A latest case1 reveals that each technical step concerning proof of loss necessities within the flood claims course of needs to be adopted, even when the steps are meaningless. Federal legislation concerning flood claims is draconian. It’s the worst legislation in opposition to policyholders. Makes an attempt at authorized reform of the claims processes have fallen on deaf ears. It’s a “heads I win, tails you lose” state of affairs if a flood policyholder challenges any claims resolution.
Listed below are the information of the case:
On September 14, 2021, Plaintiff’s property allegedly sustained flood harm. Underneath the SFIP, the insured is required to offer a signed and sworn proof of loss inside 60-days of the flood loss. Defendant was notified of the flood loss on September 23, 2021, and on September 25, 2021, an impartial adjuster retained by Defendant inspected the property. The adjuster decided that normal situation of flooding didn’t exist on the property on September 14, 2021. On November 10, 2021, Defendant issued a letter denying Plaintiff’s flood declare. Plaintiff by no means supplied a signed and sworn proof of loss earlier than the expiration of the 60-day proof of loss deadline of November 13, 2021.
Regardless of the denial, the nationwide flood provider filed a movement for abstract judgment, arguing that the policyholder didn’t file a proof of loss inside the 60-day time restrict. The widespread legislation for the overwhelming majority of jurisdictions doesn’t make a policyholder file something after an entire denial of the declare—the legislation doesn’t require folks to do a useless act. However federal legislation overseeing nationwide flood claims is completely different. The choose dominated for the insurer, discovering:
Underneath the SFIP, an insured could not file swimsuit for protection until it has complied with all necessities of the coverage, together with the requirement to submit a sworn proof of loss….In adjudicating flood insurance coverage claims, the Eleventh Circuit has held that strict adherence to the proof of loss requirement is a situation precedent to restoration underneath the SFIP…Substantial compliance will not be enough as a result of any funds to policyholders are drawn from the federal treasury.
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Right here, Plaintiff doesn’t dispute that Plaintiff has failed to offer a well timed sworn proof of loss. As an alternative, Plaintiff argues that Defendant repudiated the contract when it denied Plaintiff’s loss on November 10, 2021, three days earlier than the deadline for Plaintiff to submit a sworn proof of loss. Thus, Plaintiff argues, Defendant’s alleged repudiation relieves Plaintiff of the requirement to submit a proof of loss assertion or, on the very least, creates a problem of fabric reality precluding abstract judgment. The Courtroom disagrees.
… Defendant’s denial letter said it decided that there was no normal situation of flood on the property and invited Plaintiff to submit extra info which may assist Plaintiff’s declare, additional evincing that Defendant didn’t intend to repudiate the coverage. Plaintiff has didn’t put forth any proof on the contrary. (Citations omitted)
The underside line is that when coping with nationwide flood insurance coverage claims, a policyholder has to dot each “i” and cross each “t” or anticipate that the regulators of the nationwide flood program will attempt to escape the promise to pay. FEMA and the Nationwide Flood Program are the worst governmental actors in the event you problem any resolution they make.
I’ve publicly written about this very subject for over a decade. In a 2009 article, , I famous how troublesome it’s for policyholders to return out forward when difficult nationwide flood:
The options left to resolve the dispute are normally litigation or appraisal. The issue with litigating in opposition to Nationwide Flood is the unavailability of lawyer’s charges and the standard excessive expense of federal litigation. The policyholder can win the lawsuit, however don’t have any cash after lawyer’s charges and prices as a result of the disputes should not normally that enormous.
This spring, I famous latest efforts at reform and questioned the integrity of these working this nationwide insurance coverage program in :
Understanding that Nationwide Flood prospects have been relying upon Nationwide Flood’s personal phrases to show extra monies have been owed, Nationwide Flood directors merely modified the handbook to cheat its prospects out of monies overwise owed. That’s not proper.
Congress ought to conduct an investigation and reform the Nationwide Flood Insurance coverage Program. The Government ought to ‘clear home’ to get directors who will demand integrity. It’s clearly being run partially by those that look to shortchange policyholders by technical necessities and who will change the foundations mid-stream to win in any respect prices.
The claims administration of nationwide flood claims is a technical nightmare for policyholders. Insurance coverage claims ought to be resolved on the deserves—did a flood harm the property—and never technical and inconsequential paper filings. The widespread legislation will not be offering equitable reduction for policyholders, and Congress must do one thing for the general public that this system was designed to guard.
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