My work day started at 4:30 am EDT in Tampa, with a trip to South Padre Island regarding a Hurricane Dolly dispute. It will end at sunset following meetings on Hurricane Ike matters. As my pilots are working on getting me safely home through the summer Gulf Coast weather, I am wondering how Judy Guice did in her argument earlier today before the Mississippi Supreme Court.
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.