The occasionally volatile Texas weather leads to numerous property damage claims. Those of you who have worked on a weather-claims unit or as an on-site claim investigator are doubtlessly familiar with contractors who often arrive at a damaged property shortly after the weather event ends and sign up your insureds to “manage their claim.” What you may not know is that the State of Texas has a law, Chapter 4102 of the Texas Insurance Code, requiring anyone who works as a public insurance adjuster to obtain a license through the Texas Department of Insurance. The law also prohibits an unlicensed party from advertising that it provides insurance claim services and prohibits an unlicensed party employed as a contractor from also handling the insurance claim of its customer. A recent opinion by the Texas Supreme Court in Texas Dep’t of Ins. v. Stonewater Roofing, Co. upholds this law and confirms that the law applies to contractors who purport to provide “claim adjusting or handling” services.

The lawsuit was filed by Stonewater Roofing, LTD. Co., a professional contractor that provides roofing services to residential and commercial customers. Stonewater runs a website on which it advertises its company as an “insurance specialist” and “the leader in insurance claim approval.” Additionally, Stonewater’s customer contracts “authorize” it “to negotiate on [the customer’s] behalf with [the] insurance company and upon insurance approval to do the work specified.” Stonewater is not a licensed public adjusting firm and its contractors are not licensed public adjusters. After a purportedly dissatisfied customer sued Stonewater for violating the law by adjusting its insurance claim without a license, Stonewater filed suit against the Texas Department of Insurance (TDI) and its commissioner asserting that the prohibitions on advertising and contractor restrictions infringed on its free speech rights under the First Amendment and were void for vagueness under the Fourteenth Amendment’s due process clause.

The Supreme Court determined that the law regulates professional conduct, which is not protected by the First Amendment, and is properly regulated by the State, and therefore does not violate the Fourteenth Amendment. In determining that Stonewall’s advertising and contracting services constituted the profession of insurance adjusting, the Supreme Court held that “there is no question that if the State may permissibly require a license to engage in the profession, it may permissibly prohibit false commercial speech about the same”.



This opinion makes it clear that insurance claims must be handled by the insured or a licensed public adjuster on the insured’s behalf rather than by an unlicensed contractor who “followed the weather” to the insured property.