5 Takeaways

• Enforcement Tightens: Iowa Insurance Division intensifies actions against roofing contractors acting as unlicensed public adjusters, sparking industry tension.  
• Regulatory Compliance: Iowa law reserves insurance claim negotiations for licensed public adjusters, barring contractors from these roles without proper licensure.  
• Key Case Example: Darren Reeves Roofing faced penalties for negotiating claims, highlighting the division’s focus on strict enforcement of public adjuster laws.  
• Industry Pushback: Shamrock Roofing, based in Kansas, filed a lawsuit challenging Iowa’s framework as overly vague and restrictive, claiming it infringes on First Amendment rights.  
• Contractor Takeaway: Adhere to public adjuster laws, avoid insurance negotiations, and focus on providing accurate assessments to prevent legal and regulatory risks.  

The Iowa Insurance Division continues to crack down on roofing contractors negotiating insurance claims on behalf of homeowners, resulting in a growing list of enforcement actions that have sparked significant resentment within the industry.

The IID remains steadfast in its position that roofing contractors who negotiate insurance claims on behalf of homeowners are violating state law, a role the agency says is exclusive to licensed public adjusters.

On Dec. 11, Darren Reeves Roofing, based in Anita, midway between Des Moines and Omaha, Neb., became the latest roofing contractor to enter into a consent order with the IID. The agreement included that Reeves Roofing stops claiming to be public adjusters or providing public adjuster services on its websites, social media pages and advertisements.  

According to an IID news release, Reeves Roofing also agreed to “instruct its agents and employees from taking any direct or indirect role in effecting the settlements of insurance claims in the state of Iowa.”

The consent order details an instance when Darren Reeves Roofing responded to a commercial farm business that incurred damage to buildings during a 2022 storm.

Farm operator M&M submitted a claim to its insurer, Farm Bureau Financial Services, in June 2022 for hail and wind damage to its business and a residential home. M&M hired Reeves to repair their business and residential home one month later.

Darren Reeves Roofing negotiated the claim on behalf of M&M from the time of the repairs until M&M hired The Adjusters Group, a licensed adjuster, in late December 2022.

According to the state, Darren Reeves, the company’s principal, requested Farm Bureau modify its property loss estimate to “reflect a different category code for roofing material and add 10% overhead and 10% profit to the estimates.”

Farm Bureau said it could only add overhead and profit after the contractor submitted unredacted invoices for materials and subcontractors and would not modify the estimate. Iowa says Reeves responded by email with an attached estimate. He asked Farm Bureau to send a corrected estimate, or he would forward the job to The Adjusters Group and “waste more of my time and yours.”

After Reeves sent the email, the claim went through arbitration. The arbitration award was the dollar value of Reeves’ estimate.

“They targeted me,” he told the Iowa Capital Dispatch.

He believes the division pursued a case against him rather than larger companies that engage in the same practices simply because he’s an “easy target” and can’t afford to pay multiple attorneys’ fees to challenge such actions.

Reeves said he informed the division of numerous other construction companies that, for years, had done precisely what he was accused of doing but had never been pursued by the division.

“Everybody does this,” Reeves said. “These are [repair] companies that write claims and do the adjusting — and the division didn’t care about any of them; all they cared about was targeting me.”

Recent enforcement actions, including cease-and-desist orders and consent agreements, have become more commonplace as the agency continues training its gaze on roofing contractors. Darren Reeves Roofing was one of four roofing firms targeted last June. Roofing & Construction, Exterior + Home and Remodeling and American Dream Home Improvement were each swept up in that action. 

Iowa law requires that public adjusters hold specific licensure to adequately represent homeowners at ‘arms-length’ during insurance disputes without conflicts of interest. The IID prohibits unlicensed contractors or service providers from advertising, negotiating with insurance companies, filing claims for homeowners, or settling claims.

Martin Grace, an insurance law expert at the University of Iowa, explained the law's rationale: "Public adjusters have a fiduciary duty to homeowners. Allowing contractors to fulfill this role could prioritize their financial interests over the homeowner's needs." 

He added that the framework aims to prevent contractors from inflating claims or abandoning disputes, leaving homeowners with unresolved issues.

Roofing Pushes Back

RC reported last October that Kansas-based Shamrock Roofing has challenged Iowa’s regulatory framework. Shamrock filed a lawsuit in U.S. District Court claiming the prohibition infringes on its First Amendment rights and harms consumers by preventing contractors from advising homeowners on insurance claims. 

Shamrock’s owner, Garen Armstrong, voiced his frustration: "They want to muzzle us so insurers don’t pay the fair claim homeowners deserve. Instead of helping people rebuild after a disaster, we’re told we can’t talk about the process at all."

Armstrong also criticized the vagueness of Iowa’s laws, arguing that contractors are left without clear guidance on what constitutes public adjusting. This ambiguity, he claims, makes compliance nearly impossible and unfairly penalizes businesses trying to assist homeowners.

The lawsuit against the IID highlights the growing tension between regulators and contractors. Grace notes that while Iowa intends to regulate behavior rather than speech, the law's vague wording may undermine its enforceability. 

"If the courts find the law too ambiguous, they could strike it down for vagueness," Grace said, suggesting a potential eventual victory for Shamrock Roofing.

That legal battle underscores the delicate balance between protecting consumers and enabling contractors to provide valuable services. For now, roofing contractors operating in Iowa must tread carefully, adhering strictly to state regulations or risk facing penalties.

Takeaway for Contractors

As the debate continues, contractors are urged to educate themselves on public adjuster laws and focus on providing homeowners with accurate damage assessments and repair estimates without crossing regulatory boundaries. 

This case may set a precedent for other states grappling with similar issues, making its outcome one to watch closely in the roofing and insurance industries.