PUBLIC ADJUSTER ONLY ENTITLED TO RECOVER COMMISSION ON SUPPLEMENTAL PAYMENTS, NOT GROSS PAYMENT

In a decision that is of interest to all carriers who handle claims with public adjusters involved, the Fort Worth Court of Appeals recently examined a dispute between an insured and his public adjuster (PA) over how much the PA was entitled to be paid.  In Dan Dilts Construction, Inc. v. Weeks, No. 02-17-00373-CV, 2018 WL 5668530 (Tex. App.—Fort Worth Nov. 1, 2018) (slip op.), the insured, Dilts, made a hail claim on several properties.  After being dissatisfied with the insurer’s initial claim valuation of $351,000, Dilts hired public adjuster Weeks to assist him in seeking reconsideration of his claim. The insurer recalculated the claim and found the new gross claim to be $611,000.  The PA demanded payment of 10% of the gross replacement cost claim, or  $61,100.  The insured contended the PA was only entitled to 10% of the supplemental payments that the PA obtained after his retention.

The court held that under the terms of the contract (and the controlling provisions of the Texas Insurance Code), the most the PA was entitled to recover was 10% of the amount collected, adjusted, or otherwise received as a result of the PA’s services.  Therefore, the PA was not entitled to recover 10% of the gross payment, but only 10% of the supplemental claim that was re-adjusted after his retention.