Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

In a recent case out of New Jersey, a state that doesn’t see too many lawsuits based on hurricane damage, an insurance company denied a local woman’s claim for flood damage from Hurricane Ida in 2009. In Pepe v. Fid. Nat. Prop. & Cas. Ins. Co., CIV.A. 11-3746 JEI, 2011 WL 4916290 (D.N.J. Oct. 17, 2011), the plaintiff purchased flood insurance under the NFIP program through Fidelity National Property and Casualty Insurance Company. After Hurricane Ida damaged her property, she submitted a claim to Fidelity, which sent an adjuster from Fountain Group, LLC. The adjuster did not find flood damage and denied the claim. Unhappy with the insurance company and adjuster’s findings, the plaintiff filed suit against the insurance company, the adjuster, and FEMA. FEMA filed a motion to dismiss the suit against it, claiming the court did not have jurisdiction to entertain a lawsuit against it under these circumstances. The court agreed:

It is well established that the United States and its agencies are immune from suit unless Congress explicitly waives sovereign immunity. U.S. Dept. of Energy v. Ohio, 503 U.S. 607, 615, 112 S.Ct. 1627, 118 L.Ed.2d 255 (1992). The National Flood Insurance Act (“NFIA”) contains a limited waiver of sovereign immunity where a claim was directly submitted to, evaluated, and denied by the FEMA Director, as opposed to a [write your own insurance] company. See 42 U.S.C. § 4072; see also Van Holt v. Liberty Mut. Fire Ins. Co., 163 F.3d 161, 166 (3d Cir. 1998) (noting that “the plain text appears to restrict the reach of § 4072 to suits against FEMA.”).

The court found that the plaintiff purchased insurance from Fidelity, submitted a claim to Fidelity, and Fountain had adjusted the claim. Since FEMA did not directly sell the policy to the plaintiff, nor did FEMA participate in the adjustment of the claim, FEMA could not be held responsible for any problems with the claim. The New Jersey court noted that other courts in Maryland, Massachusetts, and Pennsylvania have also ruled the same way, and the claim against FEMA was dismissed.

This case serves as a reminder that even though the NFIP is a federal government program, recourse may be limited against the federal government if something goes wrong during the claims process. Sovereign immunity seems to be rather simple and straightforward when applied to the facts of this case, but it is actually a complex legal doctrine. If you have a complication with a flood insurance claim, it pays to seek competent legal help for your claim.

Farm Bureau filed suit, asserting a claim for unjust enrichment and seeking to recover the proceeds it paid the insured under the SFIP.

As Farm Bureau sought to recover funds paid under a SFIP, the U.S. District Court for the Northern District of Florida concluded that any remedy was limited to those set forth by FEMA in the federal flood insurance regulations and the NFIA, as interpreted under federal common law insurance principles. As there was no provision for the relief requested by Farm Bureau in the above mentioned law and the Court could not create federal common law cause of action, the Court concluded there was no cause of action for which Farm Bureau could recover.

Here is the gist of the article:

Federal fisheries experts have told the Federal Emergency Management Agency that -- by underwriting thousands of flood insurance policies in Puget Sound -- it encourages construction in floodplains in ways that harm federally protected species.

In response, FEMA is now drafting new building rules for about 122 communities in Puget Sound to minimize the harm to salmon and endangered whales that feed on them.

"We're going to see less damages caused by flooding and less lives lost due to flooding and good riparian stewardship," said John Graves, a floodplain specialist with the National Flood Insurance Program.

What FEMA is doing in Washington state is being closely watched elsewhere.

Conservation groups across the country have challenged FEMA's flood program for harming endangered sea turtles in Florida, pallid sturgeon in Missouri, jaguars in Arizona, salmon in Oregon, and the Southwestern willow flycatcher in New Mexico.

FEMA has "a national responsibility to comply with the Endangered Species Act and not harm imperiled species by allowing and even subsidizing development in floodplain habitat areas," said Dan Siemann, senior environmental policy specialist for the National Wildlife Federation.

Conservation groups say FEMA's program allows building to occur in areas where it otherwise would not, since most private insurers won't safeguard homes in such flood-prone areas. They say the agency sets minimum building standards, but those don't consider impacts of development on wildlife and their habitat.

