Allstate Agent Can Be Sued Over Nonrenewal of ‘Grandfathered’ Flood Insurance Policy

A Connecticut agent for Allstate Insurance may be sued by an insured who faults the agent for not renewing a flood insurance policy in a timely fashion, thereby depriving the insured of the benefit of “grandfathered” lower premiums on flood insurance.

The federal court for the district of Connecticut has allowed the lawsuit against the Allstate insurance agent Jason Garoppolo to proceed on charges of negligence, professional malpractice, and breach of contract.

Gerald Candeloro had purchased a federal flood insurance policy through the Allstate franchise agency in Groton for his two-family home every year since 2000 as required by his mortgage lender. Garoppolo bought the franchise from its previous agent owner in 2019 and Candeloro continued to do business with the agency.

According to the case background, on September 14, 2021, Candeloro purchased a flood insurance policy that had an expiration date of September 29, 2022. From August 9, 2022, through October 7, 2022, the insured, who was refinancing his mortgage, repeatedly requested via emails and telephone calls that agent Garoppolo renew the flood insurance policy. Candeloro says the agent told him he would take care of it.

On October 7, 2022, the insured’s mortgage company alerted him that it had not received a required certificate of renewal for the flood insurance. Although the policy had lapsed, it was still within the 30-day grace period for renewal. Candeloro says Garoppolo again promised that he could “easily renew” the policy and that he would do so. However, the agent still did not timely renew the flood insurance, and the policy expired. The mortgage company bought temporary flood insurance and charged the $645 cost to Candeloro.

On November 10, 2022, agent Garoppolo alerted Candeloro to the policy expiration and informed him that since it lapsed by more than 30 days, the policy was no longer part of the grandfathered program and he would have to write a new flood policy at a much higher non-grandfathered rate. The new policy would run from December 8, 2022 to December 8, 2023.

In the complaint he filed in March 2023, Candeloro alleges that the lapse in the policy means he will face higher premiums for a non-grandfathered policy for every year remaining on his 28 year mortgage, and that he will suffer a negative impact on the marketability of his property because a grandfathered policy can be transferred to a future buyer. The lawsuit also cites attorneys’ fees and the effects of a delay in the closing on his refinancing due to the insurance lapse.

The National Flood Insurance Program’s (NFIP) grandfathering allows policyholders who have a policy in effect before updated flood zone maps become effective to keep their previous flood zone to calculate their insurance rate. According to the NFIP, this can result in significant savings.

The agent argued that negligence, malpractice, and contract claims against him were excluded under the National Flood Insurance Act but the court disagreed. The court said Candeloro’s claims are not preempted by rules that apply to insurers. The court said this is “clearly” a case alleging “agent error” and the agent’s role was to procure coverage, whether by obtaining a new policy or by renewing an existing policy.

The agent did convince the court to dismiss claims of unfair insurance practice, bad faith and breach of fiduciary duty.

Topics Lawsuits Agencies Flood