Insurance contingency contracts are common in Texas roofing and restoration work. A contractor inspects storm damage, the homeowner has not yet received a full insurance estimate, and the contractor asks the homeowner to sign an agreement stating that the contractor will perform the work if the insurance claim is approved.

The question is simple: are these contracts legal? The answer is yes, but only if the contract is drafted and performed correctly.

Texas law does not prohibit a construction contract merely because the final scope or price depends on a future insurance estimate. But Texas law does prohibit a contractor from using that contract as a vehicle to act as a public insurance adjuster, to waive or absorb the homeowner's deductible, or to blur the contractor's role in the claim.

The Contract Can Be Enforceable Even If the Insurance Proceeds Are Unknown

The starting point is basic Texas contract law. A contract must be sufficiently definite in its essential terms that a court can understand what the parties promised and determine their legal obligations. Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237 (Tex. 2016). But Texas law does not require every number to be known on the date of signing. An agreement can be enforceable if it supplies a workable way to determine an essential term later.

That principle matters in insurance restoration because the full scope and price often cannot be known before the insurer completes its adjustment. The Texas Property Code recognizes this reality in residential construction. The statutory disclosure statement for residential construction contracts tells owners that the written agreement should include "the cost of the work or how the cost will be determined." Tex. Prop. Code § 53.255. That language does not require a fixed dollar amount. It allows the parties to agree on a method for determining the cost.

Cohen v. P&C Restoration Services

That is exactly what the Houston Fourteenth Court of Appeals addressed in Cohen v. P&C Restoration Services, LLC, No. 14-22-00907-CV (Tex. App.—Houston [14th Dist.] Apr. 30, 2024) (mem. op.). The homeowner argued the contingency contract was unenforceable because it was merely an agreement to agree and did not contain a price. The court rejected that argument.

In that agreement, the owner chose the contractor "to be the general contractor to perform the work upon the property that the insurance company deems necessary, in the event that any insurance company approves any claim for repairs." The agreement tied the price and the scope of work to the insurer's detailed claim summary, which would list the approved repairs and approved prices.

The court held that this was enough. The contract was not merely an agreement for a future agreement; its language showed a present agreement that became enforceable once the insurer approved the claim. The missing dollar figure did not defeat the contract because the agreement supplied a mechanism for determining both scope and price: the scope of repairs and prices approved by the insurer.

So the better rule is this: a Texas construction contingency contract is not invalid merely because insurance proceeds have not yet been determined. If the contract shows a present intent to be bound and provides a reasonably certain mechanism for determining the scope and price, Cohen supports enforcement. Keep in mind that Cohen is a memorandum opinion from one court of appeals, so it is persuasive rather than binding statewide.

But the Condition Must Be Clear

A separate issue is whether insurance approval is a condition precedent to performance. A condition precedent is an event that must happen before a right to enforce an obligation accrues. Because conditions can cause forfeiture, when no conditional language is used and another reasonable reading is possible, Texas courts construe the term as a promise (a covenant) rather than a condition. Solar Applications Eng'g, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 108–09 (Tex. 2010). To make performance conditional, a term such as "if," "provided that," "on condition that," or similar conditional language is normally used. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex. 1976).

That means contractors and homeowners should be precise. If the parties intend the contractor's duty to perform a roof replacement to arise only if the insurer approves full roof replacement, the contract should say that directly. A general reference to "insurance approval" may not be enough. Approval of a small repair is not the same thing as approval of a full roof replacement.

The contract should identify the exact triggering event. For example, the condition may be approval of any covered repair, approval of full roof replacement, payment exceeding the deductible, approval of a particular estimate, an appraisal award, or some other defined event. Texas law does not supply the condition. The contract does.

The Deductible Still Must Be Paid

Even if the contract is enforceable, Texas law does not allow the contractor to waive or absorb the homeowner's deductible. A person insured under a property insurance policy must pay any deductible that applies to a first-party claim. Tex. Ins. Code § 707.002.