I imagine that environmental groups could use the same logic and tactic to force federally funded or guaranteed mortgages to be written with new environmental building rules. And, maybe that is the way it should be. Construction and building codes can potentially harm or have significant impact on the environment and our fellow creatures living on earth.

There are significant federalism and public policy issues in those topics. Certainly, building codes should allow for affordable housing and there should be codes written with the environment in mind…but shouldn’t those be written and decided by the governing authorities charged with the responsibilities associated with those issues? Shouldn't mitigation be the primary concern in the National Flood Program Building Codes? 

The case involved a number of late-filed federal proofs of loss for flood claims. The adjusters refused to grant the plaintiffs a waiver for the late filing, while allowing others. I think it is a stupid legal rule to make a piece of paper determinative of whether a proof of loss has been filed on time as an absolute condition precedent to recovery. The best rule, from the policyholder’s standpoint, regarding proofs of loss is in Louisiana, and the most draconian has been under the National Flood Program. Maybe that is about to change. After all, shouldn’t the contract be interpreted to provide coverage and recovery despite immaterial failures of filing pieces of paper? Proofs of Loss are not in the same category as Constitutions, and many documents in commercial settings and life are filed late or imperfectly without releasing the other party from an otherwise valid obligation.

In the National Flood context, most policyholders have “storm trooper” claims adjusters from an independent adjustment company controlled by a “write-your-own” insurer estimate the policyholder’s damage. Usually, the policyholder simply accepts. They may not agree, but they hope money is coming soon and that it is enough to get the structure fixed. Do any of them want to spend their own money to get an independent estimate? Usually, they do not. But, I would suggest that they hire a public adjuster; most estimators make mistakes and Flood estimators make a lot more money by churning out many estimates rather than spending the time getting a few very accurate.

In this case, the administrators for National Flood denied the appeal for the waiver. Usually, that has been the end of the story. Here, the policyholders argued that a court should decide if that decision was right. This is what the Court wrote about the situation before going into its analysis :

Under its regulatory framework, the Federal Insurance Administrator is authorized to waive the proof of loss deadline at his discretion. See 44 C.F.R. § 61.13(d) (2008). Upon receipt of a waiver request, the Administrator, or his delegates, "determine whether it is an appropriate claim to waive the [proof of loss] deadline and whether there is a legitimate reason why the [proof of loss] was not timely submitted"…

During one of several oral arguments before the Court that occurred in these proceedings during 2007, FEMA acknowledged that it had granted waivers for some insureds beyond the January 17, 2004 deadline. But when asked by the Court what criteria were used to determine whose claims might be considered after the deadline and whether such criteria had ever been publicly announced, FEMA was not able at first to articulate the criteria, except to suggest that some claims for additional compensation were deemed to be meritorious and were therefore granted late. Thereafter, per the Woods Affidavit, FEMA advised the Court of the criteria, effectively conceding that they had not theretofore been published.

Because it felt that these criteria for waiver were potentially invalid as to pending claims in that they were not previously-announced, the Court, contingent upon a subsequent finding that the criteria would indeed be held invalid for that reason, granted Plaintiffs leave to file individual requests for waiver of the proof of loss deadline.

Plaintiffs thereupon filed individual waiver requests based upon the newly announced criteria set forth by FEMA. In July and August 2008, FEMA issued a series of letters denying all but five of Plaintiffs' waiver requests. Plaintiffs now seek review of the denials. FEMA submits that the Court lacks authority to review its waiver decisions.

In a footnote, the Court noted the new criteria that FEMA made and used to determine whether a waiver should be granted:

The criteria included: the severity of the damages caused by flood; whether the damage required an expert to evaluate the extent of structural damages caused by flood; whether the damage required a Certified Public Accountant to review the stock and inventory; whether salvage is involved and if the adjuster must either sell it back to the insured or dispose of it, which would further delay the adjustment process; whether the insured experienced difficulty listing all items damaged by flood due to the extent of personal property inventory involved; whether there were settlement disputes which may have caused delay in finalizing the claim adjustments; whether the insured required additional time due to health conditions (i.e., hospitalization) and required a family member’s assistance in the presentation of their claim; whether the claim involved prior losses and the insured was required to document repairs to the structure and replacement of personal property prior to the recent flood loss; and whether the insured demonstrates that there is additional covered damage for which a supplemental payment is appropriate.

