One certain way FEMA and National Flood Administrators get out of paying otherwise valid flood insurance claims is to require strict and timely requirements. Citing an internally generated and fraudulent 99% closure statistic, the National Flood Program denied a request to extend the timeline for filing Proofs of Loss for Hurricane Harvey, Irma, and Maria victims.
The proof of loss is a required document that must be sworn to under the penalty of perjury and submitted with complete accurate numbers by the current deadline of one year after the loss. If the form is not submitted 100% completed, correct, and before the deadline, policyholders will lose their right to pursue further action to get additional money they may be owed.
We have been contacted by countless people throughout Texas, Florida, and Puerto Rico who have encountered significant difficulties and delays obtaining the documents (like full repair estimates) and information needed to complete and submit their required proof of loss forms. Additionally, flood victims have faced prolonged delays in the flood claims process that have further inhibited their ability to submit the required proof of loss, including but not limited to adjusters being shifted around, non-responsive adjusters, and lack of communication from FEMA and the insurance companies.
Insurance companies make up closure statistics from their own definition of closure. They do this to satisfy complaints from policyholders about claims not being paid. So, they conveniently make up a statistic called “closed claims” as an excuse provided to newspapers and politicians and a false indication those claims are “happily and fully resolved,” when that is far from the truth.
Six months after four major hurricanes hit Florida in 2004, I was on a Windstorm Insurance Conference keynote panel about Citizens Property Insurance Company’s claim. Citizens stated that over 90% of its claims were “closed.” I addressed the more than 1,200 professionals in the audience and asked for a show of hands about how many thought this statistic was true. One hand went up—from a Citizens claims manager.
National Flood Administrators and insurance claims managers, correctly citing federal law, require their attorneys to argue out of otherwise valid claims in court by arguing that a insufficient Proof of Loss Form, which is a piece of paper not properly filled out, requires no payment and allows the Federal Government to escape its otherwise obligation to pay. They are correct and that is how you can expect your federal government to treat you even if you would otherwise be owed money. You have to comply with the red tape requirements and regulations.
An example is an opinion from a national flood insurance case that was issued just last week.1 The policyholders signed a proof of loss for the undisputed amount for damages but sought additional damages which National Flood claimed were excluded as part of a basement. The trial court held against the policyholders, not ruling on the basement issue, but finding that the proof of loss was not submitted properly and stated:
The SFIP defines the proof of loss as the insureds’ signed and sworn ‘statement of the amount [they] are claiming under the policy.’….Independent insurance adjusters may assist the insureds by providing or preparing this proof of loss form, but the SFIP is clear that even with such assistance the insureds must use their own judgment concerning the amount of loss they claim.
* * *
Among the significant SFIP provisions concerning the proof of loss requirement is a rule that ‘[i]n completing the proof of loss, [the insureds] must use [their] own judgment concerning the amount of loss and justify that amount.’…While insurance adjusters may assist with preparing the proof of loss form, they do so as ‘a matter of courtesy only’ and insureds are ultimately responsible for ensuring their claim is timely filed…. Thus as a matter of law, the [plaintiffs] were the only parties responsible for ensuring compliance with the proof of loss requirement, including the determination of the ‘amount of loss.’2
The refusal to grant a further extension means that if you are a flood policyholder and have more monies you think are owed under your National Flood Policy, you need to get your own documentation and properly and timely file a proof of loss with the National Flood Insurance Carrier within the one-year timeline. As shown from the recent case example, this requirement to file a proper proof of loss on time is required even if the National Flood Insurance adjusters denied your claim. Under the current rules, all hurricane flood victims have a one-year limit to file a proper proof of loss and that time deadline is approaching quickly.
Thought For The Day
Unfortunately, we are finding the bureaucratic inefficiencies and red tape have a tendency to slow the efforts of individuals and communities working to rebuild.
1 Surfsand Resort v. Nationwide Mutual Fire Ins. Co., — F.Supp.3d —-, 2018 WL 3215739 (D. Or. June 28, 2018).
2 Id., at *7 (Quoting Dickson v. Am. Bankers Ins. Co. of Fla., 739 F.3d 397 (8th Cir. 2014)).