Texas property insurance and construction have always been closely connected. Understanding where the legal line is drawn — and what a referral relationship looks like — protects your business and serves your clients.
Carriers ask for them routinely. Building one takes days. Without the documentation infrastructure behind it, the adjuster uses your estimate to set a ceiling on what they’re willing to pay.
If your agreement includes language authorizing you to negotiate with the insurer on the customer’s behalf, that contract may be unenforceable on its face under TIC §4102.207(a).
A licensed public adjuster has authority the contractor does not. When an insurer declines to engage further, a contractor has no enforcement mechanism. A PA does.
The adjuster will use your estimate to set a ceiling on what they are willing to pay. A 30-page estimate without the documentation infrastructure behind it gives the insurer more to dispute, not less.
The Itemized Estimate ProblemOne of the most common points of friction between contractors and insurance carriers is the request for an itemized estimate. Carriers ask for them routinely. Many contractors try to comply, believing it will help their client move the claim forward.
It rarely does — and it costs the contractor significantly.
An itemized estimate submitted without the documentation required to support every line does not produce results. The adjuster will question quantities, challenge unit costs, exclude items that are not photographically documented, and use the estimate to set a ceiling on what they are willing to pay.
Beyond the claim result, producing that kind of estimate takes an enormous amount of time that cannot be billed. While a contractor is building an insurance-department-style estimate for one claim, they are not servicing existing clients or finding new ones.
Contractors are not required to change their standard estimating practices to satisfy an insurer’s request. The insurer’s request is not a legal obligation. It is a negotiating tactic.
Referring a client to a public adjuster at this stage changes the dynamic entirely. Versa produces documentation and estimates with the depth and methodology required to support every line. The carrier is dealing with a licensed representative who has both the tools and the legal standing to push back.
The Unfair Practices in Public Adjusting Act was enacted by the Texas Legislature in 2003 specifically to address concerns about unscrupulous contractors taking advantage of homeowners after catastrophic weather events. The definition of a “public insurance adjuster” turns on the role, not the label.
Two recent Texas cases illustrate what happens when contractors cross the line. Versa comes from the construction side of this industry. We are not here to create problems for contractors — but this is the legal landscape and contractors should understand it.
A class action brought on behalf of 36,899 Texas homeowners who signed contracts with Lon Smith Roofing containing language authorizing the company to negotiate with the insurance company on their behalf — a role that requires a public adjuster license under Texas law.
The trial court found the contracts illegal, void, and unenforceable. The decision is currently on appeal, though the grounds for reversal are considered thin. If upheld, each of the 36,899 class members would be entitled to recover every dollar they paid Lon Smith under those contracts. The court also found the violations constituted unfair and deceptive acts under TIC Chapter 541 and the Texas Deceptive Trade Practices Act.
Stonewater challenged the constitutionality of the licensing and dual-capacity requirements under Chapter 4102. Website descriptions included “The Leader In Insurance Claim Approval” and “Trusted Roofing and Insurance Specialist.”
Licensing and dual-capacity requirements upheld. Website language and contract terms authorizing negotiation on behalf of clients found to violate the statute. Penalties under Chapter 4102 include administrative sanctions, a Class B misdemeanor, and civil liability.
Removing negotiation language from a contract is a compliance step. It is also a practical step: that language makes an “insurance proceeds” business model significantly harder to enforce under Texas law.
A contractor’s highest and best use of time is finding new clients and managing active jobs. The claims process is a separate discipline — one that requires a different license, different training, and direct legal authority to negotiate on the insured’s behalf.
When the insurance offer won’t cover the actual cost of restoration, refer the client to Versa. No further involvement in the insurance process is required.
We document the loss, build the claim package, and negotiate with the carrier as the client’s licensed representative. The contractor is free to focus on their other clients and active jobs.
When the claim is settled and funds are available, the restoration work goes back to the contractor who made the introduction.
“The insurance company hasn’t provided enough money to get this job done properly. I know a professional who can help. There is a contingency fee, but if no additional money is recovered, there is no fee to you.”
If you’re a contractor doing insurance work and not recommending PAs to your customers you are leaving a TON of money on the table. Did you know when an insurance company drags out a claim, they have to pay interest to the customer? PAs provide that helpful info and make the insurance companies pay up.
Bill Spell has just completed the task of helping my 85-year-old clients get the type of funding they needed to actually fix their home correctly. They had no idea what they were doing and the insurance adjuster knew that so he tried to give them 6K. I won’t disclose how much he ended up getting for this elderly couple but it was enough to fix their home where they don’t have to worry about mildew growing inside their home anymore. Thank you Bill, I really enjoyed watching you work.
The division is straightforward: Versa handles the insurance side, you handle the work. When the claim is settled and funds are available, the job comes back to you.