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AFTER THE WATER IS GONE: What My Flood Insurer Owes

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The catastrophic flooding of Baton Rouge, Livingston, Ascension, and surrounding areas has caused its own flood of insurance claims with flood insurers. However, flood insurance policies (almost all of which are underwritten by the federal government) are different from the more-familiar homeowner’s policies. The following are a number of points you should keep in mind as you make a claim with your flood insurer.

  1. Although you may think your flood insurance policy is with a private insurer, almost all policies are underwritten by the federal government and are part of the National Flood Insurance Program (NFIP) and governed by the National Flood Insurance Act (NFIA). Whereas the private insurer, such as Wright National Flood Insurance Company or Allstate, is responsible for adjusting your claim, any funds paid as a result of the claim are paid by the federal government.
  2. Because these private insurers (also called “Write Your Own” or “WYO” insurers) are merely servicing policies that are underwritten by the federal government, and payments are made directly from the federal treasury, they (or FEMA in the case of a policy placed directly by that agency) are entitled to the protection of federal laws that govern these policies under the NFIA.
  3. Federal law requires that you make a proof of claim for your loss under your flood policy within 60 days of the loss.  The Standard Flood Insurance Policy (SFIP) Proof of Loss form can be found at http://www.fema.gov/media-library-data/1404745070512-4523e347d5c3d5dd8a463ab3c6c9e15f/FEMA%20Form%20086-0-9.pdf
  4. In cases of natural disasters, FEMA often extends the 60 day period. However, you should assume there is no extension and submit the required proof of loss within 60 days. Unfortunately, courts usually strictly enforce this deadline resulting in the loss of flood coverage. Supplemental proof of loss should be submitted as new damages are discovered.
  5. Because federal law applies to disputes for damages under a flood insurance policy issued by FEMA or a WYO insurer, state law claims for bad faith or extra-contractual damages are not available. Instead, a policyholder cannot recover any damages incurred as a result of the manner in which their flood claim was adjusted, and can only recover damages owed under the policy.
  6. Likewise, policyholders cannot even recover interest if they are ultimately successful in a claim against FEMA or a WYO insurer.
  7. Attorneys’ fees are also not recoverable under the NFIA; however, they may be available pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(b).
  8. Aside from the 60 day proof of loss requirement, a lawsuit filed pursuant to the NFIA must be filed within one year from the date of the denial of the claim, 42 U.S.C. § 4072.
  9. In the event of the denial of an entire claim, or even parts of it, a policyholder is entitled to an appraisal and appeal process that is designed to resolve any disagreement about monies owed under the policy. If there is a dispute concerning causation, scope of damages, or coverage, appraisal is not available. If an appeal is filed, the policyholder waives the right to request an appraisal.
  10. In suits filed against either FEMA (when the policy is issued directly by that agency) or WYO insurers, there is no right to a trial by jury.

The flood has harmed so many and so much; don’t let delay add to the total.

 

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