The battle between Shamrock Hills, a Kansas-based roofing contractor doing enterprise in Iowa, and the Iowa Insurance coverage Division has highlighted some of the 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 prohibit their speech, whereas the state insisted that it was merely regulating skilled conduct. A federal decide not too long ago 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 primarily conversations between contractors and householders 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 any case, 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 underneath the First Modification.
To make their case, Shamrock pointed to buyer opinions that regulators used in opposition to 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 have been obscure, leaving contractors to guess what phrases or recommendation is perhaps construed as illegal. In brief, Shamrock mentioned the state was punishing them for what they mentioned, not what they did.
Iowa’s Response: Conduct Versus Speech
The State of Iowa took the alternative view, framing the case not as one about free expression however about regulating skilled conduct. The state reminded the courtroom that insurance coverage has lengthy been an space of heavy regulation and that almost all states, together with Iowa, require public adjusters to be licensed. By barring residential contractors from doubling as adjusters, Iowa argued that it was defending householders from fraud, high-pressure gross sales ways, worth 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 medical doctors can not promote themselves as physicians, contractors can not market themselves as insurance coverage declare representatives when the regulation prohibits them from performing in that capability.
The Court docket: Regulation of Conduct Is Not Suppression of Speech
The courtroom agreed with Iowa, holding that the statutes goal conduct moderately than speech and subsequently don’t violate the First Modification. The decide emphasised {that a} state doesn’t lose its regulatory energy just because the conduct it bans includes 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 courtroom leaned closely on precedent. The Iowa Supreme Court docket had already interpreted these statutes in a case in opposition to 33 Carpenters Building, the place guarantees to “advocate in your behalf” and to “work instantly with the insurance coverage firm” have been discovered to violate the regulation. I mentioned this case in No Love for the Contractor’s Task of Advantages in Iowa.
With this precedent in hand, the federal courtroom concluded that Shamrock had truthful discover of what was prohibited. Buyer testimonials about Shamrock “coping with the insurance coverage firm” fell squarely inside the statutory prohibitions. As a result of Shamrock’s personal conduct was clearly proscribed, the courtroom dismissed each the as-applied and facial vagueness challenges.
The Implications
This ruling has sensible penalties that stretch nicely past the way it impacts Shamrock. For roofers and restoration contractors, the choice reinforces a tough boundary. They might restore properties and roofs, however they can not negotiate, advise, or symbolize householders in insurance coverage claims until they receive a public adjuster’s license. Even informal promoting or buyer testimonials that counsel in any other case can be utilized as proof of unlicensed public adjusting. My suggestion for restoration contractors and roofers is to assessment their advertising and marketing supplies, social media posts, and buyer communications with far larger 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 symbolize 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 would possibly 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 underneath the guise of restore work. It additionally indicators to different jurisdictions that comparable statutes are on agency constitutional floor, particularly the place shopper safety in opposition to fraud and abuse is the said objective.
This doesn’t imply that roofers and restoration contractors can not communicate with and ship info to insurance coverage adjusters and the insurance coverage firm concerning the scope, strategies, and building 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 may be made. Some public adjusters get upset with me once 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 will not 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 might counsel that these on this matter additionally fastidiously learn the Texas Stonewater case mentioned in Stonewater Case Determined for Texas Division of Insurance coverage and In opposition to the Free Speech Arguments Which Would Have Gutted Public Adjusting Licensing Legal guidelines. The Stonewater determination and this most up-to-date determination actually present precedent on the difficulty of free speech overriding public adjuster licensing legal guidelines. Insurance coverage regulators with applicable licensing legal guidelines may be anticipated to control these legal guidelines extra forcefully sooner or later.
Considered the Day
“The lifetime of the regulation 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).
