It is an unfortunate reality that flood victims generally have very limited recourse against their flood insurance company – particularly if their insurance company is a Write Your Own (“WYO”) Company operating under the National Flood Insurance Program (“NFIP”).
Under the National Flood Insurance Act, NFIP policyholders may initiate a lawsuit against their flood insurance company for breach of contract. These lawsuits must be filed within one year after the date of the written denial of the claim, and they must be filed in the United States District Court of the district where the covered property is located.
These lawsuits can be complex and take time, and its important for policyholders to be represented by an attorney who has significant experience handling flood insurance claims, which are very different from regular property insurance claims.
A question that often arises is whether attorneys (in NFIP flood insurance matters) can recover their attorney fees on top of the amount that the policyholders are entitled to under the policy. The answer is “it’s unclear and unlikely” paired with “it will be difficult” but “maybe.”
It is very unclear and will be difficult, but the law may contain an exception that allows NFIP flood policyholder attorneys to recover something for their attorney fees. The Equal Access to Justice Act, codified in 28 U.S. Code § 2412, provides language that may allow prevailing parties to recover reasonable and necessary attorney fees in civil actions against the United States, which includes any agency and any official of the United States acting in his or her official capacity.
While this avenue has not been frequently or historically pursued on NFIP flood insurance matters – subsequently, there is little precedence or court guidance – it offers an interesting alternative for aggrieved policyholders and their attorneys to get a bit closer to being made whole.
From my perspective, as an experienced NFIP policyholder attorney, I think it’s certainly an interesting option that will be worth a try.