The flood proof of loss and statute of limitations has been discussed at length by Chip Merlin in previous blogs: Avoiding the National Flood Statute of Limitation Trap; National Flood Proofs of Loss – Video Blog. However, yesterday FEMA attempted to clarify the discrepancies with a bulletin directed at the extended Proof of Loss deadline and the one-year statute of limitations to file suit.
The FEMA memorandum clarifies that the one-year statute of limitations begins from the date of the first denial or partial denial of the claim.
[I]n those instances in which a denial letter has been issued such that the statutory 1 year to bring the lawsuit will run before the Proof of Loss extended deadline runs, the insured has to both file the lawsuit and have the required Proof of Loss requirements completed within 1 year of the date of the denial or partial denial of the claim.
FEMA further explains the interplay between the Proof of Loss and the one-year statute of limitations in the context of a typical flood claim:
The typical dispute arises after an insured has received payment based on an adjuster’s report and the insurer’s approval and later believes there is additional uncompensated damage. The 1 year to sue typically will not be triggered until the required Proof of Loss for the additional amount sought is submitted and there is a complete or partial disallowance/denial of the amount sought. However, as discussed above, there are instances when the claim may be denied for reasons that do not require an adjuster’s report or Proof of Loss from the insured. Even in those claims where a denial letter was issued within the first 6 months after ME Sandy, the insured still had a full year from the date of that denial letter to collect all required documentation, file the proof of loss, and then file a lawsuit if such is believed necessary.
You can find the full FEMA memorandum here: http://bsa.nfipstat.fema.gov/wyobull/2013/w-13069.pdf.