After further outlining the legal position of the parties, the Court held:

The Court agrees with Plaintiffs that it possesses authority to review the waiver decisions pursuant to 42 U.S.C. § 4072. That section authorizes judicial review of “any claims for proved and approved losses covered by flood insurance” that the Director disallows. 42 U.S.C. § 4072 (2006). Defendants concede that section 4072 is a limited waiver of sovereign immunity that applies “with respect to circumstances involving the denial of a claim submitted pursuant to a federally-issued SFIP…”

The key question is whether a request for a waiver of a proof of loss deadline to submit a claim for payment of the loss is itself a “claim.” The Court believes it is.

The term “claim” is not defined by section 4072. Is it nonetheless “unambiguous”? The Court concludes that it is not, or stating the proposition directly, that the word “claim” is ambiguous. Black’s Law Dictionary 247 (6th Ed. 1990), for instance, defines a claim inter alia as a “[m]eans by or through which claimant obtains possession or enjoyment of privilege or thing.” In that sense, one makes a “claim” for possession or enjoyment of a waiver of a proof of loss deadline as much as a claim for the loss itself …

The Court holds that a request for waiver of a proof of loss deadline is a “claim” and, as such, is reviewable by a federal district court.

Policyholders with flood insurance may not appreciate how important this ruling is. We should be vigilant that FEMA does not try to make regulations diluting it. Without a process to appeal and challenge the decision, FEMA administrators can do what they want with impunity. Now those decisions can be challenged.

The Court also set out the standard of review when challenging those decisions:

Having determined that it has authority to review FEMA’s denials of waivers of the proof of loss deadlines in this case, by what standard does the Court review the denials? Since section 4072 does not indicate that the Court’s review should be de novo, the Court accepts the basic standard of the Administrative Procedure Act that the denials not be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A) (2006).

This is a fair and just decision. We all make mistakes and sometimes act arbitrary or capriciously—it is human nature. It is also human to not want to admit our wrongs. Having recourse to challenge such unfairness is a basic concept of American jurisprudence upheld in this case.

"The following must be followed when completing the proofs for flood claims:

1. Use the exact Federal Form for the Proof of Loss and not a generic form. Failure to do so may jeopardize payment. It would be similar to filing a Federal Income Tax return with a state form.
2. Figure exact amounts owed. Do not put, "policy limits" or "to be determined."
3. Document the amounts owed and attach the documentation. Do not just "ballpark" or "estimate" an amount. File the proof with actual estimates, proposals, lists, or some type of documentation which "proves" and substantiates the loss amount.
4. Get it received and in the hands of the company listed on the policy by the deadline. Do not just send it to the adjuster on the deadline day.
5. Do not rely upon other oral or written extensions from the field adjuster or his supervisor. Only written extensions coming from the Director or Deputy Director can legally extend the time.

National Flood may, on appeal, rescind these requirements. If you get in this predicament, we strongly suggest you obtain legal counsel. The best course of action is to never place yourself in that position in the first place."

We have been receiving some wrongful responses to properly complete Flood Proofs of Loss and imagine many others have as well. If you submit a properly filled out Proof of Loss, the insurer either pays the claim, pays part of the claim, and if the policy allows, may even replace or repair the property. The one thing some insurance adjusters wrongfully do is reject a properly completed proof of loss. This is technically a breach of the insurance contract by the insurance company because no property insurance contract, even a Flood contract, allows that to be the response.

When I did property insurance defense early in my career over twenty-six years ago, my mentor, Paul Butler, Jr., made this point in a number of insurance seminars, but the wrongful practice of "rejecting" properly completed Proofs of Loss still exists for some reason. We have received a number of these from National Flood and the adjusters with Fidelity. We have talked with them and they are clueless about what to do when a Flood policyholder sends a properly completed and documented Proof of Loss for a claim amount which is higher than what they agree is the amount of damage. I hope Russ Tinsley and others with National Flood are reading this because it is a problem that is harming policyholders.

Most insurance companies will pay the undisputed portion of the claimed amounts and try to adjust the disputed amounts through good faith discussion. This activity goes on all the time. Most property insurance claims being handled with disagreements can end with each side giving some after consideration for the other's point of view. But, the Proof of Loss is not rejected. Instead, the good faith insurer merely indicates that it disagrees, puts in writing why it disagrees, pays the undisputed amounts, and usually asks to meet right away for a settlement or other adjustment conference trying to resolve differences in good faith.

