On September 1, 2013, Texas House Bill 1183 went into effect. It became a part of existing Texas Insurance statutes that govern the conduct of insurance companies and their representatives. The new law hopes to eliminate conflicts of interest by preventing roofing contractors from also working as insurance or public adjusters.
Texas House Bill 1183 may not seem relevant to you at this time. But if your roof is ever damaged due to fire, windstorm, or any other insured peril, the law could be important. Working with your insurance company to resolve damage and repair issues can be difficult enough. A property owner doesn’t need the added complication a conflict of interest can create.
A conflict of interest
When a serious storm damages a home or commercial property, one of the first calls the property owner makes is to the insurance company. The insurance company usually sends out their staff adjuster. But a conflict of interest can arise if the person repairing your roof is also the insurance company representative who decides if there is damage, how much damage there is, and how much money the insurance company should pay.
The insurance company adjuster usually inspects the property, writes an estimate, and works with the contractor chosen by the policyholder. He usually performs these duties on behalf of an insurance company based on policy provisions. But what happens if he also has a financial interest in a roofing company?
• An adjuster who is also a roofer would have the unfair advantage of being in control of a roof claim from beginning to end.
• He could inspect a roof and write an estimate for damage, even if there was no damage.
• He could use his influence as an insurance adjuster to steer the property owner to his roofing company to get the repairs done.
• He could give the property owner the impression that his roofing company was authorized to act on the insurance company’s behalf.
• The adjuster/roofer could set up a situation where the property owner might feel compelled to use his roofing company instead of the contractor of his choice.
How could this happen?
An insurance company wouldn’t necessarily know of an adjuster’s roofing company connection. If they did, they probably wouldn’t hire him in the first place, due to the potential for conflict. A roofer seeking employment as an insurance company property adjuster would most likely hide his ties to the roofing company.
If hired as an employee, the roofer would be working on behalf of the insurance company. Even if his employer were unaware of his roofing company interests, they could still be held legally liable for his actions on the job. If the property owner hired the adjuster’s roofing company to do the job, the insurance company could be ultimately responsible for the quality of the work they perform as well.
Protecting the consumer
While it’s hard to imagine how a roofer could set himself up to earn money by handling the claim for the insurance company, then earn additional money by repairing the damage, it was a big enough problem in the state to require legislative action.
When damaging perils occur, especially catastrophic storms that effect a number of homes, someone will make money doing the repairs. While most contractors might be honest and ethical, property owners should always be aware of potential contractor money-making schemes. Texas HB 1183 provides one more level of protection by eliminating situations that would allow roofers to steer business to their own companies.
You need a personal advocate
Insurance companies have adjusters looking out for their interests. Roofers and other contractors have estimators and sales people looking out for them. When your business or home is damaged, shouldn’t you have someone looking out for you?
If your property is damaged and you need someone who is experienced, knowledgeable, and trustworthy working on your behalf, contact us. We can help.