Flood Policy Claim Disputes

Flood insurance policies are adjusted and administered by your insurance company but paid by the National Flood Insurance Program (NFIP). The NFIP was created by the National Flood Insurance Act (NFIA) and the NFIP is administered by the Federal Emergency Management Agency, or FEMA. Flood insurance claims are governed by strict, and sometimes complex, rules and it’s often difficult for an insured party to receive the amount to which they are entitled. While the NFIP is a federal program, since 1983 private insurance companies have been engaged in providing flood insurance as Write Your Own (WYO) insurers. WYO insurers write policies and process claims for the NFIP in exchange for an expense allowance. When the insurance policy is through a WYO insurer, the insurer is solely responsible for adjusting, settling and paying the claim.

To claim under your flood insurance policy the first step is to complete and submit a Proof of Loss containing information about the amount of your claim. This is usually required within 30 days of the loss occurring. Estimates of property damage are difficult to make and often inaccurate. Claimants should focus on documenting the damage and meeting the applicable deadlines. However, even when clients have followed all the rules for claims, insurance companies can find reasons to deny or underpay a claim. Insurance companies often claim that damage was pre-existing as a reason to avoid full payment of a claim.

Whether it’s a denial or reduction, its important to know that NFIP claim decisions can be disputed. As flood claims have special rules and are dealt with in Federal Court, its important to engage an attorney with experience in these types of claims specifically. Disputing denials successfully requires well-documenting the loss and having evidence of the loss supported by the right experts. Flood damage can be expensive, with damage frequently being hidden and not immediately obvious. Issues with mold and mildew cause extra expense whilst also making some homes dangerous. Insurers will often employ out of state contractors to contest claims and support the insurance company’s case with lowball estimates. The Berniard Law Firm takes a meticulous approach to flood policy claim disputes, engaging experts in construction who are also experienced in claim writing, to document all your insured losses.

Normally, insurance companies have to act in a reasonable manner when denying claims, in accordance with the coverage the insured has. An insurance company can undertake a number of actions which can be considered to be ‘in bad faith’. Bad faith can encompass, but is not limited to: unreasonable delay in settling claim or providing payment to the insured; deliberately misrepresenting the content of a policy to avoid paying claims, unreasonably attempting to short change the insured or avoiding full payment of a claim. When an insurance company acts in bad faith, it would ordinarily leave their clients with a legal avenue to obtain relief for any damage they have suffered due to their insurers behavior. Actions against insurance companies for bad faith are firmly within the realm of state law. In Wright v Allstate Insurance Company, it was held that flood policy holders cannot file state law actions, including actions for bad faith, against WYO insurers regarding any bad faith the insurer has engaged in in relation to the flood insurance policy. However, claims for negligent procuring of flood insurance are not excluded, and can be undertaken in State court. Where flood insurance has been misrepresented, or where an agent selling flood insurance has acted negligently, the agent or insurance company can be sued to offset any losses result from a lack of coverage. This added level of legal complexity makes that much more important that a attorney experienced in flood insurance claims specifically is engaged when seeking to dispute a claim.

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