The alternatives left to resolve the dispute are usually litigation or appraisal. The problem with litigating against National Flood is the unavailability of attorney’s fees and the usual high expense of federal litigation. The policyholder can win the lawsuit, but have no money after attorney’s fees and costs because the disputes are not usually that large.

A good example of this is in Dwyer v. Fidelity National Property and Casualty Insurance Company, 565 F.3d 284 (5th Cir., April 09, 2009). A summary of the facts were:

"...Fidelity paid the policy limit for contents and $86,629 for flooding-related building damages. After the first set of checks did not arrive, Fidelity mailed a second set, which the Dwyers received in December.

On February 21, 2006, Dwyer sent a certified letter to both Fidelity and Traveler's Insurance Company (“Traveler's”), whose homeowner's insurance policy on the Dwyer dwelling covers wind damage. The letter stated that a contractor's estimate to repair the house was roughly $100,000 more than the combined amounts paid by Fidelity and Traveler's. Dwyer wrote that neither he nor the contractor could accurately distinguish between wind and flood damage, so Dwyer recommended each company pay the additional expenses in proportion to the amount it had already paid. Based on this calculation, he requested an additional $85,471.89 from Fidelity.

Fidelity instructed the Dwyers to contact the adjuster and faxed a copy of the letter to him. Apparently no further action occurred, and the Dwyers sued Fidelity on August 25, 2006, seeking additional money under the policy and damages under federal common law for bad faith claim adjustment. The complaint does not limit its allegations to undervaluation of the Dwyers' loss nor does it disavow a claim to increase Fidelity's share of the wind/water allocation, and it includes claims such as “failing to properly train its adjusters and agents,” which could be related to valuation, coverage, or both.

In its answer, Fidelity denied liability and stated:

If these Plaintiffs' SFIP claims dispute reaches a point where it is established that there is (1) full and complete compliance with all conditions precedent to the making of a claim, and (2) resolution and agreement upon all issues of both coverage and the scope of the loss, then in that event (but not until that event) Defendant affirmatively asserts and invokes the appraisal clause of the SFIP. 44 C.F.R. Pt. 61, App. A(1), Art. VII(P).

...

...Fidelity filed a motion to compel appraisal...

Because the trial date was close at hand, the district court denied the motion as untimely. After a four-day bench trial, the court awarded the Dwyers the difference between Velez's estimate and the money already paid by Fidelity. In addition, the court awarded the Dwyers their attorneys' fees, finding that Fidelity qualified as a “federal agency” under the Equal Access to Justice Act. Fidelity appeals both rulings."

I assume there was no bad faith award because there is no federal common law bad faith. But the case is not finished and insurance monies paid because of what the Fifth Circuit did on appeal. It held that the matter had to go to appraisal despite the long time of litigating the matter and also held that no attorney’s fees and costs could be awarded against National Flood or the WYO (Write Your Own) carriers.

The appraisal analysis first noted:

"The Dwyers...argue that appraisal cannot be requested after suit has been filed. They offer no authority support their position. Nothing in the clause or the contract as a whole establishes a time limit for invoking the appraisal clause. Contractual clauses cannot be evaded by racing to the courthouse, and appraisal and arbitration clauses are routinely invoked during litigation. E.g., Hill v. G E Power Sys., Inc., 282 F.3d 343 (5th Cir.2002) (arbitration); Terra Indus., Inc. v. Commonwealth Ins. Co., 981 F.Supp. 581, 600 (N.D.Iowa 1997) (appraisal). Consequently, the appraisal clause may be invoked after suit, provided that the failure to do so has not amounted to waiver.

…The district court incorrectly homed in on the interval between the appraisal request and the trial date. The appropriate waiver inquiry examines Fidelity's knowledge and action-when Fidelity knew that the appraisal clause could be invoked, whether it reacted timely to the knowledge. Fidelity first learned that the Dwyers disputed only the amount of loss, not coverage or other issues, on January 5, when it received the Velez estimate. Five weeks later, after informal requests failed, Fidelity formally moved the court to compel appraisal. Fidelity did not sit on its rights. In the context of the ongoing litigation, Fidelity raised the issue of appraisal in a timely fashion….”