Texas Business and Commerce Code § 27.02 requires a contract for goods or services that is reasonably expected to be paid wholly or partly from property insurance proceeds, with a contract price of $1,000 or more, to include a deductible notice in at least 12-point boldfaced type. The notice states that Texas law requires the insured to pay any applicable deductible and that it is a violation of Texas law for a seller who expects to be paid from insurance proceeds to knowingly allow the insured to fail to pay, or assist the insured's failure to pay, the deductible. Tex. Bus. & Com. Code § 27.02(b).

The same statute makes it a Class B misdemeanor for a seller, without the insurer's consent, to advertise or promise to pay, waive, absorb, or decline to collect the deductible, to provide a rebate or credit that offsets it, or to otherwise help the insured avoid paying it. Tex. Bus. & Com. Code § 27.02(c)–(d).

This matters when the contract says the "price" equals the insurance proceeds. That language can be misleading if it suggests the homeowner owes nothing beyond the insurance payment. The legally safer formulation is that the contract price consists of the insurer-approved amount, including the applicable deductible, plus any approved supplements or separately agreed upgrades.

Insurance Code Chapter 707 reinforces this rule. An insurer that provides replacement-cost coverage may refuse to pay withheld recoverable depreciation or a replacement-cost holdback until it receives reasonable proof that the policyholder paid the deductible. Tex. Ins. Code § 707.004. In short, insurance proceeds may be used as a pricing mechanism, but they do not erase the deductible.

The Contractor Cannot Become the Public Adjuster

The biggest legal danger is not the contingency clause itself. The danger is when the contractor uses the contract to take over the insurance claim. Texas Insurance Code Chapter 4102 regulates public insurance adjusting. A person may not act as, or hold themselves out as, a public insurance adjuster in Texas without a license. Tex. Ins. Code § 4102.051(a). A public insurance adjuster includes a person who, for compensation, acts on behalf of an insured in negotiating for or effecting the settlement of a property insurance claim. Tex. Ins. Code § 4102.001(3).

Texas goes further for contractors. A contractor may not act as a public adjuster, or advertise to adjust claims, for any property on which the contractor is providing or may provide contracting services, even if the contractor holds a public adjuster license or has a power of attorney or other agreement from the insured. Tex. Ins. Code § 4102.163(a).

This distinction is critical. A contractor may prepare a construction estimate, explain the scope of repairs, and discuss technical construction issues. But a contractor may not act on behalf of the insured to negotiate, adjust, or settle the insurance claim. The Texas cases draw that line sharply.

Wolfe's Carpet v. Bourelle

In Wolfe's Carpet, Tile & Remodeling, LLC v. Bourelle, No. 14-22-00579-CV (Tex. App.—Houston [14th Dist.] July 27, 2023), the contractor sued homeowners for payment after hurricane repairs. The homeowners argued the contract was void because the contractor acted as an unlicensed public adjuster in violation of Texas Insurance Code § 4102.051. The contract authorized the contractor "to negotiate to said Insurance Company ... on [the owners'] behalf a quick and fair settlement" and said the work and money due would be the scope and price "agreed upon with the adjuster and insurance company." The Fourteenth Court of Appeals held that this language fell squarely within what § 4102.051 prohibits and affirmed the judgment voiding the contract and dismissing the contractor's claims.

Texas Department of Insurance v. Stonewater Roofing

The Texas Supreme Court reinforced this regulatory boundary in Texas Department of Insurance v. Stonewater Roofing, Ltd. Co., 696 S.W.3d 646 (Tex. 2024). The roofing company challenged Texas's public-adjuster licensing requirement and the contractor/adjuster prohibition on free-speech and due-process grounds. The Court rejected those challenges, holding that the statute regulates the role a person plays in a commercial transaction rather than speech, and that the statute gave fair notice of what it prohibits.

Pricing language versus claim advocacy

So there is a major difference between these two kinds of clauses:

• Pricing mechanism: "The contract price shall be determined by the insurer's approved estimate, including the insured's deductible, together with any approved supplements or written change orders."
• Public-adjusting language to avoid: "Contractor will work on behalf of the insured, negotiate with the insurance company, secure approval, or settle the claim."

The first clause concerns construction pricing. The second concerns claim advocacy.

What Happens If the Contractor Violates Chapter 4102?

A contract for services regulated by Chapter 4102 that an insured enters into with a person who is violating the licensing requirement may be voided at the option of the insured. Tex. Ins. Code § 4102.207(a). That distinction matters: the contract is not automatically void in every situation. The statute gives the insured the option to void the agreement.

