Texas Insurance-Contingent Contract Compliance

Understanding the Basics of Texas Insurance-Contingent Contract Compliance

Why Insurance-Contingent Language Matters

> “We will handle the insurance company and get the best settlement for your roof.”

That sentence can move a contractor from selling a repair to appearing to adjust a claim. Under Texas Insurance Code Chapter 4102, a roofing contractor cannot act as a public insurance adjuster, advertise that the contractor will adjust an insurance claim, or promise claim results on property where the contractor provides or may provide roofing services. The problem does not depend on the contractor’s job title. The contract, sales pitch, text messages, and conduct can show what the contractor actually promised.

The drafting goal is straightforward: sell and document the repair, not the insurance claim. A compliant agreement states the repair scope and price, leaves the insurance claim to the homeowner and insurer, and clearly says that the contractor will not adjust, negotiate, or represent the homeowner’s claim. After applying the No-Adjusting Script Check, you should be able to identify risky language, replace it with repair-focused language, and preserve a clean record showing that your company never acted as the homeowner’s claim representative.

This distinction matters because Texas courts, including litigation involving Lon Smith Roofing, have treated promises to negotiate with an insurer, obtain the best settlement, or make the contractor’s price depend on the insurer’s approval as possible unlicensed public-adjusting conduct. A violation can expose the contractor to disgorgement of money paid and the homeowner’s attorney’s fees. The safest contract does not merely avoid the words “public adjuster.” It avoids the work and promises associated with adjusting.

The No-Adjusting Script Check

The No-Adjusting Script Check reviews every insurance-related sentence for three questions: Who controls the claim, what does the contractor promise to do, and how does the price work? If the wording gives the contractor control over the claim, promises an insurance result, or ties the contractor’s compensation to the insurer’s decision, revise it before presenting the agreement.

1. Define the contractor’s service. State that the company will inspect, document, repair, or replace the described property for a stated price. This keeps the agreement about construction work rather than claim handling.

2. Reserve the claim to the homeowner. State that the homeowner alone communicates with the insurer, submits the claim, provides requested information, and decides whether to accept or dispute the insurer’s position. This matters because the homeowner, not the contractor, must control the insurance relationship.

3. Reject claim representation. Say that the contractor will not adjust, negotiate, settle, or represent the homeowner in the insurance claim. Do not rely on a vague statement that the contractor is “not an adjuster.” The contract should identify the prohibited activities.

4. Separate price from settlement. Use a stated contract price or a clearly defined repair price. Do not say that the price equals “whatever the insurance company approves,” and do not promise that insurance proceeds will cover the full amount. A contractor may explain the repair scope and provide documents, but the insurer decides coverage and payment.

5. Check the spoken script. Sales representatives must use the same limits in person, by telephone, by text, and in email. A compliant contract cannot cure a sales promise that the company will “fight the carrier” or “get the roof approved.”

Texas Insurance Code Section 4102.158 identifies a conflict when a person adjusts a claim for an insured and also performs the repairs. Section 4102.163 prohibits a roofing contractor from acting as a public adjuster or advertising to adjust claims on property where the contractor provides or may provide roofing services. Section 4102.104 caps an adjuster-style commission at 10 percent of the settlement amount, but that cap does not authorize an unlicensed contractor to adjust claims. A contractor should not treat the cap as a pricing option.

Texas Insurance Code Chapter 707 adds a separate contract requirement for contracts of $1,000 or more tied to an insurance settlement. The agreement must tell the policyholder that the policyholder remains responsible for the deductible and must not waive, rebate, or absorb it. Include this notice in the signed contract, even when the homeowner says the insurer will pay the entire bill. The notice protects the accuracy of the transaction and prevents a sales promise that conflicts with Texas law.

A repair agreement also needs to preserve lien rights. Texas Property Code Chapter 53, including Section 53.255, requires the required lien-rights disclosure in the applicable residential construction setting. Follow the statutory form and delivery rules for the project....