Hail Contract Signed After the Iowa License Lapsed
Marisol is a public adjuster licensed in Nebraska who moved to Council Bluffs in January. Her Iowa nonresident public adjuster license expired on January 31 and she did not renew it, although her Nebraska license remained active. On Tuesday, June 10, a severe hail storm damaged roofs in Council Bluffs. That evening she met with homeowner Dale, whose gutters were dented and whose shingles were bruised. She inspected the roof the next morning, told Dale she could "get him a new roof," and had him sign a one-page contract at 8:45 p.m. on June 11. The contract sets her fee at 12% of "the amount offered by the insurance company," requires Dale to use her preferred contractor, and says nothing about cancellation. On Friday, June 13, Dale's son, who works for another insurer, tells Dale the contract may be cancellable; Dale emails Marisol at 4:00 p.m. to rescind. Marisol says the rescission is too late and demands 12% of the $48,000 the insurer has offered.
1. Was Marisol authorized to handle this Iowa claim, and what licensing consequences follow?
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No. Iowa licenses public adjusters individually, and a Nebraska license does not authorize adjusting an Iowa claim. Her Iowa nonresident license expired January 31. Inspecting the roof, advising Dale, negotiating with the insurer, and soliciting the contract after expiration are unlicensed adjuster activity.
The consequence is not simply a paperwork problem. The Insurance Division can impose civil penalties, deny or condition reinstatement, require restitution, and refer the conduct for further action. The insurer can refuse to recognize her as the insured's representative. Her agreement is not automatically valid just because Dale signed it while she was unlicensed.
To cure the problem she must stop adjusting immediately, obtain an Iowa license or associate with a properly licensed Iowa public adjuster, and disclose the lapse to the client. She should not continue to demand a fee while unlicensed.
2. Was Dale's June 13 email a timely rescission, and can Marisol collect the 12% fee?
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The rescission was timely. The contract was signed Wednesday, June 11. Counting three business days after signing gives Thursday June 12, Friday June 13, and Monday June 16. Dale emailed at 4:00 p.m. on Friday, within the period. The contract also omitted the required cancellation notice, which supports rescission rather than defeating it.
Even without the timing issue, the fee demand is defective. A 12% fee measured by "the amount offered" rather than money actually paid to the insured is not a proper contingent fee; an offer may never be accepted or paid. Marisol also cannot collect for unlicensed activity. The mandatory contractor term is an improper tie-in and creates a conflict.
She should confirm rescission in writing, return the contract and any documents, and charge nothing. If she believes she performed compensable work, she must still resolve the licensing problem first.
3. Identify the contract terms that violate Iowa public adjuster requirements or sound practice, and rewrite them.
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The problems are: (1) no written disclosure of the insured's right to rescind within three business days; (2) a fee based on an insurer's offer instead of amounts actually recovered; (3) a requirement to use the adjuster's preferred contractor; (4) no clear description of services, fee calculation, or when the fee is earned; and (5) no acknowledgment that the adjuster represents the insured, not the insurer.
A compliant contract should state the adjuster's name, Iowa license number, and business address; describe the claim and services; set the fee as a stated percentage of amounts actually paid to the insured, payable only when payment is received; disclose the three-business-day rescission right prominently; state that the insured may use any contractor; provide a copy to the insured; and explain that the adjuster does not provide legal advice. Marisol should also document the license expiration and not use the contract to pressure the homeowner.