Texas Public Adjuster Rules, Explained in Plain English

Texas public adjusters are regulated by the Texas Department of Insurance (TDI) under Texas Insurance Code Chapter 4102 and TDI's rules at 28 Texas Administrative Code Chapter 19, Subchapter J. This page covers the Texas public adjuster rules policyholders ask about most, with section numbers so you can read the official text.

Key Texas public adjuster rules at a glance

Licensing: who can act as a public adjuster in Texas

Texas law is direct: "A person may not act as a public insurance adjuster in this state or hold himself or herself out to be a public insurance adjuster in this state unless the person holds a license issued by the commissioner" (Ins. Code §4102.051(a)).

When a business entity such as an LLC is licensed, TDI's rules also require the people doing the adjusting to be licensed individually. Under 28 TAC §19.704(c)(3), "all other persons performing any acts of a public insurance adjuster on behalf of the corporation or partnership in this state are individually licensed by the department separately from the corporation or partnership."

Every public adjuster must also carry a surety bond of at least $10,000 for the benefit of insureds (28 TAC §19.705 and §19.707).

If you sign with someone who isn't licensed, the law gives you a way out. Under §4102.207, a contract with an unlicensed person "may be voided at the option of the insured," and "the insured is not liable for the payment of any past services rendered, or future services to be rendered."

How to check a license

TDI tells policyholders to "Call our Help Line at 800-252-3439" to confirm a license and ask about complaints and disciplinary actions. TDI also has an online license lookup (linked below).

Smoke Damage Public Adjuster is operated by Rise Public Adjusting LLC, Texas Department of Insurance License #3356839. You're welcome to look that number up before you talk to us.

Who a public adjuster works for

A Texas public adjuster works for the policyholder. The statute defines a public adjuster as someone who "acts on behalf of an insured in negotiating for or effecting the settlement of a claim" for loss or damage to real or personal property (§4102.001(3)).

The license covers "fire and allied coverages, burglary, flood, and all other property claims, both real and personal, including loss of income, but only when the client is an insured under the insurance policy" (§4102.101(a)). A public adjuster can't work on bodily injury claims under life, health, or accident policies (§4102.157).

The law also bars working both sides: "A license holder may not represent an insured on a claim or charge a fee to an insured while representing the insurance carrier against which the claim is made" (§4102.158(c)).

TDI adds that a public adjuster can't "Keep you from talking with your insurance company." Hiring one doesn't cut you off from your insurer.

The public adjuster contract

A written contract on an approved form

No work can start without a signed contract. Section 4102.103(a) requires "a contract, in writing, on a form approved by the commissioner, executed in duplicate by the license holder and the insured," and says a public adjuster "may not use any form of contract that is not approved by the commissioner."

TDI's rule narrows the choices to two: "(1) a standard language contract developed by the department, identified by FIN 535; or (2) a contract filed and approved by the department before use" (28 TAC §19.708(d)). TDI's FIN535 form states that it "must not be edited or modified." You can read the form yourself — TDI links it as a sample contract.

What the contract must include

Under 28 TAC §19.708(b), the contract must contain, among other things:

• The adjuster's name, address, and license number, with the license number shown prominently on each page
• The addresses (and, for online contracts, email and website) where a cancellation notice can be delivered
• The date and time the contract was signed
• A description of the claim and property damage, the location, and the event date
• A general description of the services the adjuster will provide
• The exact fee method — the hourly rate, flat fee, exact percentage, or a detailed explanation of any other method
• TDI's contact information for questions and complaints, in English and Spanish

The signature page must also carry three bold statements, including "We represent the insured only." and "You are entering into a service contract. You are being charged a fee for this service. You do not have to enter into this contract to make a claim for loss or damage on a policy of insurance." (28 TAC §19.708(b)(7)).

In other words, hiring a public adjuster is optional.

Fees: the 10% cap

Texas caps what a public adjuster can be paid. Under §4102.104(a), the fee can be "an hourly fee, a flat rate, a percentage of the total amount paid by an insurer to resolve a claim, or another method of compensation," but "The total commission received may not exceed 10 percent of the amount of the insurance settlement on the claim."

TDI's rules make clear that the cap covers the adjuster's costs too. The 10% limit applies "including expenses, direct costs, or any other costs accrued by the public insurance adjuster" (28 TAC §19.701(b)(1)).

When policy limits are paid quickly

There's a specific exception. If the insurer, within 72 hours after the loss is reported, "either pays or commits in writing to pay to the insured the policy limit," the public adjuster can't take a percentage fee on that claim (§4102.104(b)). The adjuster is instead entitled to "reasonable compensation" for time spent and expenses until the claim is paid or the written commitment is received.

What TDI tells consumers about fees

TDI's consumer page puts it plainly:

• "The fee can be based on the total amount of the claim settlement, not just the amount you're disputing."
• "You can ask the public adjuster to put their fee in a dollar amount, instead of a percentage, in the contract."
• "If your insurance company doesn't increase its offer after you hire the public adjuster, you might still have to pay the public adjuster. And you still have to pay your deductible."

Public adjusters are also barred from advancing money to a potential client or insured (§4102.160(1)).

Your right to cancel within 72 hours

Every Texas public adjuster contract must let you back out. Section 4102.103(b) requires "a provision allowing the client to rescind the contract by written notice to the license holder within 72 hours of signature."

