ADJUSTERSINTERNATIONAL.COM • (800) 382-2468 • INFO@ADJUSTERSINTERNATIONAL.COM 1 The roles of both restoration contractors and public adjusters in recovering from fires, hurricanes and other disasters is critical. Sometimes the line between who should be doing what can be confusing or appear to be a grey area. Well intentioned contractors often cross the line from contracting into the unauthorized practice of public adjusting. This is not only legally prohibited in many states, but it can also irreparably harm the insured’s claim. The line between roles becomes even more complicated when an insured provides a contractor with an assignment of benefits (AOB), FROM THE EDITOR Adjusters International Limited Who Can Resolve a Property Insurance Claim? The role of public adjusters, contractors, and the balance of consumer protection By Joseph S. Harrington, CPCU and Jim Beneke, SPPA After a storm, fire, water loss, or other property disaster, an owner has two urgent problems at once: the property must be repaired and the insurance claim must be resolved. That is precisely the moment when a simple promise can sound most appealing: hire the contractor, sign over the insurance proceeds, and let the contractor “handle everything” with the insurer. We have all seen the pitch. Contractors canvass neighborhoods after hail, wind, and hurricane events. Restoration companies market themselves as insurance claim specialists. Some promise to meet with the insurer, argue for supplements, negotiate claim amounts, or absorb the policyholder’s deductible. To a property owner who is overwhelmed, that may sound like practical help. continued on next page »
ADJUSTERSINTERNATIONAL.COM • (800) 382-2468 • INFO@ADJUSTERSINTERNATIONAL.COM 3 2 ADJUSTINGTODAY.COM But the arrangement is not merely a matter of convenience. In most states, settling an insurance claim on behalf of an insured is the work of a licensed public adjuster or, in appropriate circumstances, a licensed attorney. A contractor may inspect damage, estimate repair costs, explain construction methods, and answer factual questions about the work. What the contractor may not do is step into the insured’s shoes and negotiate or effect the settlement of the insurance claim without the license and duties that come with that role. The problem is commonly known as the unauthorized practice of public adjusting, or UPPA. It is not a technicality. It is a consumer protection issue, a claims-handling issue, and an integrity issue for the property insurance system. Recent court decisions and statutory reforms, including the Texas Supreme Court’s 2024 decision in Texas Department of Insurance v. Stonewater Roofing, Ltd., have made the dividing line clearer than ever.1 The line is not between silence and speech. It is between providing construction information and assuming the legal role of the insured’s claim representative. Why the line matters Public adjusters represent policyholders in the adjustment, negotiation, and settlement of first-party property insurance claims. Their work is regulated because they handle matters involving contract rights, insurance coverage, claim valuation, settlement strategy, and sometimes claim proceeds. They are expected to understand property damage, policy language, documentation requirements, duties after loss, and the ethical obligations that attach to representing an insured. Repair contractors perform a different and also essential role. They evaluate physical damage, propose a scope of repair, provide pricing, perform construction work, and stand behind the completed job. Their expertise is indispensable to claim resolution because insurers and policyholders often need contractor input to understand what work is necessary and what it will cost. The difficulty arises when one party attempts to occupy both roles. A contractor who will profit from the repair work has a direct financial stake in the amount of the claim payment allocated to that work. This is not an integrity issue. Most contractors are honest, but their focus may unknowingly differ from the policyholder’s broader interests. A property claim may involve building damage, code upgrades, business interruption, personal property, additional living expenses, debris removal, ordinance or law coverage, sublimits, deductibles, and exclusions. A contractor focused on its own work is not positioned to evaluate the claim as a whole. Instead of merely receiving payment for completed work, a contractor with an assignment might attempt to control communications with the insurer, submit supplements, dispute coverage or pricing, demand appraisal, or file suit in its own name. In that setting, the assignment becomes more than a payment mechanism. It becomes a vehicle for claim representation by someone who may not be licensed to represent the insured. Florida became the best-known example. For years, AOB litigation and related claim-cost inflation were a central part of Florida’s property insurance crisis. The Legislature responded with a series of reforms, culminating in a prohibition on assigning post-loss benefits under residential property policies and certain commercial property policies issued on or after January 1, 2023.2 The result is that the Florida example is now both a warning and a case study: widespread use of AOBs in property