If the insured does void the contract, the insured is not liable for payment for any past or future services rendered by the violating person "under that contract or otherwise." Tex. Ins. Code § 4102.207(b). In Wolfe's Carpet, that is what happened: the homeowners voided the contract, and the contractor could not recover for roughly $40,000 of work it had performed.

This is why contractors should not draft agreements that make them the homeowner's insurance representative. The contractor can build the roof. The contractor can estimate the roof. The contractor can explain construction issues. But the contractor cannot adjust the claim.

Cohen and Wolfe's Carpet Can Be Harmonized

Some may read Cohen and Wolfe's Carpet as conflicting. They are not. Cohen answers a contract-definiteness question: a contingency contract can be enforceable even though the price and scope are supplied later through the insurer's detailed claim summary. Wolfe's Carpet answers a public-adjusting question: a contractor cannot use a construction contract to negotiate or settle the insurance claim on the insured's behalf.

Together, the cases point to a coherent rule. A Texas contractor may use insurance approval as a condition and may use the insurance estimate as a pricing mechanism. But the contractor may not contract to pursue, negotiate, settle, or adjust the insurance claim for the insured.

Practical Drafting Rules

A compliant Texas insurance-contingency construction contract should separate four concepts:

1. Intent to be bound. The contract should state whether the parties intend to be bound immediately or only after a specified condition occurs.
2. The condition. The contract should define any condition precedent with precision. If the parties mean full roof replacement approval, the contract should say full roof replacement approval, not merely claim approval.
3. The price. The contract should explain how the price will be determined. If the price is based on the insurer's detailed claim summary, the contract should say that. If supplements, upgrades, code items, overhead and profit, or the deductible are included, the contract should say that too, and it must include the § 27.02 deductible notice when that statute applies.
4. No public adjusting. The contract should disclaim public-adjusting authority. It should state that the contractor does not represent the insured in the insurance claim, does not negotiate settlement of the claim, does not interpret policy coverage, and does not act as a public insurance adjuster. And the contractor's conduct has to match the contract.

Conclusion

Insurance contingency construction contracts can be legal in Texas when properly drafted and lawfully performed. Texas law does not require the contract to state a fixed dollar amount at signing if the agreement provides a definite method for determining the price later. See Fischer, 479 S.W.3d at 237; Cohen, No. 14-22-00907-CV. But enforceability is not the end of the analysis. The contract must clearly define any condition precedent. The homeowner must pay the deductible. The contract must comply with residential construction and homestead requirements when they apply. Most importantly, the contractor must not act as the insured's public adjuster.

The lawful version of the contingency contract is a construction agreement with an insurance-based pricing mechanism. The unlawful version is a construction agreement that turns the contractor into the policyholder's claim advocate. That distinction is where Texas law draws the line.

Key takeaways

• A Texas contingency contract is not unenforceable just because the price depends on a future insurance estimate, as long as it supplies a reasonably certain way to fix scope and price (Cohen, 2024).
• Define the triggering event precisely; "insurance approval" is not the same as "approval of a full roof replacement."
• The homeowner must pay the deductible. Contracts of $1,000 or more paid from insurance proceeds need the 12-point bold deductible notice, and waiving or absorbing the deductible is a crime (Tex. Bus. & Com. Code § 27.02).
• A contractor may not act as a public adjuster on a property it is or may be repairing, even with a license or power of attorney (Tex. Ins. Code § 4102.163), and the Texas Supreme Court upheld these rules in Stonewater Roofing (2024).
• Contract language authorizing the contractor to negotiate a settlement "on behalf of" the owner can let the homeowner void the contract and avoid paying for work already done (Wolfe's Carpet, 2023; Tex. Ins. Code § 4102.207).

If you are a contractor or public adjuster with questions about how Texas law treats insurance contingency agreements, or a homeowner with questions about a Texas property insurance claim, contact The Claim Attorney. Homeowners can request a free case review, and attorneys interested in co-counsel are welcome to reach out.