The contract itself must say, in bold: "NOTICE: The insured may cancel this contract by written notice to the public insurance adjuster within 72 hours of signature for any reason." (28 TAC §19.708(b)(7)(A)).

TDI's standard FIN535 contract explains how: the insured may void the contract "by notifying the Public Insurance Adjuster in writing, by either registered or certified mail, return receipt requested, to the address shown on this contract or by personally serving notice on the Public Insurance Adjuster."

TDI's consumer guidance is clear about the deadline: "If you change your mind, you have 72 hours after you've signed a contract to cancel it. You can't get out of the contract after 72 hours."

No legal advice

A public adjuster is not a lawyer. Section 4102.156 says a license holder "may not render services or perform acts that constitute the practice of law, including the giving of legal advice to any person in the license holder's capacity as a public insurance adjuster."

The law also restricts how public adjusters deal with attorneys. They can't solicit employment for an attorney, can't sign up a client mainly to refer them to a lawyer, and can't have an insured sign an attorney's representation agreement (§4102.158(d)–(e)). They may recommend a particular attorney (§4102.158(d)).

Legal questions belong with a Texas-licensed attorney.

No repair work and no conflicts of interest

This is one of the clearest lines in Texas law. A public 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 license holder" (§4102.158(a)(1)).

The same section bars financial ties to, or payments from, any salvage, repair, or construction firm that gets business from a claim the adjuster is handling (§4102.158(a)(2)). An adjuster also can't acquire an interest in salvaged property from the claim without the insured's written knowledge and consent (§4102.158(b)).

Referral fees are off the table

A public adjuster "may not accept a fee, commission, or other valuable consideration of any nature, regardless of form or amount, in exchange for the referral" of an insured to "any third-party individual or firm, including an attorney, appraiser, umpire, construction company, contractor, or salvage company" (§4102.164(a)). Public adjusters also can't pay non-licensed people for referring clients to them (§4102.160(2)).

Contractors can't act as your adjuster

The rule works in both directions. "A contractor may not act as a public adjuster or advertise to adjust claims for any property for which the contractor is providing or may provide contracting services" (§4102.163(a)). TDI summarizes it: "public insurance adjusters who work on your claim can't act as your contractor. Likewise, contractors can't advertise that they'll handle your insurance claim."

That's why Smoke Damage Public Adjuster does not clean, remediate, repair, or rebuild property. Our role is documenting, preparing, presenting, and negotiating the claim.

When and how public adjusters may solicit business

Texas limits when a public adjuster can reach out to you:

• Not during a disaster in progress. "A license holder may not solicit or attempt to solicit a client for employment during the progress of a loss-producing natural disaster occurrence" (§4102.151).
• Only during set hours. Soliciting "in person, by telephone, or in any other manner" is allowed only "between the hours of 9 a.m. and 9 p.m. on a weekday or a Saturday and between noon and 9 p.m. on a Sunday" (§4102.152(a)).
• You can call any time. The hours limit doesn't stop an adjuster from "accepting phone calls or personal visits during the prohibited hours from an insured on the insured's initiation" (§4102.152(b)).
• No badges. "A license holder may not use a badge in connection with the official activities of the license holder's business" (§4102.154).
• No misrepresentation. An adjuster "may not use any misrepresentation to solicit a contract" (§4102.159), and may not suggest they are part of the federal, state, or local government (§4102.161).

Advertising rules

TDI's rules treat websites as advertising. The definition of "advertisement" includes material "used in direct mail, newspapers, magazines, radio, telephone and television scripts, websites, billboards, and similar displays" (28 TAC §19.712(a)(1)).

Every public adjuster ad must identify who is behind it: "Each advertisement by a license holder soliciting or advertising business must display the license holder's name, address, and license number as they appear in the records of the commissioner" (§4102.113).

A public adjuster also can't advertise under a different name "unless the name is used under a valid assumed name certificate as provided by Chapter 71, Business & Commerce Code" (§4102.162).

How your claim money is handled

Texas law protects claim payments in several ways:

• Fiduciary duty. "All funds received as claim proceeds by a license holder acting as a public insurance adjuster are received and held by the license holder in a fiduciary capacity. A license holder may not divert or appropriate fiduciary funds received or held" (§4102.111(a)).
• You're on the check. Anyone paying policy proceeds must "include the insured as a payee on the payment draft or check" and "require the written signature and endorsement of the insured" (§4102.104(c)).
• No endorsing for you. "Notwithstanding any authorization the insured may have given to a public insurance adjuster, a public insurance adjuster may not sign and endorse any payment draft or check on behalf of an insured" (§4102.104(e)).
• Records. Adjusters must keep a record of each claim, including the total fee received and an itemized statement of disbursements from recoveries, for at least five years (§4102.110).

Complaints and where to get help

TDI's consumer page says: "To report a public adjuster, call the Texas Department of Insurance at 800-252-3439 or file a complaint." It also notes: "If you're having issues with your public insurance adjuster, you have the right to sue."

Every Texas public adjuster contract must list TDI's complaint phone number and mailing address in English and Spanish (28 TAC §19.708(b)(10)).

To see how we approach a claim within these rules, read how the smoke damage claim process works or learn more about working with a Texas smoke damage public adjuster.