Roofing contractors and adjusters have been at the center of an ongoing debate in Texas. As I noted in Texas Moves to Limit the Role of Roofing Contractors, Texas enacted H.B. 1183, prohibiting insurance adjusters from doubling up as roofing contractors and preventing roofing contractors from acting as adjusters, or advertising to act as an adjuster, on any property they perform work.
While there isn’t any doubt the law has cut down on the involvement of roofing contractors in the claims process, the problem still exists. Many times this is to the detriment of the policyholder.
With hurricane season upon us, TDI issued a new bulletin to all insurance carriers, adjusters, and roofing contractors reminding them of the bill’s requirements. In part, the bulletin states:
The Texas Department of Insurance issues this bulletin to remind insurers, insurance adjusters, and public insurance adjusters that the 83rd Texas Legislature (2013), enacted House Bill 1183, effective September 1, 2013, which establishes prohibited conduct of insurance adjusters, public insurance adjusters, and roofing contractors.
HB 1183 does not change existing prohibitions in Texas Insurance Code, Chapters 4101 or 4102, but it adds §4101.251 and §4102.163.
Section 4101.251 prohibits licensed adjusters from adjusting a loss related to roofing damage on behalf of an insurer if the adjuster is a roofing contractor or otherwise provides roofing services or roofing products for compensation, or is a controlling person in a roofing-related business. The section also prohibits a roofing contractor from acting as an adjuster or advertising to adjust claims for any property for which the roofing contractor is providing or may provide roofing services, regardless of whether the contractor holds a license under this chapter.
Section 4102.163 prohibits a roofing contractor from acting as a public adjuster or advertising to adjust claims for any property for which the contractor is providing or may provide roofing services, regardless of whether the contractor holds a license under this chapter.
Associations, directors, and managers should be aware of this new legislation because associations are often the most vulnerable after a loss occurs. If your association is approached by a contractor after a loss, keep the following in mind:
- Be wary if the contractor tells you about his experience in settling insurance claims or in dealing with insurance carriers and adjusters. Contractors are specifically prohibited from negotiating your claim with the insurance company and, other than providing and/or explaining an estimate to repair the damages that occurred, should not be involved in the claim process. Note this applies even if the contractor was previously a licensed insurance adjuster.
- Read contracts carefully before signing them. If the fine print says that you are authorizing the contractor to deal with the insurance company on your behalf, you can assume that the contractor is ignoring the requirements of law above.
- Do not sign contracts that assign all or a portion of an unsettled claim to the contractor and do not sign contracts that do not have a stated price for doing the work. Often we see contracts where the work will be done for “insurance proceeds recovered.” Many jurisdictions have found these contracts to be invalid because they do not state the exact price that is to be paid.
- Do not sign contracts that require the association to pay a contractor a percentage of the amount recovered in the claim if either party decides to cancel the contract. This is often a sign that the contractor plans to get involved in the negotiation of the claim in violation of the new Texas law.
While there are obviously a number of good and ethical contractors out there, each state has its own law about what they can and can’t do. By knowing your state’s requirements, and using a little common sense, you can help protect your association and its claim.