Related reading

• What Contractors Can and Cannot Do in a Texas Insurance Claim
• Texas Public Adjuster Licensing: Low Barrier, High Stakes
• A Fictional Texas Trial: Can an Insurer Aid Unlicensed Adjusting?

Originally published on LinkedIn on June 28, 2026. Reviewed and updated September 2026.

This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws change, and results depend on the facts of each case and the language of each policy. Michael P. Bowman is licensed to practice law in Texas and Alabama only. Responsible attorney: Michael P. Bowman, Law Office of Michael P. Bowman PLLC, Austin, Texas.

For many Texas homeowners, a public insurance adjuster is the first professional who works for them, not for the insurance company, after a storm or fire. A good public adjuster has to understand construction, building codes, estimating software, policy language, appraisal, and the deadlines that protect a claim. Some claims are worth hundreds of thousands of dollars or more.

The weight of that responsibility is heavy. The requirements to enter the profession in Texas are comparatively light. I previously held a public adjuster license in Florida before I became a lawyer, and I have great respect for public adjusters who do the job well. This article sets out what Texas currently requires, compares that with what the job actually demands, and makes the case for higher standards. The requirements below were checked against the Insurance Code and Texas Department of Insurance (TDI) materials as of September 2026. They can change, so confirm them with TDI before relying on them.

What a Texas public adjuster does

A public insurance adjuster is a person who, for compensation, "acts on behalf of an insured in negotiating for or effecting the settlement of a claim" for loss or damage under a property insurance policy, or who holds himself or herself out as an adjuster of those claims. Tex. Ins. Code § 4102.001(3). A license is required. § 4102.051. Licensed Texas attorneys are exempt.

A public adjuster may not practice law, "including the giving of legal advice to any person in the license holder's capacity as a public insurance adjuster." § 4102.156. The adjuster holds claim proceeds in a fiduciary capacity. § 4102.111. And the adjuster may not take part in repairing property on a claim the adjuster is handling. § 4102.158(a).

What it takes to get licensed in Texas today

Personal qualifications

A resident individual applicant must, among other things, be at least 18, be a Texas resident, be trustworthy, and meet criminal-history limits. The applicant must also have "sufficient experience or training" in assessing property values and physical loss, be "sufficiently informed" about property insurance contracts, and possess knowledge and experience adequate to do the job "fairly and without injury to the public." Tex. Ins. Code § 4102.053.

The exam

Applicants must pass a state exam before a license is issued. § 4102.057(a). By statute, the exam tests basic insurance theory, the essential elements of contracts, claims ethics, technical competence in handling the relevant claims, and knowledge of key parts of the Insurance Code and related consumer-protection law. § 4102.057(b). The exam is administered through a state testing vendor. No exam is required to renew. Applicants licensed in a reciprocal state that requires a written exam may be exempt. § 4102.058.

Fingerprints, application, and fee

According to TDI, the applicant passes the exam, completes fingerprinting, and applies online. The application fee is $50. TDI, Adjuster: public insurance (apply).

Financial responsibility

The statute requires proof of financial responsibility in an amount set by TDI rule. § 4102.105. TDI's rule sets it at a surety bond of not less than $10,000. 28 Tex. Admin. Code § 19.705.

An approved contract

A public adjuster must use a written contract on a TDI-approved form. The contract must let the client cancel by written notice within 72 hours of signing and must display the notice "WE REPRESENT THE INSURED ONLY." § 4102.103; 28 Tex. Admin. Code § 19.708.

Continuing education and renewal

License holders must complete at least 24 hours of continuing education during each license period. § 4102.109(a). TDI states that this means 24 hours every two years. At least three of those hours must be in ethics or consumer protection, and at least 12 must be classroom or classroom-equivalent. The renewal fee is $50. TDI, Adjuster: public insurance (manage).

Fee rules

• A public adjuster's total commission may not exceed 10 percent of the insurance settlement on the claim. § 4102.104(a). TDI notes that the cap applies to the total settlement even if only part of the insurer's offer was in dispute. TDI, Public adjusters: What to know.
• No percentage fee is allowed if the insurer pays, or commits in writing to pay, policy limits within 72 hours after the loss is reported. § 4102.104(b).
• The insured must be a payee on claim checks, and the public adjuster may not sign or endorse a check for the insured. § 4102.104(c), (e).

