policyholder’s deductible could face up to 180 days in jail or a fine of up to $2,000. Paying for a policyholder’s deductible is classified as a Class B misdemeanor offense.
It’s unusual for a reputable contractor to offer to pay for your deductible. Typically, this behavior is associated with “storm chasing” contractors.
How This Affects You
For Policyholders: As a policyholder, you should be wary of any contractors who agree to pay your deductible in exchange for taking on your insurance claim. It has always been a grey area of the law. Now, however, this practice is officially illegal.
For Contractors: As a contractor, you are not permitted to pay for a customer’s deductible in any form. A roofing contractor cannot pay for a customer’s deductible in exchange for taking on a roof repair insurance claim, for example.
For Public Adjusters: As a public adjuster, you also cannot pay for a homeowner’s deductible in any way, shape, or form.
Section 707.004: Reasonable Proof of Payment
The new law enacted by Texas House Bill 2102 also has an important subsection under Section 707.004.
This section describes how an insurer may refuse to pay a claim for withheld recoverable deprecation or replacement cost holdback until the insurer receives “reasonable proof” of payment of the deductible by the policyholder.
This “reasonable proof” can be a canceled check, money order under receipt, or credit card statement.
Texas House Bill 2013: Contractors Cannot Act as Public Adjusters
Texas House Bill 2103 is the second important bill passed into law that went into effect on September 1, 2019.
The bill states that a contractor may not act as a public adjuster or advertise to adjust claims for any property for which the contractor is providing or may provide contracting services.
This law extends to all contractors regardless of whether or not the contractor holds a public adjuster license or is authorized to act on behalf of the insured under a power of attorney or other agreement.
How This Affects You
For Policyholders: As a policyholder, you can still hire a public adjuster. However, your public adjuster and contractor cannot be the same person or company.
For Contractors: As a contractor, you cannot act as a public adjuster for a client (assuming you are already providing contracting services to that client, or plan to provide contracting services in the future), even if you are licensed. The client must use a third-party public adjuster.
For Public Adjusters: As a licensed public adjuster, you can continue serving as a public adjuster for clients, as long as you do not also plan to provide contracting services.
The Texas Business and Commerce Code Has Been Revised
The new law also amends the Texas Business and Commerce Code by adding a new required section to contracts and/or work authorizations in certain situations.
The new section provides that a contract that is reasonably expected to be paid wholly or partly from the proceeds of a property insurance claim to provide a good or service of more than $1,000 must contain the following provision in 12 pt. font:
“Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of this Texas law for a person or business paid wholly or partly from proceeds of a property insurance claim to knowingly allow the insured person to fail to pay, or assist the insured person’s failure to pay, the applicable insurance deductible. See SECTION 2. Business & Commerce Code, is amended to read as follows: Section 27.02. “Goods or Services Paid for by Insurance Proceeds: Payment of Deductible Required”
How This Affects You:
For Policyholders: This does not affect you.
For Contractors: As a contractor, you will need to add the above section to any work authorization forms and/or contracts if you expect to be paid from the proceeds of a property damage insurance claim (assuming you are providing contracting services worth more than $1,000).
For Public Adjusters: As a public adjuster, you will need to add the above section to any work authorization forms and/or contracts if you expect to be paid from the proceeds of a property damage insurance claim (assuming your service fee will be greater than $1,000).
FAQs About Texas House Bills 2102 and 2103
Can a Contractor Waive My Insurance Claim Deductible? No. Under the new las created by Bill 2102, a contractor cannot waive your insurance claim deductible or offer to cover the deductible in any way, shape, or form.
Can a Contractor Handle Negotiations with My Insurance Company? No. Under the new law created by Bill 2103, a contractor cannot serve as a public adjuster for any property for which the contractor is providing or may provide contracting services, regardless of whether the contractor is licensed as a public adjuster.
Can a Contractor Ever Serve as a Public Adjuster? A contractor who has a public adjuster license can serve as a public adjuster as long as the contractor is not providing contracting services to that client. You can serve as a public adjuster to one client and a contractor to another client, but you cannot serve both roles for one client.
Hire a Reputable Public Adjuster in Texas with ClaimsMate Today
Hiring a reputable public adjuster is more important than ever with the passage of Texas House Bills 2102 and 2103.
We’re available in all big cities and small towns across Texas. Contact ClaimsMate today for personalized assistance from a licensed public adjuster on your next insurance claim.