Agent Negligence: Allstate Agent Faces Lawsuit Over ‘Grandfathered’ Flood Insurance Nonrenewal
Introduction:
Imagine relying on your insurance agent to protect your home, only to discover their negligence has cost you dearly. Sadly, this scenario is becoming increasingly common, with homeowners facing significant financial repercussions due to agent errors. A recent case highlights this issue: an Allstate agent in Connecticut is facing a lawsuit for allegedly failing to renew a client’s “grandfathered” flood insurance policy, potentially costing the homeowner thousands of dollars in increased premiums. This case underscores the importance of understanding agent responsibilities and the legal recourse available when negligence occurs.
Understanding “Grandfathered” Flood Insurance Policies
Before diving into the specifics of the lawsuit, it’s crucial to understand what a “grandfathered” flood insurance policy is and why it matters. The National Flood Insurance Program (NFIP) offers grandfathering to policyholders who had a policy in effect before updated flood zone maps were implemented [1, 20]. This allows them to maintain their previous, often lower, flood zone designation for insurance rate calculations, resulting in significant savings over time [1]. Losing this grandfathered status can lead to a substantial increase in premiums, making it a valuable benefit to protect.
The Case: Candeloro v. Garoppolo and Allstate
In Gerald J. Candeloro v. Allstate Insurance Co., et al., a homeowner, Gerald Candeloro, is suing Allstate agent Jason Garoppolo for negligence, professional malpractice, and breach of contract [1, 2]. Candeloro had maintained a flood insurance policy on his two-family home in Mystic, Connecticut, through Allstate since 2000 [2]. In 2019, Garoppolo took over the franchise agency, and Candeloro continued to renew his policy through him [1].
According to the lawsuit, Candeloro repeatedly contacted Garoppolo between August 9, 2022, and October 7, 2022, requesting renewal of his flood insurance policy, which was set to expire on September 29, 2022 [1, 2]. Candeloro claims Garoppolo assured him he would handle the renewal [1]. However, the policy was not renewed, and it lapsed [1, 2]. As a result, Candeloro’s mortgage company purchased temporary flood insurance and charged him $645 [1]. More significantly, because the policy lapsed for more than 30 days, Candeloro lost his grandfathered status and faced significantly higher premiums for a new flood insurance policy [1].
Candeloro’s lawsuit alleges that the agent’s failure to renew the policy will result in higher premiums for the remaining 28 years of his mortgage and negatively impact the marketability of his property, as the grandfathered policy could have been transferred to a future buyer [1].
Legal Arguments and Court Ruling
Garoppolo argued that the claims against him were preempted by federal law under the National Flood Insurance Act (NFIA) and FEMA’s Standard Flood Insurance Policy (SFIP) [2]. However, U.S. District Judge Kari A. Dooley rejected this argument, citing FEMA guidance and a Fifth Circuit Court decision, Campo v. Allstate Ins. Co. [2, 21]. The court found that claims against insurance agents arising from procuring or renewing coverage are not preempted by federal law [2]. FEMA’s guidance distinguishes between agent-related procurement disputes and those involving Write-Your-Own (WYO) insurers, stating that the former are not subject to federal preemption [2].
While the court allowed the claims of negligence, professional malpractice, and breach of contract to proceed, it dismissed claims of breach of fiduciary duty, unfair insurance practices, and bad faith [1, 2]. The court found that the bad faith claim failed to differentiate between Garoppolo and Allstate and lacked evidence of deceptive intent [2].
What Constitutes Agent Negligence?
This case raises an important question: what actions constitute negligence on the part of an insurance agent? Generally, negligence occurs when an agent fails to exercise the degree of care that a reasonably prudent agent would under similar circumstances [11]. This includes:
- Failure to Procure Requested Coverage: An agent has a duty to obtain the insurance coverage specifically requested by the client or clearly warranted by their expressed needs [9].
- Failure to Advise on Adequate Coverage: In some cases, an agent may have a duty to advise clients on the appropriate type and amount of coverage necessary to meet their needs, especially if a “special relationship” exists [9, 10, 11]. This duty arises if the agent holds themselves out as having expertise in insurance and the client relies on that expertise.
- Misrepresentation: Providing false information about a policy or failing to disclose important terms can be considered misrepresentation [6].
- Failure to Notify of Policy Changes: An agent has a responsibility to inform the insured of policy cancellations or non-renewals [9].
Damages Recoverable in Negligence Claims
If an insurance agent is found negligent, the client may be able to recover damages to compensate for their losses [3, 6, 10]. These damages can include:
- The amount the client would have received in benefits if the negligence had not occurred [3].
- Consequential damages, such as legal fees and other costs associated with the agent’s failure [6, 10].
- Compensation for inconvenience and emotional distress [3].
Protecting Yourself from Agent Negligence
While you entrust your agent to look out for your best interest, here are steps you can take to mitigate the risks of agent negligence:
- Clearly Communicate Your Needs: Be explicit about your coverage requirements and ensure the agent understands them.
- Review Your Policy Documents: Don’t rely solely on the agent’s representations. Carefully read your policy documents to understand the coverage, exclusions, and terms.
- Keep Records of Communication: Maintain copies of emails, letters, and notes from phone conversations with your agent.
- Be Proactive with Renewals: Don’t wait until the last minute to renew your policy. Contact your agent well in advance of the expiration date to confirm the renewal process.
- Shop Around: Don’t be afraid to compare quotes and services from multiple agents to ensure you’re getting the best coverage and service.
- Read everything: Read everything that is sent to you and make sure it is correct.
What to Do If You Suspect Agent Negligence
If you believe your insurance agent has been negligent, take the following steps:
- Document Everything: Gather all relevant documents, including policy information, communications with the agent, and evidence of damages.
- Consult with an Attorney: Contact an experienced insurance attorney to discuss your legal options. An attorney can evaluate your case, advise you on your rights, and help you pursue a claim against the agent.
- File a Complaint: You can file a complaint with your state’s Department of Insurance, which can investigate the agent’s conduct and take disciplinary action if necessary.
Conclusion
The case against the Allstate agent serves as a stark reminder of the potential consequences of agent negligence. By understanding your rights and taking proactive steps to protect yourself, you can minimize the risk of financial losses due to agent errors. If you suspect negligence, don’t hesitate to seek legal counsel to explore your options and pursue the compensation you deserve.
Do you have questions about a potential case of insurance agent negligence? Contact us today for a consultation.