Conduct rules

Public adjusters may not solicit clients while a loss-producing natural disaster is in progress (§ 4102.151). They may solicit only between 9 a.m. and 9 p.m. on weekdays and Saturdays and between noon and 9 p.m. on Sundays (§ 4102.152). A contractor may not act as a public adjuster on property where it is or may be doing the work, even if it holds a license (§ 4102.163).

What is not on the list

TDI's application steps do not list a required pre-licensing course, a minimum period of field experience, an apprenticeship, or a degree. The statute does require "sufficient experience or training," but TDI's published application steps do not say how that is measured. In practice, a motivated person can study, pass the exam, buy a $10,000 bond, and begin representing homeowners on large and complex claims.

What the job actually demands

Compare those requirements with what a competent Texas public adjuster must be able to do:

• Read a building. Identify storm damage and tell it apart from wear, installation defects, and prior damage. Understand roofing systems, framing, water migration, and mold.
• Know the code. Recognize when local building codes require work that the damaged structure did not have, and whether the policy's ordinance-or-law coverage will pay for it.
• Write a defensible estimate. Build a line-item estimate, support pricing, and explain overhead and profit, matching, and supplements.
• Understand the policy without practicing law. Explain what the policy says, while staying on the right side of § 4102.156 and recognizing when a coverage question needs a lawyer.
• Handle appraisal. In Texas, "the scope of appraisal is damages, not liability," but appraisers "must always consider causation, at least as an initial matter." State Farm Lloyds v. Johnson, 290 S.W.3d 886, 890, 892-93 (Tex. 2009). An adjuster who does not document causation well can lose an appraisal on that point alone.
• Protect the deadlines. Insurers have statutory deadlines to accept or reject claims. Tex. Ins. Code § 542.056. Most property claim suits require written notice at least 61 days before filing, stating the specific amount owed. § 542A.003. Suits under Insurance Code Chapter 541 generally must be filed within two years. § 541.162. Many policies add their own suit-limitation clauses.

Why the gap matters

A public adjuster cannot give legal advice. That rule is right. But it creates a real risk when an adjuster keeps negotiating a claim for months without recognizing that a limitation period is running, and the homeowner assumes the adjuster is watching the calendar. The homeowner may not learn that the right to sue has been compromised until it is too late.

Estimates matter the same way. In a Texas lawsuit, the attorney's fees a court may award depend in part on how the judgment compares with the amount demanded in the pre-suit notice. If the judgment is less than 20 percent of that amount, no fees may be awarded. § 542A.007(a)(3), (c). An inflated or poorly supported adjuster estimate can hurt the homeowner long after the adjuster is out of the picture.

There is also a business-model problem. Some firms put more effort into signing clients than into training the people who handle their claims. When an under-trained adjuster produces a weak estimate or an avoidable dispute, the whole profession pays for it in reputation and in pressure from insurers for tighter restrictions. Many public adjusters are careful professionals. The low entry barrier makes it harder for the public to tell them apart from the rest.

A reasoned case for higher standards

I am not arguing for fewer public adjusters. Texas homeowners need more qualified advocates, not fewer. The goal is competence. These are policy proposals that would need legislative or TDI action:

1. A meaningful pre-licensing course covering construction methods, building codes, estimating, policy structure, appraisal, and Texas claim deadlines.
2. Supervised experience before independent practice, such as a period working under a licensed public adjuster, to give real content to the statute's "sufficient experience or training" requirement.
3. Targeted continuing education. Require some of the 24 hours to cover building code updates, estimating, appraisal, and claim deadlines, not only general topics.
4. A higher bond or required errors-and-omissions coverage. A $10,000 bond is small compared with the size of many claims. The statute already allows TDI to accept professional liability coverage as financial responsibility. § 4102.105(b).
5. A written deadline disclosure. Require public adjusters to tell clients in writing that the adjuster cannot give legal advice about limitation periods or pre-suit notice, and that the client should consult a lawyer about those deadlines.

There is a fair counterargument: higher barriers could reduce the number of public adjusters available after a major storm. That is a real tradeoff. But the answer is not to leave the bar where it is. The answer is to build a pipeline, through apprenticeships and supervised practice, that produces more qualified adjusters rather than more licenses.

