Liability of Flood Risk Assessor

Most homeowner insurance policies do not cover flood damage. As a result, the federal Flood Act requires lenders to determine if a property is in a flood plain and, if so, dictates the purchase of flood insurance. Unfortunately, mistakes sometimes happen.

One such mistake was made on a house in Watseka. The owners were refinancing and the lender hired a flood risk assessor to determine whether the property was in the flood plain. The assessor found it was not and no one bought flood insurance. However, the assessor was wrong, and a year later the house was badly damaged by a flood.

When the homeowners learned that they were not covered they sued the lender and the risk assessor. The trial court relied on prior cases saying that the Flood Act preempted claims against the lender.

The court also dismissed claims against the assessor. The appellate court reversed this part of the ruling.

It found that while the Flood Act protected lenders from state law claims, it offered no similar protection for a risk assessment company that the lender might hire. The court then went on to find that Illinois state law allows a negligence claim against a flood assessor, because the flood assessor's decision was important to the homeowners and it was foreseeable that they would rely on it.

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