claims can distort the claims process so severely that legislatures may remove the mechanism altogether. The broader principle applies outside Florida. A policyholder may have a right to assign certain proceeds after a loss, depending on the policy and governing law. But assigning the right to collect money is not the same thing as assigning the regulated role of adjusting, negotiating, or settling the claim. Public-adjuster licensing laws continue to govern who may act for an insured in the claim process. Contractor boundaries Regulators generally recognize that contractors must be able to communicate about repairs. A contractor may describe the damage observed, explain the cause of damage from a construction standpoint, provide a repair estimate, discuss material choices, answer questions about labor and pricing, and meet an insurer’s adjuster at the property to explain the proposed work. Those communications are often necessary for a fair and efficient claim. The crossing point comes when the contractor moves from explaining its work to advocating as the insured’s representative in the settlement of the claim.3 A contractor crosses that line when it negotiates claim value on behalf of the insured, interprets coverage for the insured, advises the “The line is not between silence and speech. It is between providing construction information and assuming the legal role of the insured’s claim representative.” giving the contractor the right to collect the insurance proceeds. In this issue of Adjusting Today, Joseph S. Harrington and Jim Beneke identify the problems that arise when a restoration contractor’s actions cross the line into public adjusting. It also sets forth clear guidelines on what the restoration contractor should and should not do, particularly considering the landmark Texas Supreme Court case, Texas Department of Insurance v. Stonewater Roofing, Ltd. (2024). It is our hope that this article clarifies any confusion over the roles and benefits provided by restoration contractors and public adjusters. With a full understanding of these distinct roles, insureds will be better understanding of the importance of having a public adjuster managing and negotiating their entire claim while at the same time, utilizing the restoration contractor’s expertise in the areas where it is most suited. Ethan A. Gross, JD Editor AOB vs. licensing laws Much of the modern UPPA problem grew alongside assignment of benefits, commonly called AOB. In its simplest form, an assignment of benefits allows a policyholder to assign the right to collect insurance proceeds to a third party, often a contractor or remediation company. The practice is familiar in health insurance and auto physical damage claims, where providers may bill insurers directly while the policyholder remains responsible for applicable deductibles and other obligations. Property insurance AOB arrangements became more controversial because they were sometimes used to bypass public-adjuster licensing laws.
ADJUSTERSINTERNATIONAL.COM • (800) 382-2468 • INFO@ADJUSTERSINTERNATIONAL.COM 5 4 ADJUSTINGTODAY.COM were unconstitutionally vague under the Fourteenth Amendment. The Texas Supreme Court rejected both arguments. The Court held that the challenged statutes regulate professional conduct and representative capacity, not protected speech. The licensing requirement prescribes what a person must do - obtain a license before acting as a public adjuster. The dual-capacity prohibition restricts a contractor from undertaking a business engagement that creates a conflict of interest. According to the Court, neither provision is triggered merely by what a person says about property damage. They are triggered by the role the person assumes in the claim-settlement transaction. The Court also made an important practical distinction. Contractors are not forbidden from discussing repairs, damage, pricing, scope of work, supplements, or clarifications. What they may not do, without proper licensing, is act on behalf of the insured in negotiating for or effecting settlement of the insurance claim. Stonewater’s own contract language, insured how to present the claim, represents that it will obtain claim approval, demands payment beyond the contractor’s own factual estimate, or holds itself out as able to handle the insurance claim. The 2024 Stonewater ruling The Texas Supreme Court’s decision in Texas Department of Insurance v. Stonewater Roofing, Ltd. is now one of the most important authorities on the distinction between contractor speech and public-adjuster conduct. Stonewater Roofing was not licensed as a public insurance adjuster. Its website described the company as an “Insurance Specialist” and “The Leader In Insurance Claim Approval,” and its customer contract authorized Stonewater to negotiate with the insurance company on the customer’s behalf and then perform the resulting repair work. Stonewater challenged Texas’s public-adjuster licensing requirement and its dual-capacity prohibition, arguing that the statutes violated the First Amendment because claim negotiation involves speech. It also argued that the statutes which authorized it to negotiate with the insurer on the customer’s behalf, “practically recite[d]” the statutory definition of public adjusting. Its marketing reinforced the same message