What homeowners can do now

• Verify the license and complaint history through TDI's Help Line at 800-252-3439.
• Read the contract. Confirm the fee and remember the 72-hour cancellation right.
• Ask how many claims like yours the adjuster has handled, and who will actually inspect and estimate the damage.
• Ask who is tracking your deadlines, and talk to a lawyer early if the claim is disputed.
• Do not hire an adjuster who is also offering to do the repairs.

Key takeaways

• A Texas public adjuster license requires an exam, fingerprints, a $50 application fee, a $10,000 surety bond, and an approved contract. It does not require a set pre-licensing course, field experience, or a degree.
• Licensees need 24 hours of continuing education every two years, including three hours of ethics or consumer protection.
• Fees are capped at 10 percent of the settlement, with added limits when the insurer quickly pays policy limits.
• The job demands knowledge of construction, code, estimating, appraisal, and claim deadlines, and that is well beyond what the entry requirements test.
• Higher standards, including real training, supervised experience, and stronger financial responsibility, would protect policyholders and the profession.
• Licensing requirements change. Confirm current rules with TDI.

Homeowners with questions about a Texas property insurance claim or an approaching deadline can contact The Claim Attorney for a free case review. Attorneys interested in co-counsel on Texas property insurance matters are welcome to reach out.

Related reading

• What Contractors Can and Cannot Do in a Texas Insurance Claim
• Are Insurance Contingency Roofing Contracts Legal in Texas?
• A Fictional Texas Trial: Can an Insurer Aid Unlicensed Adjusting?

Adapted for Texas law in September 2026 from an article Michael Bowman originally published on LinkedIn.

This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws change, and results depend on the facts of each case and the language of each policy. Michael P. Bowman is licensed to practice law in Texas and Alabama only. Responsible attorney: Michael P. Bowman, Law Office of Michael P. Bowman PLLC, Austin, Texas.

When a hailstorm or hurricane hits a Texas neighborhood, the first person on the roof who actually knows how to rebuild it is usually a contractor, not an insurance adjuster. The insurer's estimate is written by an adjuster working from pricing software. The contractor is the one who has to tear off the old roof, replace the rotted decking, meet the city's building code, and do it for a price that suppliers and crews will accept. That real-world knowledge is valuable to a homeowner trying to get a claim paid correctly.

Texas law does not shut contractors out of the claims process. It does draw firm lines around what they can do. My view is simple: a contractor who stays inside those lines helps policyholders, and a contractor who crosses them puts both the homeowner and the business at risk. This article explains where the lines are.

Why contractor input matters in a Texas claim

Before I practiced law, I previously held licenses in Florida as a contractor, roofer, and public adjuster. I saw the same pattern repeatedly: the insurer's estimate and the actual cost to rebuild were often far apart, and the person who could explain the difference was the contractor. A good contractor adds value in at least three ways:

• Scope. A contractor knows what a proper repair actually requires, including tear-off, underlayment, flashing, drip edge, decking, and matching materials. Items like these are often missing from a first estimate.
• Code requirements. Local building codes can require work that the damaged structure never had. Whether the policy pays for those upgrades depends on its ordinance-or-law coverage, but someone has to identify the requirement first. That is usually the contractor.
• Pricing evidence. Supplier quotes, subcontractor bids, and invoices from comparable jobs show what the work really costs in that market at that time. That evidence is often more persuasive than a software price list.

This matters even more if a claim ends up in a lawsuit. Before filing most property claim suits, Texas law requires the policyholder to give written notice at least 61 days in advance, stating "the specific amount alleged to be owed by the insurer on the claim." Tex. Ins. Code § 542A.003(a)-(b). The attorney's fees a court can award are then tied to how the judgment compares with that demand. If the judgment is less than 20 percent of the amount demanded, the court may not award attorney's fees at all. Tex. Ins. Code § 542A.007(a)(3), (c). A demand built on a careful, well-supported contractor estimate is far safer than a number pulled from the air.

