The 10:40 p.m. Contract and the 15% Fee
Six days after a hurricane, TDI-licensed public adjuster Darryl meets homeowner Maria at her Houston house at 10:40 p.m., and she signs his contract on the kitchen table. The form (a) sets his fee at 15% of "all amounts the insurer pays on the claim," with no dollar example, (b) contains no rescission language, (c) never states that he represents the insured rather than the insurer, and (d) is undated and unsigned by Darryl. He also recommends his wife's roofing company for the rebuild; that company pays him a $2,000 "marketing" fee per referred job. The carrier ultimately pays $80,000: $62,000 dwelling, $8,000 contents, $10,000 additional living expense. Darryl has already deposited a $12,000 fee drawn from the dwelling funds. Nine days later Maria calls and says she wants "out of the whole deal."
1. Identify every Chapter 4102 compliance problem in this engagement, and advise on Maria's rescission request given that nine days have passed.
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Fee cap. A Texas public adjuster may not charge, agree to charge, or collect a fee exceeding 10% of the amount of the insurance claim settlement (Tex. Ins. Code ch. 4102). 15% of $80,000 = $12,000; the lawful ceiling is $8,000. The $4,000 excess is unenforceable even though Maria signed the contract - the cap is not waivable by agreement.
Contract formalities. The written contract must be dated, signed by the insured and the adjuster, state the fee and how it is calculated, state that the adjuster represents the insured and not the insurer, and contain the prescribed notice of the insured's right to rescind within three business days of signing. This contract fails at least four of those requirements.
Rescission. The three-business-day window is triggered by a contract that actually gives the required notice. Because no rescission notice was ever delivered, the clock was never properly started, and the defensible position - and the one TDI would take - is that Maria may still rescind and that Darryl must return all compensation received and release any assignment or power of attorney. The 10:40 p.m. signing hour is corroborating evidence of an unconscionable solicitation practice.
Referral arrangement. Accepting $2,000 per referral from a contractor, and steering the insured into a business owned by his spouse, is a disqualifying conflict of interest and an unlawful split of compensation. An adjuster may not accept compensation from any source other than the insured for the same claim, and may not steer repairs.
Bottom line: stop work, refund the full fee, document the file, and disclose the relationship. Any of these facts standing alone supports license discipline; together they invite a Chapter 541 referral and possible fraud exposure.
2. Darryl argues his fee should be 15% of the dwelling money only, and that the $10,000 of ALE should be excluded because he did no work on it. Evaluate that argument and compute what he can actually keep.
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His argument fails in both directions.
Direction one - the cap. The statutory measure is the amount of the insurance claim settlement, not the portion the adjuster chooses to attribute to his own labor. 10% × $80,000 = $8,000. Darryl collected $12,000; $4,000 must be refunded immediately.
Direction two - his own theory. If he insists the base is only what his work produced, then the $10,000 of ALE he admittedly did not develop is excluded, giving a base of $70,000 and a maximum fee of $7,000. His alternative theory therefore costs him another $1,000 rather than saving him anything. That is the trap in arguing a narrower base after the fact: you cannot simultaneously claim the full settlement as the product of your efforts and disclaim the parts you did not work.
Practical handling. (1) Recompute the fee at 10% of amounts actually paid by the carrier; (2) refund the difference by check with a written itemization; (3) if the contract is rescinded, refund the entire amount, not just the overage; (4) never take the fee from a check that requires a mortgagee endorsement without written direction from all payees. Charging above the cap is a standalone violation regardless of the quality of the adjustment work - good results do not cure an unlawful fee.