Regarding the attorneys fees, the Court found: 

“Fidelity, a private insurer, cannot be characterized as a department, commission, administration, authority, board, or bureau of the United States. For the Dwyers to recover EAJA fees, Fidelity must qualify as an “independent establishment” or a “corporation in which the United States has a proprietary interest.” An “independent establishment,” however, is “an independent entity within the executive branch.” Scott v. Fed. Reserve Bank of Kansas City, 406 F.3d 532, 535 (8th Cir.2005) (emphasis added). Fidelity is not so situated, nor is Fidelity “a corporation in which the United States has a proprietary interest.” See id.

Finally, although Fidelity acts as a fiscal agent of the United States, “it is possible to be a fiscal agent ... of the government without being a federal agency.” Id. (citing In Re Hoag Ranches, 846 F.2d 1225, 1227 (9th Cir.1988)). The SFIP regulations expressly state:

A WYO Company shall act as a fiscal agent of the Federal Government, but not as its general agent. WYO Companies are solely responsible for their obligations to their insured under any flood insurance policies issued under agreements entered into with the Administrator, such that the Federal Government is not a proper party defendant in any lawsuit arising out of such policies.

… In analyzing the definition of “federal agency” under the Federal Tort Claims Act, the Supreme Court admonished that although “[b]illions of dollars of federal money are spent each year on projects performed by people and institutions which contract with the Government” and “the Government may fix specific and precise conditions to implement federal objectives,” such contracts and regulations do not transform private actors into federal agencies. United States v. Orleans, 425 U.S. 807, 815-16, 96 S.Ct. 1971, 1976-77, 48 L.Ed.2d 390 (1976). Likewise, serving as a fiscal agent and a participant in a heavily regulated federal program did not transform Fidelity into a federal agency under the EAJA.
…

This conclusion is consistent with that reached by several district courts. See Dickerson v. State Farm Fire and Cas. Co., 2007 WL 1537631, at *4, No. 06-5181 (E.D.La. May 23, 2007) (“[W]hile State Farm is a WYO carrier participating in the NFIP as fiscal agent for the United States, it is not an agency of the United States as required by the EAJA.”); Schopen v. State Farm Ins. Co., 1996 WL 696444, at *2, No. 96-1892 (E.D.La. Dec. 2, 1996) (“Section 2412(b) only applies to civil actions which are ‘brought ... against the United States.’ State Farm is neither the United States nor an agency of the United States.”). The district court erred in awarding EAJA fees to the Dwyers.”

I feel for the Dwyers. It appeared they were awarded only another $56,963.19 which easily gets eaten up by deposition and expert costs even before the cost of their attorneys. Now, they will have to pay for an appraiser and half an umpire’s cost as well. Some may correctly figure that it may not pay to fight the National Flood bureaucracy. Something needs to be done in Congress about this because policyholders are economically forced to take less. There is no meaningful way for them to “win” and be made whole, unless they file a lawsuit to only prove a point.

Today's discussion has to do with an adjustment myth that seems to be spreading. Since it was raised by Ivy League educated Sleighton Bickford of Adjusters International, I felt that the myth of "adverse proofs of loss" needs to specifically analyzed in the context of federal flood claims. Sleighton is just about one of the smartest people I have yelled at. I kept quiet when he eloquently explained one could wait forever to file a supplemental federal flood proof of loss.

Sleighton may have been extremely effective in the $100m plus claim we successfully litigated together for the Port of New Orleans following Hurricane Katrina, but he is dead wrong about the relatively small flood claims he is cutting his teeth upon in Texas and Louisiana. The proper rule regarding proofs of loss for flood claims is:

File a Documented Proof of Loss for the Full Amount of the Estimated Damage as Soon as Possible and Within the Federal Deadlines.

If anybody says differently, let them comment and tell us who carries their E&O insurance so we can put them on notice. I know this sounds harsh, but I am tired of some wrongly explaining that National Flood will agree to late filed supplements when that is not true. National Flood will only agree to late filed supplements that it agrees are valid. What happens if there is a disagreement and you need a litigator, like me, to prove your case and you have not properly filed a Proof of Loss?

The answer is "game over." This technicality is legally correct and enforceable, even though, in equity, it seems unjust. Under federal law, forms must be filed on time and correctly.