The legal line: public adjusting is a licensed activity

Texas regulates public insurance adjusters under Chapter 4102 of the Insurance Code. A "public insurance adjuster" includes a person who, for compensation, "acts on behalf of an insured in negotiating for or effecting the settlement of a claim" for property damage, or who advertises or holds himself out as an adjuster of those claims. Tex. Ins. Code § 4102.001(3). No one may act as a public adjuster, or claim to be one, without a license. Tex. Ins. Code § 4102.051(a). Licensed Texas attorneys are exempt, and so are property and casualty agents acting for an insured on a policy the agent issued. § 4102.051(b).

Contractors face an additional rule. Under Tex. Ins. Code § 4102.163(a), 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." The rule applies whether or not the contractor holds a public adjuster license, and whether or not the homeowner has given the contractor a power of attorney or other authorization. In other words, a contractor cannot solve the problem by getting licensed or by having the homeowner sign a document. On any job the contractor is doing or may do, the contractor cannot be the adjuster.

The Texas Supreme Court upheld this framework against a constitutional challenge in Texas Department of Insurance v. Stonewater Roofing, Ltd. Co., 696 S.W.3d 646 (Tex. 2024). The Court held that the licensing requirement and the contractor restriction regulate conduct, meaning the role a person takes on in a business transaction, not speech. The Court also made clear that the statute does not stop contractors from talking with their customers or insurers about repairs connected to a pending claim or from sharing their knowledge about repairs. That point matters. The law limits the contractor's role. It does not silence the contractor.

What happens when a contractor crosses the line

The consequences are serious:

• The contract can be voided. A contract for services regulated by Chapter 4102 with a person violating § 4102.051 "may be voided at the option of the insured." If the insured voids it, the insured is not liable for past or future services by that person. Tex. Ins. Code § 4102.207.
• Criminal and administrative exposure. Violating Chapter 4102 is a Class B misdemeanor, and the violator is also subject to sanctions under Insurance Code §§ 541.108-.110. Tex. Ins. Code § 4102.206.

The Houston Fourteenth Court of Appeals showed how this plays out in Wolfe's Carpet, Tile & Remodeling, LLC v. Bourelle, No. 14-22-00579-CV (Tex. App.—Houston [14th Dist.] July 27, 2023). The contractor's agreement authorized it to "negotiate to said Insurance Company . . . on [the homeowners'] behalf a quick and fair settlement." The court held that this language fell squarely within what § 4102.051 prohibits. The homeowners voided the contract under § 4102.207, and the court affirmed a judgment that defeated the contractor's claims for breach of contract, quantum meruit, and unjust enrichment. The trial court also removed the contractor's lien on the property. One sentence in a form contract cost the contractor the job's payment.

What a Texas contractor can do

Within those limits, a contractor still has plenty of room to help. Based on the statute, Stonewater, and guidance from the Texas Department of Insurance (TDI), a contractor can:

• Inspect and document the damage. This includes photographs, measurements, test squares, and notes on the materials and how the building was put together.
• Prepare a detailed repair estimate with line items, quantities, and pricing.
• Discuss the estimate with the homeowner and the insurer. TDI's published FAQ on unlicensed adjusting says a roofer or contractor may discuss the scope of work in its repair estimate, and supplements and clarifications to a revised estimate, with the consumer or the consumer's insurance company. TDI FAQ on Unlicensed Individuals and Entities Adjusting Claims (2014).
• Explain code requirements and construction methods, and back them up with the code section, the manufacturer's installation instructions, or the local permit requirement.
• Provide pricing support such as supplier quotes, subcontractor bids, and invoices.
• Testify. If a claim goes to litigation, a contractor can testify as a fact witness about what the contractor saw, did, and charged. A contractor with the right qualifications can also be retained to give opinions on construction and repair costs. Either way, the contractor is providing evidence, not negotiating the claim.