by holding the contractor out as an insurance-claim specialist. For public adjusters, insurers, contractors, and policyholders, Stonewater is significant because it answers a common defense to UPPA enforcement: the claim that regulating unlicensed adjusting is really regulating speech. The Court’s answer was no. Licensing laws may incidentally involve communications, but they regulate the professional role and commercial relationship through which claim settlement is undertaken. A warning about unenforceable assignments Stonewater is not the only modern warning. In 2020, the Iowa Supreme Court decided a trio of cases involving 33 Carpenters Construction, Inc., a residential contractor that obtained post-loss assignments of insurance benefits and then sued insurers for additional payment. The court held that a residential contractor acting as an unlicensed public adjuster could not enforce its post-loss assignment against the homeowner’s insurer.4 The Iowa decisions are important because they demonstrate that UPPA can have consequences beyond regulatory penalties. If the underlying contract or assignment is void or unenforceable because the contractor performed public-adjuster services without a license, the contractor may lose the very payment rights it sought to obtain. The policyholder may also face confusion, delay, or litigation over a claim that should have been handled by properly licensed professionals from the start. Legal jeopardy for policyholders and insurers Property owners should not assume that allowing a contractor to “handle the claim” is harmless. Depending on the state, knowingly authorizing an unlicensed person to negotiate or settle a claim may create regulatory problems, contractual disputes, or coverage complications. At minimum, it can place the insured’s claim in the hands of someone who is not trained or regulated for that role. Insurers also have obligations. Several states instruct insurers not to engage with unlicensed adjusters in the settlement of claims. Rhode Island’s Insurance Division, for example, has warned that contractors, estimators, and other unlicensed individuals may not negotiate or effect settlement of an insurance claim, provide claim advice, advocate for the customer in the adjustment of a claim, or prepare the insurance claim for the customer. Insurers are expected to verify that they are dealing with properly licensed representatives when claim settlement is involved.5 This does not mean an insurer should refuse to consider legitimate repair information from a contractor. The better practice is to separate the source of factual construction information from the person authorized to represent the insured in claim settlement. A contractor may help document the cost and nature of repair work. A licensed public adjuster or attorney, where permitted, may advocate for the insured’s claim rights. Protecting consumers Some ask why a contractor should not simply become licensed as a public adjuster and perform both functions. The answer is conflict of interest. A Generally appropriate contractor activity Activity reserved for licensed public adjusters or attorneys Inspect damage and identify repair needs. Negotiate the amount of the insurance settlement on behalf of the insured. Prepare and explain a repair estimate. Interpret policy coverage, exclusions, or claim rights for the insured. Discuss construction methods, materials, code issues, and pricing. Advocate for coverage or claim payment as the insured's representative. Meet an insurer's adjuster to answer factual construction questions. Prepare, present, or settle the insurance claim for the insured. Submit factual supplements or clarifications concerning the contractor's own estimate when requested. Advertise that the contractor will “handle,” “negotiate,” “settle,” or “get approved” the insurance claim.
ADJUSTERSINTERNATIONAL.COM • (800) 382-2468 • INFO@ADJUSTERSINTERNATIONAL.COM 7 6 ADJUSTINGTODAY.COM public adjuster is retained to evaluate and advocate for the insured’s entire property claim. A contractor is paid to perform a particular scope of work. When the same person controls both functions, the insured may lose independent advice about what the claim is worth, what work is necessary, whether a contractor’s estimate is reasonable, and how claim proceeds should be allocated. This is why some states have dual-capacity prohibitions which provide that a person cannot hold a license as a public adjuster and be a restoration contractor.6 The conflict is not limited to dishonest actors. A contractor may sincerely believe that a larger repair scope is justified. But if the contractor’s compensation increases as the approved scope increases, the contractor’s advice is not independent. Conversely, an inflated building estimate could consume limits or proceeds that might otherwise be available for other covered categories of loss. The insured needs a representative whose financial interest is aligned with the insured’s overall recovery, not a vendor whose interest is tied to one portion of the loss. Dual-capacity prohibitions also protect contractors who operate properly. Contractors who stay in their lane should not have to compete against businesses that promise to waive deductibles, control claim negotiations, inflate estimates, or market themselves