The Takeaways
- Contractors may advise against hiring a Public Adjuster because this does not benefit their interests
- Texas Insurance Code 4102.163 makes it illegal for a contractor to settle or negotiate your insurance claim
- A Public Adjuster will educate Insureds on the entire claim process including the various ways you can choose to recover from a large loss
- A contractor may not like the additional transparency and accountability that occurs when you hire a Public Adjuster, holding them accountable
- A Public Adjuster is the only person in the claim process who has a legal duty to act solely in your best interest
Why Is A Contractor Telling Me Not To Hire A Public Adjuster?
When you're dealing with a significant insurance loss, navigating the complexities of the claims process can be challenging. Your contractor might promise to handle everything with your insurance company and tell you not to hire a Public Adjuster, but is that the best course of action?
Any logical analysis would determine that it does not make sense that an unlicensed contractor would advise someone not to hire a licensed adjuster who is required by law to act solely in your interest. Not only do Public Adjusters understand your insurance policy, how to interact with your insurance company's adjusters, and how to maximize your settlement, but they also possess a deep understanding of the construction process.
Here True View Commercial explores why contractors might use scare tactics to discourage you from hiring a public adjuster, why it's essential to consider each party’s interest in your claim, and why hiring a Public Adjuster might be the right step to take to protect your insurance claim settlement.
My Contract Said I Don’t Need A Public Adjuster…
This is a leading statement that we hear on a weekly basis at my firm. “My contractor is telling me I don’t need a Public Adjuster, but something just doesn't seem right with my claim”. This is usually followed by a lengthy explanation of how everything seemed okay at the beginning of the claim and then the insured noticed substantial delays because the contractor and insurance company couldn’t agree on how to settle the claim, or that the contractor had become unresponsive.
Now, certainly, there might be instances where a Public Adjuster may not be warranted. For example, your loss is so severe that the insurance company agrees to all damage upfront and issues all monies possibly owed to you under your policy. However, it is rare that this occurs. In any event, a consultation with Public Adjusters should be at no cost and the Public Adjusters will let you know if it makes sense to use their services. Remember, they have a fiduciary duty to you and your interests will always be at the forefront.
Three Reasons A Contractor Doesn’t Want You Hiring A Public Adjuster
Over the years, and across millions of dollars of insurance claim settlements, there seem to be three common reasons that contractors use to discourage an insured from using a Public Adjusters:
- We expose illegal activity
- We educate Insureds on the claim process
- We add transparency and accountability to the reconstruction process
Let’s further examine the three common reasons why contractors try to discourage the use of a public adjuster.
Exposing Illegal Activity
A Public Adjuster is aware of insurance laws and regulations surrounding what contractors are permitted to do by law when it comes to their involvement in an insurance claim. The primary issue is that contractors cannot carry out acts that a reserved for a licensed adjuster, without holding an insurance adjusting license. Even if contractors hold an insurance adjusting license, the law prevents them from practicing adjusting on a claim in which they are also the contractor. This creates serious conflicts of interest.
Contractor: “You don’t need a Public Adjuster. ABC Construction Company will handle the claim for you and make sure the insurance company pays you everything you’re entitled to in your policy”
Reality: This is against the law.
Well… this seems like a no-brainer. Who wouldn’t want to get everything they’re entitled to and have someone get it for them? While your insurance company may interact with your contractor as a courtesy to clarify property reconstruction plans, they are not obligated to do so.
The issue here is that in Texas, and many other states, contractors are prohibited from negotiating and settling insurance claims on behalf of policyholders. In the State of Texas, the law is clear: Texas Insurance Code 4102.163, implemented in 2019, outlines specific activities that contractors must avoid when involved in restoration projects tied to insurance proceeds. This legislation aims to ensure that only licensed public insurance adjusters handle such negotiations, and rightfully so.
The prohibition on contractors negotiating insurance claims stems from the fact that they are essentially performing tasks reserved for licensed public adjusters. The Texas Insurance Code clearly states:
"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, regardless of whether the contractor holds a license under this chapter or is authorized to act on the behalf of the insured under a power of attorney or other agreement."
In essence, if a contractor attempts to negotiate, adjust, or influence the settlement of your insurance claim, they are, by definition, acting as a public adjuster without the appropriate license or in conflict with their license (if they hold one).
Increasing Your Knowledge of the Process
Public adjusters often offer educational resources and materials to enhance your understanding of the insurance claim process. These resources will empower you with knowledge to help you understand the entire process and how to achieve your specific claim goals.
Contractor: You don’t need a Public Adjuster. ABC Construction Company will explain exactly how a large claim like yours works.
Reality: The contractor will only explain their business model and how it applies to your claim.
A licensed Public Insurance adjuster has a fiduciary duty to you, not any other company or process. Our deep understanding of large and complex losses gives us the experience and insight to accurately forecast the outcome of a claim. With that in mind, we can explain multiple avenues of claim recovery options that are specific to your loss and your goals.
By offering not just guidance but a comprehensive education, public insurance adjusters empower you to make well-informed decisions. These decisions not only maximize your claim but also align with your financial goals, whether that's minimizing expenses, expediting the process, or securing a fair settlement. With claim management directed by your Public Adjuster, you're an active participant in the claims process, making choices that truly serve your interests, not the interests of a contractor.
Adding Transparency and Accountability
Public Adjusters at True View Commercial offer a second set of eyes on all aspects of your claim. This helps add transparency and accountability from all parties across the board, especially when contractors are involved.
Contractor: "You don’t need a Public Adjuster. ABC Construction Company will do everything on the agreed insurance scope… as far as you know".
Reality: Contractors may need additional construction oversight
Some contractors are so concerned with their bottom line, that they may cut corners during reconstruction to maximize their profits. Sadly, this is not an uncommon practice. To ensure transparency and accountability throughout the claim journey, a public adjuster is your trusted ally. Adding a layer of oversight prevents unsavory contractors from deviating from what has been agreed to in your approved insurance scope.
"Transparency and accountability are essential components of a successful insurance claim process. When dealing with contractors, it's crucial to have a clear understanding of what's happening every step of the way." J. Ryan Faber, President, True View Commercial
Throughout the project, your public adjuster will keep you in the loop with regular progress updates. Your Public Adjusters will also monitor the quality of the work performed by the contractor. They ensure that the repairs or replacements meet industry standards and align with the agreed-upon scope of work. Any deviations or discrepancies should be addressed promptly to maintain accountability.
True View Commercial also reviews and verifies invoices submitted by the contractor. We check for accuracy, ensuring that the charges align with the scope of work and estimates. This step adds an extra layer of financial accountability to the contractors.
A Public Adjuster Has A Duty To Protect Your Interests, Not A Contractor’s
While contractors may tell you not to hire a Public Adjuster or offer to negotiate with your insurance company on your behalf, it's important to understand the legal restrictions in Texas that prohibit them from doing so; additionally, the self-interested motivations for keeping a Public Adjuster out of your claim. Employing a Public Adjuster at True View Commercial to actively manage and oversee a contractor's activities and maintain open communication with you only adds transparency and accountability to the claims process. Our goal is to ensure that your interests are protected and that the contractor adheres to the agreed-upon terms.
If you have questions about your contractor's actions during your reconstruction process or need guidance on whether to hire a public insurance adjuster, don't hesitate to reach out to True View Commercial. Our licensed experts are here to provide insights and help you make informed decisions.
Please note that True View Commercial does not provide legal advice. For questions regarding the legal aspects of your claim, it's advisable to consult with a trusted attorney.
