Texas Insurance Code 4102

Roofing practices are in the spotlight now more than ever. On October 25, 2017, a lawsuit was filed in Tarrant County against a local roofer accused of acting as an unlicensed public insurance adjuster in violation of Texas Insurance Code 4102. In that suit, the property owner plaintiff claims that the roofer promised to and, in fact, did negotiate on the owner’s behalf with the owner’s insurance company. According to the petition, the roofer charged a 5% consulting fee for this service, a discount from the standard 10% charged by a public insurance adjuster, which fee was then added to the claim. Then, when negotiations apparently broke down between the roofer and the insurance company adjuster, the owner and roofer had a falling out and the roofer filed a lien against the property for the value of the claim, at least as the roofer saw it. The lawsuit goes on to claim that, but for the roofer grossly over-valuing the claim, the insurance company would likely have paid, leaving the owner without a repaired roof and at odds with its insurance company. Whether or not any of these allegations are true remains to be determined. What is true is that, if the lawsuit is not settled quickly, this roofer is likely facing months or years of litigation and tens of thousands of dollars in legal fees defending its name and practices.

What does this mean to roofers and others in the restoration contractor community?

First, lawyers across the DFW metroplex are hearing about – and acting on – potential violations of Tex. Ins. Code 4102. Second, these suits are spreading into commercial property disputes. And, for the first time, a non-roofer is accused of acting as a public adjuster. In the case at hand, while not named as a defendant, the contractor who did the water damage testing and assessment is also accused of acting as an unlicensed pubic insurance adjuster.

Any roofer who disregards the rules, whether out of ignorance or assuming they are immune to suit, is vulnerable. Remember, the penalty for violating 4102 – as currently interpreted by the courts – is giving “back” to the property owner all monies paid for work on the property subject to the violation, plus payment of the property owner’s legal fees, and their own. What does your contract and your advertising promise your customers and prospects? Are you going too far in your dealings with insurance company adjusters? Remember, only the roofer can violate this statute, so don’t get sucked in to conversations with adjusters that you shouldn’t be having. Any conversations that take you beyond a factual discussion of the content of your proposal is risky and leaves you vulnerable. If you feel yourself arguing with or trying to persuade the adjuster to your way of thinking, you’ve likely gone too far.

Save yourselves and your property owners time and headaches when dealing with unreasonable adjusters. Develop a relationship with an attorney or a public insurance adjuster you can recommend to your owners who can legally advocate for delayed, underpaid or wrongfully denied claims.

By Karen Ensley, Board certified construction lawyer, general counsel for the Roofing Contractors Association of Texas and the North Texas Roofing Contractors Association. For questions or comments Karen can be reached at karen@saunderswalsh.com.

Learn more by downloading Karen’s presentation on the Texas Insurance Code 4102.