As an attorney at Merlin Law Group in Texas, I have the clear privilege of working directly with Rene Sigman, Regional Litigation Manager, who runs the firm's Texas operations. As a mentor, Rene has gone above and beyond to show me the complex ropes for handling first-party security matters in Texas. Rene's unmatched work ethic combined with her passion for our customers' interests was more than evident recently when we recovered several favorable deals for commercial and residential policyholders. During this time, we noticed something interesting with one of the insured's contracts with her public adjuster. The contract was incomplete and did not comply with the Texas Administrative Code, which governs public insurance adjustment agreements.
Public Adjusters in Texas must first enter into a written agreement executed by the Insured or the Insured's duly authorized representative before acting directly or indirectly as a public adjuster in this state. In other words, you can not act as a public adjuster until there is a written agreement between you and the insured. If you are not using the Texas Department of Insurance standard FIN 535 contracts for public adjusters, this is a good time for Texas public adjusters to review their written contracts and make sure they follow the code, especially with hurricane season here.
Requirements for Texas Public Insurance Adjuster Contracts
Below are the thirteen general requirements for a public adjustment written contract with an insured.
2. the telephone and fax numbers of the general insurance adjuster, including area codes;
3. postal and physical addresses to which cancellation notices and all communications to the general insurance adjuster can be delivered,
4. if any part of the agreement or request is made via the Internet, the e-mail address and the website address to which notice of termination of contract and all communication to the general insurance adjuster can be delivered,
5. date and time of signing the contract;
6. for each foreign insurance adjuster specified in the contract, the name and address of the foreign insurance adjuster's agent for service of the process;
7. the following separate statements in 12-point bold on the signing page of the contract:
a. "NOTICE: THE INSURED MAY CANCEL THIS AGREEMENT WITH WRITTEN NOTICE TO THE PUBLIC INSURANCE ADJUSTER WITHIN 72 HOURS OF SIGNATURE FOR ANY REASON."; "WE REPRESENT THE INSURED ONLY."; and
c. “YOU ENTER INTO A SERVICE CONTRACT. YOU WILL BE CHARGED FOR THIS SERVICE. YOU DO NOT HAVE TO GO TO THIS AGREEMENT TO MAKE A CLAIM FOR LOSS OR DAMAGE TO AN INSURANCE POLICY. ”;
8. the statement: "If the insurer pays or undertakes to pay the insurance to the insurance according to the insurance code article 6.13 or §862.053 within 72 hours after the loss is reported to the insurer, the general insurance adjuster is not entitled to compensation based on a percentage of the insurance settlement, but has to reasonable compensation for the time of the general insurance adjuster and expenses insured before the damage was paid or the written commitment to pay was received. ”;
9. the statement: "NOTE: A general insurance adjuster may not participate directly or indirectly in the reconstruction, repair or restoration of damaged property that is the subject of a claim adjusted by the general insurance adjuster or participate in other activities that can reasonably be interpreted as presenting a conflict of interest, including requesting or accepting any compensation from, or having a financial interest in, any salvage company, repair company or other company conducting business in connection with any claim that the public insurance adjuster has a contract or agreement to adjust. ”;
10. on the first or second page of the contract, the following English and Spanish messages in ten-point bold:
a. “IMPORTANT NOTICE: You can contact the Texas Department of Insurance for information about public insurance adjusters, your rights as a consumer, or information on how to file a complaint by calling 1-800-252-3439; or you can write to the Texas Department of Insurance, at PO Box 149104, Austin, Texas 78714-9104, or contact the department at Fax 512-475-1771. ”;
b. “ADVISO-VIKTIGT: Can communicate with the Texas Department of Insurance to obtain information from public safety adjusters, such as the consumer, or information about presenting a line called 1-800-252-3439; you can write to the Texas Department of Security, at PO Box 149104, Austin, Texas 78714-9104, or communicate with the department at Fax 512-475-1771. ”;
11. a statement that the total commission to the general insurance adjuster, including costs, direct costs or other costs incurred by the public insurance adjuster, may not exceed ten percent of the amount of the insurance settlement under any compensation. 19659005] 12. where applicable, a statement showing how payments made before the entry into force of the agreement will be used to determine compensation to the general insurance adjuster; and
13. a clear and prominent statement from the Commission of the General Insurance Adjuster, including:
a. the method for calculating the commission for the general insurance adjuster, whether it is an hourly rate, flat rate, settlement percentage or another method of compensation, in particular:
i. if an hourly rate, the contract must specify the hourly rate and how it will be applied to working hours provided by the general insurance adjuster in order to calculate the amount to be paid,
ii. if a fixed fee, the contract must specify the amount to be paid to the general insurance adjuster,
iii. if a percentage, the contract must specify the exact percentage that will be applied to the settlement of the claim in order to calculate the amount to be paid to the general insurance adjuster; or
iv. if another calculation method is chosen, the contract must include a detailed explanation of how the amount to be paid will be determined based on services provided by the general insurance adjuster.
b. a general description of the services that the general insurance adjuster will provide under the agreement,
c. a description of the claim, damage to property, place and date of event;
d. if it is based on an hourly rate, a provision that the general insurance adjuster will provide an invoice for services that includes a detailed list of services provided and separate costs to be paid to the general insurance adjuster as part of the commission based on the damages, including costs , direct costs and other accrued expenses.
Click here for more information on Texas Public Insurance Adjustment Contracts and click here for more information on the Texas Department of Insurance.