The battle between Shamrock Hills, a Kansas-based roofing contractor doing enterprise in Iowa, and the Iowa Insurance coverage Division has highlighted probably the most contentious points within the property insurance coverage world at the moment: When does a contractor cross the road into the enterprise of public adjusting? Shamrock argued that Iowa’s statutes improperly limit their speech, whereas the state insisted that it was merely regulating skilled conduct. A federal choose lately sided with Iowa, dismissing Shamrock’s constitutional claims. 1 The choice is greater than a technical authorized ruling. It sends a message with important implications for restoration contractors, roofers, public adjusters, and insurance coverage regulators throughout the nation.
Shamrock’s Case: Free Speech and Not Conduct
Shamrock Hills contended that Iowa’s legal guidelines went too far in criminalizing what are basically conversations between contractors and owners about insurance coverage claims. They argued that Iowa Code sections 103A.71(3) and 522C.2(7), which forbid residential contractors from representing or negotiating insurance coverage claims, inherently goal speech. In spite of everything, the statutes expressly prohibit “aiding,” “advising,” and “promoting” in reference to insurance coverage claims, all of which require communication. Shamrock asserted that this made the legal guidelines content-based restrictions on speech, that means they need to be topic to strict scrutiny beneath the First Modification.
To make their case, Shamrock pointed to buyer evaluations that regulators used towards them. Statements like “Shamrock helped me with my insurance coverage declare” or “they handled our insurance coverage firm” weren’t, in Shamrock’s view, unlawful acts however examples of protected expression. They argued that the statutes had been obscure, leaving contractors to guess what phrases or recommendation is perhaps construed as illegal. In brief, Shamrock stated the state was punishing them for what they stated, not what they did.
Iowa’s Response: Conduct Versus Speech
The State of Iowa took the other view, framing the case not as one about free expression however about regulating skilled conduct. The state reminded the court docket that insurance coverage has lengthy been an space of heavy regulation and that the majority states, together with Iowa, require public adjusters to be licensed. By barring residential contractors from doubling as adjusters, Iowa argued that it was defending owners from fraud, high-pressure gross sales ways, value gouging, and collusion. Iowa insisted that the legal guidelines regulate conduct, performing as a public adjuster with out a license, even when that conduct typically manifests by means of phrases.
On the promoting level, Iowa drew a pointy line: business speech selling an illegal exercise receives no First Modification safety. Simply as unlicensed docs can’t promote themselves as physicians, contractors can’t market themselves as insurance coverage declare representatives when the legislation prohibits them from performing in that capability.
The Court docket: Regulation of Conduct Is Not Suppression of Speech
The court docket agreed with Iowa, holding that the statutes goal conduct somewhat than speech and due to this fact don’t violate the First Modification. The choose emphasised {that a} state doesn’t lose its regulatory energy just because the conduct it bans entails phrases. Iowa was not making an attempt to suppress unpopular concepts or speech, however to implement skilled licensing necessities in a market vulnerable to abuse.
On the vagueness declare, the court docket leaned closely on precedent. The Iowa Supreme Court docket had already interpreted these statutes in a case towards 33 Carpenters Development, the place guarantees to “advocate in your behalf” and to “work immediately with the insurance coverage firm” had been discovered to violate the legislation. I mentioned this case in No Love for the Contractor’s Task of Advantages in Iowa.
With this precedent in hand, the federal court docket concluded that Shamrock had honest discover of what was prohibited. Buyer testimonials about Shamrock “coping with the insurance coverage firm” fell squarely throughout the statutory prohibitions. As a result of Shamrock’s personal conduct was clearly proscribed, the court docket dismissed each the as-applied and facial vagueness challenges.
The Implications
This ruling has sensible penalties that stretch properly past the way it impacts Shamrock. For roofers and restoration contractors, the choice reinforces a tough boundary. They might restore houses and roofs, however they can not negotiate, advise, or characterize owners in insurance coverage claims except they get hold of a public adjuster’s license. Even informal promoting or buyer testimonials that recommend in any other case can be utilized as proof of unlicensed public adjusting. My suggestion for restoration contractors and roofers is to evaluation their advertising supplies, social media posts, and buyer communications with far better warning.
For licensed public adjusters, the ruling is a victory that reinforces the truth that, apart from licensed attorneys, public adjusters have unique authority to characterize policyholders. The choice validates the general public adjuster’s position as separate from that of contractors and shields their market from competitors by roofers and restoration who may in any other case blur the road. This bolsters public adjuster licensing guidelines in different states.
For departments of insurance coverage, the ruling strengthens their regulatory hand. It affirms that enforcement letters, investigations, and penalties directed at contractors providing declare providers are constitutional workouts of state energy. Regulators in Iowa and elsewhere now have clearer authority to pursue contractors who stray into declare negotiation beneath the guise of restore work. It additionally indicators to different jurisdictions that related statutes are on agency constitutional floor, particularly the place shopper safety towards fraud and abuse is the said purpose.
This doesn’t imply that roofers and restoration contractors can’t converse with and ship info to insurance coverage adjusters and the insurance coverage firm concerning the scope, strategies, and development prices. Insurance coverage adjusters, as a part of their good religion investigation, should hunt down this info. Contractors, roofers, and insurance coverage adjusters ought to routinely have these discussions to make sure a correct analysis of the loss quantity will be made. Some public adjusters get upset with me after I say this, however merely exchanging info concerning the prices and strategies of restore by the contractor chosen by the policyholder to do the work shouldn’t be public adjusting.
This put up follows the primary dialogue of this case in Roofing Contractor Challenges Iowa’s Public Adjusting Legal guidelines on Constitutional Grounds. I’d recommend that these on this matter additionally rigorously learn the Texas Stonewater case mentioned in Stonewater Case Determined for Texas Division of Insurance coverage and Towards the Free Speech Arguments Which Would Have Gutted Public Adjusting Licensing Legal guidelines. The Stonewater choice and this most up-to-date choice definitely present precedent on the problem of free speech overriding public adjuster licensing legal guidelines. Insurance coverage regulators with applicable licensing legal guidelines will be anticipated to manage these legal guidelines extra forcefully sooner or later.
Considered the Day
“The lifetime of the legislation has not been logic; it has been expertise.”
—Oliver Wendell Holmes, Jr.
1 Shamrock Hills v. State of Iowa, No. 4:24-cv-00340 (S.D. Iowa Sept 18, 2025). (See additionally, Iowa Movement to Dismiss and Temporary in Assist, and Shamrock Hills’ Response).