So, why should the filing of a piece of paper determine what is owed on a debt determined by estimates? Why not have Federal Flood pay the correct amount of the loss? I don't know a rational reason. But, this is the federal law judges have made. Form is greater than substance, and how stupid are we to follow this archaic system?

An "adverse proof of loss" is a proof filed knowing that the insurer's adjuster has not approved of the amount claimed in advance. Most of the time, adjusters and policyholders agree on the amount claimed and an "agreed to proof of loss" is filed and the claim ends with payment of that amount. Adverse proofs are becoming more common as policyholders become more disgruntled with the estimated amounts of damage.

For federal flood claims, you have to file whatever you think is the right amount of the claim within the time limits. If you file an amount greater and it is denied, you have one year from the date of denial in the Federal District Court where the loss happened to seek redress. Otherwise, you are in the position of hoping Federal Flood grants a waiver.

To its credit, the current National Flood Management has granted waivers where equity generally allows and they agree with the policyholder's position. They should be applauded for this.

Still, the safer and better practice is to timely file a claim for the full amount owed, even if that means filing an "adverse proof of loss." Better safe than sorry still applies as solid advice in 2009, and even from a Florida Gator to an Ivy League Columbia Lion.

To calculate your proof of loss filing deadline, count 330 days from your date of loss. For example:

• A September 11, 2008, Ike-related loss must have a proof of loss submitted by August 7, 2009.
• An August 28, 2008, Gustav-related loss must have a proof of loss submitted by July 23, 2009.

Policyholders should also keep in mind that:

• Federal flood proofs of loss must be delivered, not mailed (i.e., get it received and in the hands of the company listed on the policy by the deadline. Do not just send it to the adjuster on the deadline day); and
• The proof of loss should be submitted on the standard form utilized by FEMA, and it must be completely filled out.

You can read the June 3, 2009, extension letter here.

This is what Ruck reported to me:

"I spoke to Russ Tinsley, and he confirmed that the deadline is being extended by 60 days. The letter has not yet been signed; however, he was in a meeting this morning where they were discussing the deadline and that it was being extended. The letter will be up on the Bulletin site once the letter is signed by Edward Connor [Acting Federal Insurance Administrator], but that may be a day or two.‬‪"

There you have it. For me, my paralegal filed three more proofs of loss today. I trust Russ Tinsley. I have litigated cases against him, but still have a deep respect for his views. Still, until I see that signed letter, Edward Connor could change his mind and then what would we do?

I wish that the FEMA web site worked faster, however FEMA is to be congratulated for extending the deadline.

Many policyholders believed they had to accept the amount estimated by the National Flood adjuster. This common assumption is simply wrong. Flood policyholders should get their own estimates of flood damage and submit those with a properly filled out proof of loss if they disagree with the National Flood adjuster's estimate.

First, flood insurance is absolutely essential. Most property insurance policies specifically exclude coverage for floods and also contain an anticoncurrent causation clause, which prohibits recovery when a covered peril and a flood combine to cause a loss. For example, hurricane winds may devastate the structure of a home and then a storm surge floods it. Because the covered windstorm combined with the not-covered flood to cause the loss, the insurer will not cover it. In the litigation following Hurricane Katrina, courts routinely enforced anticoncurrent causation clauses, leaving those without flood insurance devastated, with no means of recovery.

Flood coverage is available through the National Flood Insurance Program, and can be purchased through FEMA or authorized private carriers. The premiums are relatively inexpensive and recovery is limited to $250,000. In many hurricane situations however, it could be the only recovery a homeowner can get.

Second, estimated replacement value rarely equals the actual costs of repair. A homeowner may have determined the replacement cost of his home based on the purchase price or current market value. However, after a loss, the home is to be repaired, not simply replaced, and the cost of repairing the structure can far exceed the estimated replacement costs. Debris removal, specialized work to dry out walls, and new building codes can push the repair costs well over the replacement value limit. Additional factors such as temporarily high prices in the wake of a catastrophe can also significantly increase the repair costs.

To ensure that the replacement value of a property is accurate, a homeowner could ask an expert, such as a contractor, who is knowledgeable about the current costs of construction, including current costs of materials and code requirements. The cost of recently remodeled houses in the same neighborhood could also provide a basis for a more accurate estimate of replacement costs.

