Over the last few weeks I have heard from several public adjusters and clients here in New Jersey that flood adjusters have denied their proofs of loss stating they must be supported by a line by line contractor’s estimate. This is very difficult as most contractors do not produce line by line estimates such as Xactimate or Simsol (which are designed and marketed as insurance adjusting products). This means it is almost impossible for the insured to comply with this requirement.

The problem is, there is no such requirement in the Standard Flood Insurance Policy. Rather, the adjusters are relying on FEMA WYO Bulletin W-13027, from May 3, 2013. The bulletin states that a supplemental claim must be supported by a proof of loss "attaching all documentation to fully support the supplemental claim such as: paid receipts or invoices for completed repairs; itemized (room by room) contractor’s estimate; photographs of damage or of repairs completed or in progress; and other relevant documents." (emphasis added).

The language in the bulletin is clearly permissive in nature and is not intended to be an exhaustive list of supporting documentation. However, many adjusters are reading the bulletin to mean that they insured must include a contractor’s line by line estimate. While this clearly seems to be a misinterpretation of the bulletin and the Standard Flood Insurance Policy, the Courts have yet to weigh in on this issue. I suspect that courts will rule in the insured’s favor and FEMA may well end up clarifying the bulletin.