as insurance specialists without accepting the duties and oversight imposed on licensed public adjusters. Clear enforcement supports a fairer marketplace for both construction services and claim representation. The integrity of the property insurance system The issue extends beyond any single claim. Property insurance depends on a system in which policy language is applied as written, deductibles are honored, repair costs are reasonably established, and claim settlement is handled by people authorized to perform that role. When unlicensed actors control claims for their own financial benefit, costs rise, disputes multiply, and confidence in the system erodes. Policyholders are not powerless in that system. They have access to licensed public adjusters who understand property damage, insurance policy language, documentation, valuation, and negotiation. They also have access to attorneys when legal representation is needed. The point is not to leave insureds alone against insurers. The point is to ensure that the person advocating for the insured is qualified, regulated, and free from the contractor’s conflict of interest. That is why the line between repair contracting and public adjusting should be recognized and respected by everyone involved in a property claim. Contractors serve policyholders best by providing accurate, transparent, and welldocumented repair information. Public adjusters serve policyholders best by independently evaluating and advocating for the claim. Insurers serve the system best by recognizing proper representatives and refusing to reward unlicensed claim handling. In conclusion The promise to simply “handle everything” after a loss can sound incredibly efficient, especially to a property owner who is exhausted, displaced, or overwhelmed by the disaster. But this perceived efficiency cannot come at the expense of independent advice, proper licensing, and fundamental consumer protection. It is vital to remember that a contractor’s license is fundamentally different from a public adjuster’s license, and signing an assignment of benefits is not a blanket permission slip to settle an insurance claim. The 2024 Stonewater decision firmly reinforces what regulators and courts have been saying for years: public-adjuster statutes exist specifically to regulate the professional role of representing an insured individual during a claim settlement. These laws absolutely do not prevent contractors from discussing necessary repairs or estimating costs. Rather, they prevent contractors from using their repair work as a convenient platform to control, negotiate, or settle claims without the rigorous qualifications, ethical duties, and safeguards required of licensed public adjusters. Ultimately, a license to adjust is a mandate to protect the insured’s interests through independent, conflict-free advocacy rooted in professional responsibility. That regulated role should never be treated as a loophole, a convenient marketing slogan, or a contractor’s shortcut to insurance proceeds. “A contractor’s license is not a public adjuster’s license, and an assignment of benefits is not permission to settle an insurance claim.”
Follow Adjusters International on Facebook & Instagram: Facebook.com/AdjustersInternational Instagram.com/AdjustersInternational ADJUSTING TODAY® is published as a public service by Adjusters International, Ltd. It is provided for general information and is not intended to replace professional insurance, legal or financial advice for specific cases. Back issues of AT covering a variety of topics are available at www.adjustingtoday.com. ADJUSTINGTODAY® AdjustingToday.com View our entire catalog of back issues, download PDF versions, subscribe and contact the editor. EMAIL Info@AdjustersInternational.com WEB ADDRESSES AdjustersInternational.com AdjustingToday.com PUBLISHER Gregory P. Raab, MBA EDITOR Ethan A. Gross, JD AT27 3063 ABOUT ADJUSTERS INTERNATIONAL ADJUSTING TODAY® is published by Adjusters International Ltd. to educate professionals and consumers on significant issues for first-party property insurance markets and claims. A.I. is a consortium of the nation’s premiere public adjusting firms covering all 50 states, U.S. Possessions, the Caribbean, Canada, and selected international locations. Our member firms help businesses and homeowners get through some of life’s greatest catastrophes, by shouldering the burden of managing property insurance claims. Adjusters International represents policyholders only. We do not represent insurance companies. Our principal mission is to support families in their property, financial and emotional recovery; and to assist businesses with their property losses, including interruption of business, retaining employees, and serving customers. For help with a first party insurance claim please email info@adjustersinternational.com or visit our website at www.adjustersinternational.com. Copyright © 2026 Adjusters International, Ltd. All Rights Reserved. Adjusters International was formed in 1985 when thirteen of the public adjusting industry’s leading firms recognized the need for a unified, international network of highly skilled, licensed public adjusters. As losses grew more complex and far-reaching, these firms came together to ensure clients could access specialized expertise for any