Underpaid or denied flood insurance claims in the aftermath of a hurricane are unfortunately all too common. Home owners or businesses may be eager to fix their damaged property and accept the first amount offered by their insurance, but it is very important to carefully consider the options.
While not rushing into any decisions is important, there is an incentive to act quickly due to the upcoming FEMA deadline for Harvey related flood insurance claims.
August 25, 2018, is the last day to file a Proof of Loss for a supplemental claim, file an appeal, request an outside appraisal or file a suit against your insurance company.
Difficulties with the Flood Insurance Claim Process
The flood insurance process, due to claims being handled by the Federal Emergency Management Agency (FEMA) as part of the National Flood Insurance Program (NFIP), can be unavoidably complex.
While each NFIP flood insurance policy is the same no matter which private insurance company issues the policy, victims of Hurricane Harvey throughout Texas may face significant barriers while filing flood insurance claims.
Insurance Journal estimates that Hurricane Harvey caused between $6.5 billion and $9.5 billion in home flood insurance losses alone while Accuweather estimated the entire damage caused by the storm to be almost $200 billion dollars, or an entire percentage point of the United States GDP.
After such a large catastrophe, policyholders who file a claim often face longer wait times because claims adjusters, appraisers and insurance agents must tackle such a high volume of claims. Policyholders may deal with these long wait times, unresponsive insurance representatives and other unavoidable delays.
Furthermore, it can be difficult for policyholders to accurately document property damage, submit a Proof of Loss form and gather the necessary information—especially in the aftermath of a natural disaster where flood victims have lost valuable possessions and/or important documentation.
Residential and Commercial policyholders often must seek professional help to better ensure they receive everything that is rightfully owed to them.
Was My Flood Insurance Claim Underpaid or Denied?
Insurance companies deny or underpay flood insurance claims for a variety of reasons. You must remember that it is always in the best interest of the insurance company to pay out the bare minimum for claims.
When insurance adjusters are more concerned with retaining profits than properly assessing claims, they are dealing in bad faith with policyholders in need. Often homeowners must assert themselves to receive the correct amount.
Insurance practices vary widely depending on the insurance company and the type of policy. Additionally, so many factors go into deciding the claim amount that the claim amount can vary widely. For example, if the insurance adjuster is using outdated information to find repair estimates in the area, or if the adjuster is underappreciating the value of the policyholder’s home.
Another common reason for an underpaid claim, especially after a natural disaster such as Hurricane Harvey, is that insurance adjusters are overwhelmed with claims. Due to the high volumes of claims, insurance adjusters and property inspectors rush to settle claims as quickly as possible causing property damage to be overlooked.
The insurance adjuster may overlook the severity of damage and underpay the flood insurance claim. In these cases, the adjuster includes to repair cosmetic damage to the property but fails to account for structural damage that has affected the functionality of the property, which may be harder and more time consuming to assess.
Strict Deadlines to File under FEMA
One of the most common reasons for an insurance adjuster to underpay or deny a claim is because the policyholder failed to provide the proper documentation or comply with FEMA deadlines.
Policyholders may lose important documents in the flooding or make a simple error when submitting the claim or proof of loss. Either way, mistakes by the policyholder can affect the claim amount or result in a denied claim.
Under the standard flood insurance policy, there are strict deadlines for how soon policyholder must submit a Proof of Loss as part of their claim. This Proof of Loss document is a sworn statement from the policyholder stating the amount of money requested and providing proof to support the claim amount.
While in typical flood insurance cases, the proof of loss must be submitted 60 days after the loss, FEMA extended this standard 60-day deadline for victims of Hurricane Harvey and Irma. Policyholders affected by these hurricanes have 365 days—or one year—from the date of Hurricane Harvey to file a Proof of Loss.
This deadline is strict and final.
FEMA will deny a policyholder’s claim if the proof of loss is not filed by the deadline, improperly filed or is not accompanied by sufficient evidence to support the amount claimed for property loss.
