Ethics, Fiduciary Duties, and Unfair Claim Settlement Practices
The fiduciary core
A public adjuster acts for the insured, not for the money. That means undivided loyalty, confidentiality of the insured's financial and personal information, honest reporting of damage, and a fee that is fully disclosed and earned. Never represent both the insurer and the insured on the same claim, never accept compensation from a contractor or restoration vendor for referrals, never split fees with an unlicensed person, and never pay or absorb an insured's deductible - that is a misrepresentation to the insurer.
Conflicts to recognize
A contractor who offers to "handle the claim" in exchange for the repair work; a family member with a financial interest in the loss; an offer to inflate an item "because the insurer will negotiate down anyway." Each of these trades long-term credibility for short-term dollars and typically violates both the licensing rules and the unfair-claim-practices statute.
Chapter 541 unfair claim settlement practices
Know the prohibited conduct: misrepresenting policy provisions; failing to acknowledge or act reasonably promptly on communications; failing to adopt and implement reasonable claim-handling standards; refusing to pay without a reasonable investigation; failing to attempt a good-faith settlement when liability is reasonably clear; compelling litigation by offering substantially less than the claim is worth; and failing to promptly explain the basis for a denial. Texas also exposes insurers (and, in some circumstances, adjusters) to the Deceptive Trade Practices Act. Documenting your own good faith - every call, every letter, every measurement - is the best defense against a 541 allegation.
Traps
Assuming "the insurer was slow" alone is a violation (the statute targets specific conduct); assuming a fee is ethical because it is legal (both tests apply); and discussing an insured's claim with a neighbor or contractor.
Rule of thumb
Apply the disclosure test to any doubtful action: would you be comfortable writing it into the claim file and reading it to the insured and to TDI? If not, do not do it.