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Everybody Must Follow the Law—Insurance Restoration Contractors Need to Stop Acting as Public Adjusters or Face Fines and Class Action Lawsuits


Lawyers should advise everyone to follow the law and explain the law and the ramifications of not doing so. I was thinking about this and a blog I wrote earlier this year, Public Adjusters Should Routinely Double Check Contracts for Compliance and Avoid Fines or Class Action Lawsuits, while reading a press release from the Iowa Division of Insurance that sued three insurance restoration firms for allegedly acting as public adjusters and unfair trade practices involving actions which are prohibited unless one is contracted as the policyholder’s public adjuster or attorney.

Insurance restoration contractors are important. If your work is rebuilding homes, businesses, and communities after a catastrophe, your work is noble, and all of us need your services—even the insurance industry. I have discussed this in The Hero Contractor: Being a Contender and Not a Pretender, and Restoration Contractors Providing Great Quality Workmanship Are Policyholder Friends But Many Insurance Companies Refuse To Pay For Quality.

These three lawsuits 1 should be read by every owner of a restoration construction or roofing firm dealing with insurance adjusters or expecting the policyholder’s insurance company to pay for the costs of repair in whole or part.

All three cases—Recon Roofing, AmeriPro Roofing, and Reeves Roofing—share significant similarities:

  1. Unlicensed Public Adjusting: Each company acted as or advertised to be public adjusters without holding the necessary licenses. This is a direct violation of state laws that require proper licensure for public adjusters.
  2. Misleading Advertising: All three companies misled consumers through their advertising, falsely claiming to have the ability and legal authority to handle insurance claims on behalf of clients.
  3. Unfair Trade Practices: The use of misleading contracts and advertisements constituted unfair trade practices under Iowa law. These practices deceived consumers into believing they were working with licensed professionals.
  4. Cease and Desist Orders: The Iowa Insurance Division issued summary cease and desist orders against all three companies, prohibiting them from continuing their illegal activities and imposing potential civil penalties.

The Iowa Division of Insurance went to the websites to find the improper advertising. They reviewed the contracts to see what was promised. The Division even used an undercover investigator to obtain evidence.

In light of the Texas ruling discussed in Stonewater Case Decided for Texas Department of Insurance and Against the Free Speech Arguments Which Would Have Gutted Public Adjusting Licensing Laws, and the immediate follow up by the Iowa Division of Insurance, it is evident that these laws and actions violating them are on the minds of insurance regulators. Restoration contractors can expect enforcement of these laws and should refrain from acting or contracting to be public adjusters if the applicable state law prohibits the same.

To ensure compliance, I urge all insurance restoration contractors to get a competent legal opinion from an attorney who knows about these issues, will review the advertising, and approve the contracts that are to be signed by policyholders needing restoration or catastrophe work. If the contracts are not legal and violate the law, the amounts charged may end up being forfeited. Worse, if the contract as written is illegal, it could provide a basis for a class action lawsuit where all monies obtained by such illegal contracts are voided.

Everybody must follow the law. The consequences for failing to do so are sometimes minimal. Sometimes, the consequences can wipe out your business. Be safe rather than sorry.

Thought for The Day

No man is above the law and no man is below it: nor do we ask any man’s permission when we ask him to obey it.
—Theodore Roosevelt


1 In the Matter of Recon Roofing & Construction, No. 118885 (Iowa Ins. Comm. [Order to Cease & Desist] June 13, 2024); In the Matter of American Dream Home Improvement, d/b/a AmeriPro Roofing of Iowa, No. 122471 (Iowa Ins. Comm. [Summary Cease & Desist Order] June 21, 2024); In the Matter of Darren Reeves Roofing, No. 122515 (Iowa Ins. Comm. [Summary Cease & Desist Order] June 21, 2024).