Many policyholders confuse the Proof of Loss with the claim, but they are not the same thing.
While a policyholder files a flood insurance claim for their insured property, there will be only one claim for the entire property, including personal property.
The policyholder can submit more than one Proof of Loss (along with the additional required documentation). If the initial payments made by the adjuster were not enough to complete the repairs, the policyholder must file a supplemental claim for additional damages by submitting a supplemental Proof of Loss. There is no limit to how many Proofs of Loss that can be filed by a policyholder, as long as they are submitted to the insurance adjuster and FEMA by the one year deadline and include supporting documentation.
Policyholders are required to file a compliant Proof of Loss form for any supplemental claims by the August 25th deadline. If policyholders fail to submit this document in time, they cannot make a legal claim under their flood insurance policy.
Per FEMA regulations, if there is any error or mistakes on the Proof of Loss, submitted on or by August 25th, and the policyholder fails to correct the error prior to the August 25th deadline, the policyholder forfeits the right to correct the mistake and resubmit their claim, request a supplemental payment or file legal action at a later date.
A Proof of Loss also requires additional documentation that corroborates whatever amount is requested. All documentation must be submitted by the August 25th deadline as well. Policyholders also should keep in mind that FEMA requires the Proof of Loss and the necessary documentation to be submitted at the same time.
The Impending August 25th Deadline
The Hurricane Harvey date of loss is August 25, 2017.
August 25, 2018, will be the last day to submit a compliant Proof of Loss. FEMA extended the deadline from 60 days to one year to give policyholders sufficient time to properly assess their damages, which in most cases were extensive.
Even with the extension, a year does not give flood victims a lot of time to obtain information and estimates to successfully handle the flood insurance process given that most have had to deal with multiple insurance adjusters, adjusters who left town and failed to turn in paperwork, adjusters who have not returned their calls or emails, and extremely busy contractors. Policyholders must obtain accurate, full estimates for repairs; find documentation that supports the full value of their claim amount; and file a supplemental Proof of Loss, all within one year.
There is no deadline to negotiate the claim amount with the insurance adjuster after the supplemental Proof of Loss is filed. The deadline only applies to the time frame for the policyholder to support the Proof of Loss and documentation. So, as long as the Proof of Loss and documentation are submitted timely, by August 25th, policyholders may still be disputing the claim amount with their insurance company, waiting for the completion of the appraisal process, or working through the appeals process after the August 25th deadline.
If flood insurance policyholders affected by Harvey miss this deadline, however, they will have no recourse under their current flood insurance policy or the law. After August 25th, policyholders lose the right to appeal, submit additional damages, request appraisal or pursue further legal action.
The year has passed by quickly, so it is important to act now.
Consult with an experienced attorney that has handled complex flood insurance claims where the claim may have been underpaid or denied.
Contending with an insurance company or the NFIP takes time and knowledge of the complicated process. A capable attorney will be able to handle the process for you and help you attain everything that you are rightfully owed.
Policyholders should gather as much information and documentation as possible before speaking with an attorney, so their case can be quickly and properly assessed. With a free consultation, policyholders can gain the necessary guidance to decide the best next steps with the August 25th deadline in mind.
Critical Next Steps for Denied or Underpaid Flood Insurance Claims
It can be difficult to accurately submit Proof of Loss forms by the deadline if policyholders have trouble reaching their insurance adjuster or do not receive correspondence from FEMA or the insurance company in a timely manner.
If you are considering filing a Proof of Loss or taking further action in dealing with your insurance company, do not hesitate to reach out to a professional. This close to the August 25th deadline, you will not want to waste any more time.
The deadline is fast approaching, but there is still enough time to dispute an underpaid or denied flood insurance claim. Our attorneys have handled numerous Harvey related flood insurance claims, and we are here to help you. Do not delay and miss out on claiming the full amount of your claim before the August 25th deadline. Let the Fitts Law Firm work diligently to help you secure the full amount of damages to which you are entitled.