type of loss, anywhere, at any time. Each regional office operates as an independent firm while also serving as an owner and partner of Adjusters International. This unique structure preserves strong local knowledge while promoting accountability, shared responsibility, and collaboration across the organization. The result is a cohesive network that combines the strength and resources of a national organization with the responsiveness and expertise of locally owned firms to deliver consistent, high-quality service across all markets. KEY TAKEAWAYS KNOW THE LINE Contractors can inspect damage, prepare estimates, discuss repairs and answer construction questions—but representing the insured in claim negotiation is a different professional role. LICENSING MATTERS Public adjuster licensing helps ensure that the person advocating for a policyholder is qualified, regulated and acting independently of the contractor performing the repairs. CONFLICTS CAN ARISE When the same party controls both the repair work and the insurance claim, its financial interest in the scope of repairs may conflict with the policyholder’s broader interests. COURTS ARE REINFORCING THE DISTINCTION Recent decisions, including the 2024 Stonewater ruling in Texas, reinforce that public-adjuster laws regulate who may represent an insured in claim settlement—not ordinary discussion about repairs. AN AOB IS NOT A LICENSE Assigning the right to collect insurance proceeds does not give a contractor authority to negotiate or settle the claim for the insured. WATCH FOR RED FLAGS Be cautious of contractors who promise to “handle everything,” negotiate with the insurer or waive the deductible. Those offers can put the claim at risk. ABOUT THE AUTHORS Mr. Harrington is an independent business writer specializing in property and casualty insurance coverages and operations. He served for more than 21 years as communications director for the American Association of Insurance Services (AAIS) before starting his own writing practice in 2016. His work has been published in Best’s Review, Rough Notes, publications of The Institutes, and elsewhere, and he speaks regularly to insurance audiences. He serves on the CPCU Society’s Publications Committee. Mr. Beneke is President of The Beneke Co./Adjusters International in Austin, Texas, and a thirdgeneration public adjuster with nearly five decades of experience. He led the 2003 legislative effort that created Texas’ first public adjuster licensing law and helped the National Association of Insurance Commissioners develop a model licensing act. He is a past president and lifetime board member of the National Association of Public Insurance Adjusters, which named him its 2003 Person of the Year. Joseph S. Harrington, CPCU Jim Beneke, SPPA 1 Texas Department of Insurance v. Stonewater Roofing, Ltd. Co., No. 22-0427 (Tex. June 7, 2024). The Court held that Texas Insurance Code sections 4102.051(a) and 4102.163(a) regulate professional conduct and representative capacity, not protected speech, and rejected Stonewater’s First and Fourteenth Amendment challenges. 2 Florida Statutes section 627.7152(13) provides that, except as provided in subsection (11), a policyholder may not assign post-loss benefits under residential property insurance policies and certain commercial property insurance policies issued on or after January 1, 2023, and that attempts to do so are void, invalid, and unenforceable. 3 Texas Department of Insurance, Commissioner’s Bulletin B-0017-12, “Adjusting claims by unlicensed individuals and entities” (June 26, 2012), warning that insurers cannot use roofers as de facto public insurance adjusters and that unlicensed public-adjusting activity may be referred for enforcement. 4 33 Carpenters Construction, Inc. v. State Farm Life & Casualty Co., 939 N.W.2d 69 (Iowa 2020); 33 Carpenters Construction, Inc. v. Cincinnati Insurance Co., 939 N.W.2d 82 (Iowa 2020); 33 Carpenters Construction, Inc. v. IMT Insurance Co., 939 N.W.2d 95 (Iowa 2020). The Iowa Supreme Court held that contracts entered into by a residential contractor acting as an unlicensed public adjuster were void and unenforceable under Iowa law. 5 Rhode Island Department of Business Regulation, Insurance Division, Insurance Bulletin No. 2019-6, “Insurer Compliance with Law Prohibiting Engagement with Unlicensed Public Adjusters” (Nov. 21, 2019). The bulletin distinguishes permissible contractor communications from activities reserved to licensed public adjusters or attorneys, including negotiating, effecting settlement, preparing claims, and advocating for the insured in adjustment of the claim. 6 Some states, such as Illinois allow dual licensing as both a public adjuster and a repair contractor. While this is legal, the concerns raised in this article still hold true. While balancing these roles can, and often is, done properly where legally allowed, it is important for the public adjuster/ contractor to remember it is their fiduciary duty to always prioritize what is best for the insured, over their own interests. This article is intended for general informational purposes and is not legal advice. State licensing requirements, AOB restrictions, contractor rules, and enforcement practices vary by jurisdiction. SOURCES AND NOTES
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