Third, Additional Living Expense Coverage, which pays for temporary housing when a covered event renders the covered home uninhabitable, could make the difference for a family after a loss. Many families could not afford their mortgage, car payments, and other monthly bills if they had the added expense of rent while their home is repaired after a storm.

Again, this blog may be unexciting for daily readers or those who work in insurance, but if it helps one homeowner, it was certainly worth it.

Look for tomorrow’s blog; Chip is back from Italy.

Among friends, the lack of national attention concerning the Hurricane Ike recovery has been a topic of conversation. The explanations we have include:

• The election campaign and story of Obama and Palin were overwhelming.
• The collapse of the national economy had others thinking about their backyards rather than Hurricane Ike.
• Galveston and the Bolivar Peninsula are not Houston and not the size of New Orleans. Devastation to smaller communities gets overlooked.
• Images of rescue did not feed the media's desire for sensationalism.

There was one comment of note to the Houston Press article---

"Now you tell us what happened, but the important thing is to tell us what we can do about it."

Recovery lessons can be learned from Hurricanes Ike and Katrina so the impact of the devastation minimized. Federal, state and local governments with coastal areas should have emergency regulations in place and ready to be enacted expecting these types of rare occurrences. Building permitting has to be expedited. New National Flood Building Regulations have to be made much quicker so that those in the most severely devastated areas are not waiting months for permission to rebuild. FEMA has to be more practical regarding federal infrastructure regulations so that local officials can replace infrastructure with an eye to practical and much quicker repair. There needs to be exemptions from the National Flood Regulations which recognize historic areas, such as parts of Galveston, so we do not destroy the unique characteristics of communities with historical significance.

While, governments were much better prepared for Hurricane Ike than Hurricane Katrina, we can still do a better job. I am afraid that revised lessons are not going to be learned because the national attention is elsewhere. It is pretty certain that this song will remain the same the next time we arrive in a catastrophically damaged community.

Here is the applicable wording from the extension letter:

Due to the recent flooding associated with Hurricanes Gustav and Ike, an extension of the 60-day period within which a proof of loss must be submitted to the Insurer has been granted. Therefore, by means of this memorandum, I am authorizing the extension of this period by 120 days. This extension shall apply to all claims for flood-insured buildings:

• In the States of Alabama, Arkansas, Louisiana, and Mississippi damaged by flood resulting from Hurricane Gustav (dates of loss August 28, 2008, and continuing); and
• In the States of Alabama, Arkansas, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Ohio, Oklahoma, Tennessee, and Texas damaged by flood resulting from Hurricane Ike (dates of loss September 11, 2008, and continuing).

The extension applies whether the SFIP was issued directly by the NFIP Servicing Agent or through one of the private insurance companies issuing flood insurance coverage under the WYO Program.

An NFIP policyholder who incurred a Gustav-related flood loss on August 28, 2008, would normally have until October 28, 2008, to submit the proof of loss. With the extended deadline, the same policyholder now has until February 25, 2009, to submit the proof of loss. Similarly, an NFIP policyholder who incurred an Ike-related flood loss on September 11, 2008, would normally have until November 10, 2008, to submit the proof of loss. With the extended deadline, the same policyholder now has until March 10, 2009, to submit the proof of loss. In either case, eligible policyholders will be allowed a total of 180 days to submit the proof of loss.

 The following must be followed when completing the proofs for flood claims:

 1. Use the exact Federal Form for the Proof of Loss and not a generic form. Failure to do so may jeopardize payment. It would be similar to filing a Federal Income Tax return with a state form.

2. Figure exact amounts owed. Do not put, "policy limits" or "to be determined."

3. Document the amounts owed and attach the documentation. Do not just "ballpark" or "estimate" an amount. File the proof with actual estimates, proposals, lists, or some type of documentation which "proves" and substantiates the loss amount.

4. Get it received and in the hands of the company listed on the policy by the deadline. Do not just send it to the adjuster on the deadline day.

5. Do not rely upon other oral or written extensions from the field adjuster or his supervisor. Only written extensions coming from the Director or Deputy Director can legally extend the time.

National Flood may, on appeal, rescind these requirements. If you get in this predicament, we strongly suggest you obtain legal counsel. The best course of action is to never place yourself in that position in the first place.

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You can find a complete copy of the extension letter posted on my blog.