On February 14, 2020, the Iowa Supreme Court dismissed the case of 33 Carpenters Construction, Inc., (“33 Carpenters”) against State Farm Life and Casualty Company (“State Farm”).1 33 Carpenters approached the insureds after a hailstorm to see if they would allow them to inspect their roof. 33 Carpenters found hail damage and entered into a series of contracts to help the homeowners complete the repairs, including an assignment of benefits (“AOB”).

After an initial payment and a supplemental payment, State Farm had determined it paid what it owed on the claim. 33 Carpenters disagreed then filed suit to enforce its post-loss contractual assignment of insurance benefits against the homeowners’ insurer. State Farm filed a motion for summary judgment on the grounds that 33 Carpenter’s assignment of benefits was unenforceable.

State Farm argued that 33 Carpenters acted as an unlicensed public adjuster and Iowa Code section 103A.71(5)(2016) declares “void” contracts entered into by residential contractors who perform the services of a public adjuster without the required license under Iowa Code section 522C.4. The district court granted State Farm’s motion for summary judgment and the Iowa Supreme Court affirmed.

The Iowa Supreme Court considered several factors in determining 33 Carpenters acted as an unlicensed public adjuster: The Agreement, the Insurance Contingency, the Assignment of Claims and Benefits, the 33 Carpenters public web page, and 33 Carpenters’ behavior in providing the services of a public adjuster as defined in Iowa Code section 522C.2.

The district court found, inter alia, that the Agreement authorized 33 Carpenters to communicate with State Farm, 33 Carpenters attended the roof inspections with State Farm without the insureds, and 33 Carpenters received the insurance proceeds. The Court affirmed the district court’s holding that 33 Carpenters could not recover from State Farm: “Because 33 Carpenters was acting as an unlicensed public adjuster prior to the assignment, the assignment is invalid under Iowa law.” The Court also noted in its opinion that other states have recently enacted similar statutes regulating post-loss assignments of insurance rights or benefits to residential contractors: Neb. Rev. Stat. Ann. § 44-8605 (2019); N.D. Cent. Code Ann. § 26.1-39.2-04 (2020); and Fla. Stat. Ann. § 627.7153 (2019).

Assignment of insurance proceeds for services advanced to the insured homeowner while she waits for the insurer to work through its claim process has long been a beneficial option for insureds. However, there are limits to what a contractor can do when dealing with insurance claims. Contractors working with insureds should check the public adjuster statutes in their jurisdiction to ensure they are not acting as unlicensed public adjusters when assisting homeowners in their insured repairs. Also, it would be a good idea to check the description of the services offered to the public on web pages or other advertisements to make sure the services offered are not those allowed only by licensed public adjusters.
1 33 Carpenters Construction, Inc., v. State Farm Life and Cas. Co., No. 18-1354 (Iowa 2020).