One of the strongest tools in an insured’s arsenal is a good public adjuster. If lucky, most insureds will only suffer a property loss once or twice in a lifetime. Not dealing with claims handling on a day to day basis, navigating the claims process can be not only confusing and tedious, but costly as well if the insured does not know when they are being treated unfairly.
Some states have laws in place that limit when licensed public adjusters can contact an insured with a potential need for the public adjuster’s services. Termed “solicitation,” Maine’s 36-hour rule in the Insurance Code provided:
1. Solicitation. An adjuster seeking to provide adjusting services to an insured for a fee to be paid by the insured may not solicit or offer an adjustment services contract to any person for at least 36 hours after an accident or occurrence as a result of which the person might have a potential claim
The National Fire Adjustment Company, Inc. (“NFA”) provides licensed public adjuster services in Maine. NFA sued the superintendent of the Maine Bureau of Insurance, arguing the rule violates the First Amendment of the U.S. Constitution. The NFA argued the rule was “a content and speaker based restriction of speech” that was “presumptively unconstitutional viewpoint discrimination.” In the alternative, it was argued that the Rule imposed burdens that neither advanced the State’s interests, nor achieved its stated interest, as it swept more broadly than necessary. It was asserted that public adjusters’ adherence to the Rule was causing NFA’s public adjusters to lose business on an ongoing basis. (As any public adjuster working in a state with similar restrictions knows, it only stops public adjusters that follow the rule, those that are unlicensed or unscrupulous will often swoop in, regardless of the Rule).
The Federal District Court, in its decision, applied the “intermediate scrutiny test” which first determines whether the expression is protected speech by the First Amendment (for commercial speech, it must concern lawful activity and not be misleading); next it looks at whether the governmental interest is “substantial”; and if yes to both, it must be determined whether the regulation directly advances the government interest asserted, and if it is more extensive than necessary to serve that interest.
The court determined that the Rule’s ban on “solicitation” was “exceedingly broad” and acted as “a powerful deterrent to even educational outreach activity within the 36-hour window”, and that the ban on all solicitation activity, temporary as it might be, was “an excessively paternalistic prior restraint on speech” and, as such, swept more broadly than necessary to serve the stated interests of the State.