UPPA Verdict Upheld: The Consumer, the Contractor, the Public Adjuster, and the Insurance Industry

This month a Texas court of appeals upheld an important ruling against a contractor who was involved in the Unauthorized Practice of Public Adjusting (UPPA).
By NAPIA Director Alice Young, SPPA 
This month a Texas court of appeals upheld an important ruling against a contractor who was involved in the Unauthorized Practice of Public Adjusting (UPPA).

Lon Smith Roofing & Construction entered into a contract with Gerald and Beatriz Reyelts. In the contract the roofer asserted that Lon Smith agreed “to pursue homeowners'" best interest for all repairs, at a price agreeable to the insurance company” and to work out “the final price agreed between the insurance company” and Lon Smith.  And that "The homeowner is responsible for paying the deductible and for any upgrades. “The final price agreed to between the insurance company and LSRC shall be the final contract.”

The company replaced the roof without notifying the insurance company and then sent a bill to the insurance company for payment. The insurance company rightfully denied the claim citing policy language which requires the homeowner to allow the insurance company to inspect the damages. 

Lon Smith Roofing then billed the homeowner multiple times demanding payment for their services. The homeowners asserted that based on the contract it was the roofing company's responsibility to notify the insurance company. The judge ruled in their favor. In addition, under Texas law (as well as other states) a person who negotiates and adjusts an insurance claim besides the homeowner must be a public adjuster or attorney. It is a crime for a person besides the homeowner to adjust a claim when they are not licensed. That fact alone was enough for the judge to state the contract was invalid. At the time that the original contract was signed that was the only law they broke. But as of today, the law is that a contractor cannot also be a public adjuster in order to eliminate a conflict of interest on the claim (so even if he was licensed to negotiate and adjust, he could not legally be the client's roofer).

Lon Smith Roofing appealed the verdict and both NAPIA (National Association of Public Adjusters) and TAPIA (Texas Association of Public Adjusters) stepped in to help with the appeal process. They worked with the client's attorney in drafting and filing the brief that the appeals court reviewed in their decision making. The ruling markedly references a brief that was written by Brian Goodman, Esq., NAPIA's general counsel. NAPIA uses membership dues and donations to offset the expense of legal proceedings that will potentially impact consumers.

So how does this affect the consumer, the contractor and the public adjuster? By upholding this ruling the court has chosen to protect the consumer. The consumer should not have to worry about their claim being in unlicensed hands. An unlicensed person does not know how to review an insurance policy and cannot prioritize the consumer's best interest when they are acting illegally. This will directly and positively impact consumers by ensuring that they are using a licensed, bonded adjuster who is knowledgeable. It will also make sure the insurance proceeds are in the control of the consumer, not the person engaging in the unauthorized practice of public adjusting.

The contractor can focus on what they do best: repair, restore, and build. The public adjuster can work in tandem with a contractor instead of in competition. The public adjuster can focus on negotiating, adjusting, submitting insurance forms and reviewing the policy without the concern of contractors improperly representing the insured and jeopardizing a valid claim. 

The insurance industry does not have to increase premiums because of fraud or incompetence perpetuated by those who are illegally operating as a public adjuster.

The National Association of Public Insurance Adjusters advocates for public adjuster education and a high standard of professional conduct and ethics. NAPIA members are committed to working in the best interest of their clients and to conducting business with integrity. For more than 66 years, NAPIA members throughout the United States have joined together for the purpose of education, certification, marketing opportunities, legal and legislative representation, scholarship and research, and promotion of the public adjusting profession. NAPIA is proud to be part of such a historic victory for all parties involved.