Chip Merlin | Property Insurance Coverage Law Blog | February 4, 2019
Flood insurance claims governed by the National Flood Insurance Program are different. The requirements to get paid are strict and must be complied with. Many inexperienced attorneys and public adjusters prepare these claims improperly and the result is that policyholders do not get paid or paid as much as they otherwise deserve. Federal proofs of loss have to be completed fully, properly, and on time.
A case issued last week, Clark v. Wright National Flood Insurance Company,1 involved a situation where the policyholder filed a proof of loss for the undisputed amounts of a flood claim and a proof of loss for disputed items. This is not the way to file a flood insurance proof of loss. A flood proof of loss for all the amounts claimed has to be filed on a federal form, completely filled out and signed. It should have backup and documentation as well. We have discussed and warned about these requirements in:
- A Warning Regarding Federal Flood Proofs Of Loss
- What is Enough to Satisfy the Standard Flood Insurance Policy’s “Proof of Loss” Requirement?
- National Flood Proof of Loss Deadline on Monday – Are You Sure the Proof is Right?
- Proof of Loss Tips for National Flood Claims Involving Superstorm Sandy
In the reported decision, the federal judge hammered the policyholders and stated the following:
A NFIP participant cannot file a lawsuit seeking further federal benefits under the SFIP unless the participant can show prior compliance with all policy requirements.”…In case of a flood loss to insured property, the insured must satisfy several requirements before bringing a lawsuit….Foremost, the insured must provide a complete, sworn Proof of Loss (POL) within 60 days after the loss, “or within any extension authorized by FEMA.”…
In addition, the proof of loss must include documents supporting the claimed amount, including “[s]pecifications of damaged buildings and detailed repair estimates,” as well as “inventory of damaged property showing the quantity, description, actual cash value, and the amount of loss.”… These are strict requirements….Thus, an insured’s failure to provide a complete, sworn proof of loss statement with supporting documentation “relieves the federal insurer’s obligation to pay what otherwise might have been a valid claim.”
….stating the amount of an invoice and attaching an adjuster’s list of contents losses does not amount to stating the amount claimed under the policy…Plaintiffs did not seek payment for any portion of the items on the contents list in the proof of loss, nor did they sign and swear to the amount in the attached adjuster’s estimate, which would be required under the SFIP to claim those losses…The proof of loss does not even claim the $32,310 from the invoice, it merely states that this is the flood-related part of the invoice. Because the December 2016 proof of loss did not meet the requirements of the SFIP, Wright is excused from paying plaintiffs’ claim. (Citations omitted)
Filing flood insurance claims differs from almost any other form of insurance. The law has been interpreted strictly against policyholders and exacting preciseness seems more important than the validity of the claim under current federal law.