If it walks like a duck, talks like a duck, it’s a duck.
In a much-anticipated ruling, last Friday the Texas Supreme Court gave strength to the public adjusting statute and added value to a public adjusting license. In Texas Department of Insurance et al. v. Stonewater Roofing, Ltd., Co., 2024 WL 2869414 (June 7, 2024), the Supreme Court held that it was not a violation of the roofing company’s constitutional rights to prohibit roofers from acting as public adjusters.
Public adjusters in Texas, like other states, are creatures of statute. Specific Texas law authorizes the use and governs the conduct of public adjusters. While knowledgeable of the same adjusting practices as independent adjusters, public adjusters are licensed through a different statute and are allowed, much like attorneys, to advocate for their clients. “To secure a license to adjust insurance claims on an insured’s behalf, a person must have sufficient experience or training in the assessment of property values and losses; be sufficiently informed about the terms and effects of typical insurance contracts; and successfully pass an examination of the applicant’s technical competence, basic knowledge of relevant topics, and understanding of governing law and ethical standards.” Id. On the other hand, “unlicensed persons may not advertise, solicit business, or hold themselves out to the public as an insurance adjuster.” Id. (citing Tex. Ins. Code Sec. 4102.001(3)).
The High Court’s decision to prohibit activities and advertisements by the roofing company usurping the public adjuster’s role draws a clear line where before it was blurry. In the past, “insurance consultants,” “roofers,” and other close but not quite adjusters were charging contingent fees in Texas. In case before the court, the roofing company advertised the following skills:
- “Insurance specialists;”
- “The Leader In Insurance Claim Approval;”
- “…highly experienced with the insurance claims process;”
- “…help [its] customers settle their insurance claims as quickly, painlessly and comprehensively as possible;”
- Their contract gave the roofing company authority to “negotiate on [the customer’s] behalf with [the] insurance company and upon insurance approval to do the work specified.”
The Court made a clear statement that those activities fall under the public adjuster (or attorney) license. This should put a stop to the lawyer-roofing-consultant business where attorneys are being asked to draft contracts to avoid this prohibition. The Court is saying here if it looks like a duck, walks like a duck, talks like a duck, it’s a duck. So, if you are not a public adjuster (or an attorney), you are prohibited from acting like one!