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 in the present day: 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 just 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 primarily 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, which means they need to be topic to strict scrutiny below the First Modification.
To make their case, Shamrock pointed to buyer opinions 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 imprecise, leaving contractors to guess what phrases or recommendation may be construed as illegal. Briefly, 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 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 owners from fraud, high-pressure gross sales techniques, worth gouging, and collusion. Iowa insisted that the legal guidelines regulate conduct, performing as a public adjuster and not using a license, even when that conduct generally manifests by way 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 court docket agreed with Iowa, holding that the statutes goal conduct quite than speech and subsequently don’t violate the First Modification. The choose 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 liable 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 Building, the place guarantees to “advocate in your behalf” and to “work immediately with the insurance coverage firm” had 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 court docket concluded that Shamrock had honest 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 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 properties and roofs, however they can’t negotiate, advise, or symbolize owners in insurance coverage claims until they receive 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 assessment their advertising supplies, social media posts, and buyer communications with far higher 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 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 companies are constitutional workout routines of state energy. Regulators in Iowa and elsewhere now have clearer authority to pursue contractors who stray into declare negotiation below the guise of restore work. It additionally indicators to different jurisdictions that comparable statutes are on agency constitutional floor, particularly the place shopper safety towards fraud and abuse is the said objective.
This doesn’t imply that roofers and restoration contractors can not converse with and ship info to insurance coverage adjusters and the insurance coverage firm relating to the scope, strategies, and development prices. Insurance coverage adjusters, as a part of their good religion investigation, should search out 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 relating to the prices and strategies of restore by the contractor chosen by the policyholder to do the work just isn’t 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 recommend that these on this subject additionally rigorously 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 definitely present precedent on the problem of free speech overriding public adjuster licensing legal guidelines. Insurance coverage regulators with acceptable 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 Transient in Assist, and Shamrock Hills’ Response).