What a Texas contractor cannot do

• Negotiate the settlement for the homeowner, or tell the insurer that the contractor represents the homeowner or speaks for the homeowner on coverage. TDI lists that conduct as prohibited. TDI, Roofing and insurance: Know the law.
• Advocate on coverage. TDI's FAQ says a contractor may not advocate for a consumer and discuss policy coverages and exclusions.
• Advertise claim handling. TDI gives examples of prohibited advertising, including offering to negotiate settlements or file a claim for the policyholder and promising to recover "every dime you are owed."
• Take a power of attorney or other authorization to handle the claim. Section 4102.163 applies regardless of that authorization.
• Waive, absorb, or rebate the deductible. The homeowner must pay any deductible that applies to a first-party property claim. Tex. Ins. Code § 707.002. An insurer with replacement cost coverage may withhold recoverable depreciation until it receives reasonable proof that the deductible was paid. § 707.004. The prohibition on contractors comes from the Business and Commerce Code. It is a Class B misdemeanor for a seller of goods or services to advertise, promise, or actually pay, waive, absorb, rebate, or credit the insured's deductible, or otherwise help the insured avoid paying it, without the insurer's consent. Tex. Bus. & Com. Code § 27.02(c)-(d). Contracts of $1,000 or more that are expected to be paid from property insurance proceeds must include a statutory deductible notice in at least 12-point bold type. § 27.02(b).

A word about contingency agreements

Many restoration contractors use agreements that make the job contingent on the insurer's approval. Our article on contingency contracts covers those agreements in detail. For this discussion, the key point is that the wording matters. Language that uses the insurer's approved estimate to set the price is a construction pricing term. Language that has the contractor pursue, negotiate, or settle the claim for the homeowner is public adjusting. Wolfe's Carpet shows what happens when a contract contains the second kind of language.

How homeowners can use contractor input the right way

1. Keep control of the claim. Submit the contractor's estimate and photos yourself, or through a licensed public adjuster or attorney. Let the contractor answer technical questions about the estimate.
2. Ask for the contractor's documentation in writing. A detailed estimate with photos, code references, and pricing support is far more useful than a single total.
3. Pay your deductible. A contractor who offers to "take care of" your deductible is offering to break the law, and that should make you question everything else the contractor tells you.
4. Get a licensed advocate when the dispute is about coverage or money. A public adjuster cannot also do the repairs. Tex. Ins. Code § 4102.158(a). Keeping the advocate separate from the builder is how Texas protects the homeowner.
5. Watch the deadlines. The 61-day pre-suit notice and the limitation periods in your policy and the Insurance Code do not stop running while a contractor and an adjuster trade estimates.

Where Texas law and my view line up, and where they differ

I believe policyholders are better off when the people who actually build things are part of the conversation about what a repair costs. Texas law largely agrees. It lets contractors estimate, explain, document, and testify. Where Texas differs from a view that would give contractors a bigger role is the dual-capacity rule. After Stonewater, a contractor in Texas cannot be both the builder and the advocate on the same property, even with a public adjuster license. I would not expect that rule to change soon, so the practical answer is to work within it. Contractors who understand the lines can still add real value to a claim.

Key takeaways

• Contractors bring scope, code, and pricing knowledge that often closes the gap between an insurer's estimate and the actual cost to rebuild.
• A contractor may not act as a public adjuster, or advertise to adjust claims, on any property where it is or may be doing the work, even with a license or a power of attorney (Tex. Ins. Code § 4102.163).
• Contractors may inspect, document, estimate, discuss their estimates and supplements with the homeowner and insurer, and testify.
• A contract that has the contractor negotiate the claim can be voided by the homeowner, and the contractor can lose its right to be paid (Tex. Ins. Code § 4102.207).
• Waiving or rebating a deductible is a crime in Texas (Tex. Bus. & Com. Code § 27.02), and the homeowner must pay it (Tex. Ins. Code § 707.002).

If you have questions about a Texas property insurance claim, contact The Claim Attorney for a free case review. Attorneys interested in co-counsel on Texas property insurance matters are also welcome to reach out.

Related reading

• Are Insurance Contingency Roofing Contracts Legal in Texas?
• Texas Public Adjuster Licensing: Low Barrier, High Stakes
• Better Claim Documentation Means Faster Texas Settlements

Adapted for Texas law in September 2026 from an article Michael Bowman originally published on LinkedIn.

This article is general information, not legal advice, and reading it does not create an attorney-client relationship. Laws change, and results depend on the facts of each case and the language of each policy. Michael P. Bowman is licensed to practice law in Texas and Alabama only. Responsible attorney: Michael P. Bowman, Law Office of Michael P. Bowman PLLC, Austin, Texas.