Tennessee Policyholders Sue Homeowners Insurance Agents En Masse

Published: Thu 13 May 2010

Thomas Kristoffersen

Hundreds of policyholders whose homes suffered flood damage in Tennessee are suing their homeowners insurance agents. Their lawyer said each of the homeowners has a strong case because the agents failed to provide sufficient information about their coverage options.

The Channel 4 I-Team of Nashville, Tennessee has launched an investigation of what might be a massive class-action lawsuit against the insurance agents.

"I actually got called by my State Farm agent a couple weeks previous telling me I was not covered on (my home's) contents," explained Noah Yarian.

Yarian's experience is how insurance representatives should handle flood insurance coverage with their policyholders-explain to them what is and is not covered. However, according to Nashville attorney David Raybin, hundreds of other policyholders' agents did not do so.

"They were left high and dry, or they wish they were, because the insurance didn't cover them," explained Raybin.

Raybin claims that people in flood zones believed their flood insurance policy would cover everything.

"I thought between the two insurances that, surely, the possessions would be covered," explained one disgruntled flood victim, referring to his home insurance and flood insurance policies.

Limited Coverage Results in Rude Awakening

However, many victims are now learning that only the structure of their homes is covered by flood insurance. The homeowners had to purchase separate policies to cover the contents of their homes. The clients of Mr. Raybin claim that their insurance agents never explained the coverage limitations to them.

"This is unfair to tell people you have flood insurance. You can buy your house, but not tell people it doesn't cover the content. The agent has the responsibility to tell the homeowner you're not covered. Do you want to be? It only costs $400 a year, in some cases," Raybin said.

Just as physicians have an obligation to treat patients fully, Raybin said insurance agents must fully explain all of the available coverage options. If they do not, he argued, they should have to pay for the consequences. So far, Raybin has seen the same few insurance agents' names and insurance companies in cases where policyholders said they were in the dark about their coverage.

"There's too many people in a new situation for it to just be random chance," Raybin said.

Raybin is not yet prepared to say which insurance agencies and agents will get sued because he is still gathering clients. However, he did say that if many more homeowners join in, he will most likely file multiple class-action suits against each insurance agent.