Allstate Subject of Unfair Insurance Lawsuit

Allstate Insurance is in legal trouble in Florida state court as policy holders claim the company acted in bad faith by using “falsely skewed hurricane models” to let homeowners purchase discounted reinsurance plans, and then suddenly increase rates by 42 percent.

David and Theresa Sapuppo are the lead plaintiffs in the unfair insurance lawsuit against Allstate that claims the insurance company and its lobbying resources played a substantial role in getting Florida Legislature to pass a 2007 law that allowed it, and other insurers, to purchase discounted reinsurance from the state. This law was passed in part due to “falsely skewed hurricane models and unjustifiable hurricane risk loads” presented by the insurers, according to the lawsuit.

The 2007 law also led to the state assuming risk for certain amounts of storm damage, which in turn lowered costs for insurance companies. This cost reduction was supposed to be passed along to customers.

However, the lawsuit continues to state that “Allstate Companies retained the benefit conferred upon them by the reinsurance cost savings and failed to timely pass along the savings resulting from their purchase of state-subsidized reinsurance to their ratepayers ... in the form of lower premiums, despite being legally required to do so.”

This, in turn, led to Allstate eventually asking customers for a 41.9 percent increase in rates. After being sued by the Office of Insurance Regulation, Allstate eventually reduced residential property insurance premiums by of 5.4 percent for some policyholders one year later. The lawsuit is seeking a recovery of the money paid by policyholders in the year before the eventual 5.4 percent premium decrease, and for damages for unjust enrichment and breach of contract.

If you or a loved one has suffered from an insurance company that has acted in bad faith, call Sokolove Law today to learn more about pursuing a bad faith lawsuit. For legal help, call (800) 581-6358.