When Is My Flood Claim Preempted?

J. Ryan Fowler | Property Insurance Coverage Law Blog | September 5, 2019

With Hurricane Dorian causing flooding on the east coast as we speak the question, I often get asked is: when can I sue my flood insurer for a violation of state law? Recently the Corpus Christi Division of the Southern District of Texas addressed the question.

The Plaintiff, La Mirage Homeowners Association, filed suit alleging breach of its National Flood Insurance Policy (NFIP) along with negligence claims and a demand for pre- and post-judgment interest.1 The trial court had to decide whether a plaintiff’s claims arise from “claims handling” holding that if the claims are related to claims handling then the causes of action are pre-empted. The court held that if an individual is already covered by a non-lapsed insurance policy, the interactions between the insurer and insured are claims handling subject to preemption. In the case at hand the court noted that the insured was covered by an insurance policy issued by Defendant when the claims arose and that negligence complained of was based on the insurer’s denial, delay, refusal, and/or failure to pay the claim.

The court held that since the jury demand was based on the preempted negligence claim and that FEMA is presumed to be paying the litigation expenses and damage award, Plaintiff has no right to a jury. The court also dismissed the insured’s claims for statutory penalties and attorney’s fees. The court went on to hold that pre-judgment and post-judgment are not recoverable against a WYO (“Write Your Own”) carrier.

It is important to remember that the court was dealing with a WYO carrier and a NFIP policy that was backed by FEMA. If the insured had a private flood policy, the holding would have been very different.

If you have any questions regarding your flood claim, please contact or office.
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1 La Mirage Homeowners Assn. Inc., v. Wright National Flood Ins. Co., No. 1:19-cv-138, 2019 WL 4109502 (S.D. Tex.—Corpus Christi 8/29/2019).

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