Following Hurricanes Helene and Milton, many Florida and southeast residents are left grappling with flood injury – some for the second or third time in recent times. For Nationwide Flood Insurance coverage Program (NFIP) policyholders, particularly those that have skilled prior flood losses, understanding the documentation necessities for repairs is essential. I’ve fielded quite a few questions on this subject from public adjusters, restoration contractors and policyholders. This text goals to make clear these necessities and spotlight a federal case that provides a nuanced perspective on the difficulty. The purpose of the article is to maintain these information or discover the outdated information proving the repairs had been made. There are federal necessities to take action, which is able to influence the graceful dealing with of a flood declare.
The NFIP’s Stance on Prior Harm
The Nationwide Flood Insurance coverage Program has particular tips relating to claims for properties with prior flood injury. The Commonplace Flood Insurance coverage Coverage (SFIP) features a provision, Article VII(H)(2)(e), which permits insurers to request “proof that prior flood injury has been repaired.”
FEMA and plenty of Write-Your-Personal (WYO) insurance coverage firms have interpreted this to imply that policyholders should present proof of repairs from earlier flood losses earlier than they will obtain fee for a similar broken objects in a subsequent flood. The rationale is to forestall “double dipping” – paying for a similar injury twice.
Documentation Necessities
For policyholders who’ve skilled a number of flood occasions, sustaining thorough documentation is vital. Right here’s what you must preserve:
1. Restore Receipts: Maintain all receipts for supplies bought and labor prices for repairs.
2. Contractor Statements: Acquire detailed statements from contractors describing the work accomplished.
3. Earlier than and After Images: Take clear, dated pictures displaying the injury and subsequent repairs.
4. Inspection Experiences: If out there, preserve experiences from any inspections executed after repairs had been accomplished.
5. Permits: Retain copies of any permits obtained for restore work.
6. Financial institution or Credit score Card Statements: Maintain information of funds made for repairs.
7. Correspondence: Save any emails or letters associated to the restore course of.
A Completely different Perspective: The Westmoreland Case
Whereas FEMA and plenty of insurers have taken a strict stance on requiring proof of prior repairs, a latest federal case presents a probably completely different interpretation of the SFIP. In Joyce Westmoreland v. Constancy Nationwide Indemnity Insurance coverage Firm, 1 the federal courtroom took a nuanced view of Article VII(Ok)(2)(e) of the SFIP.
The courtroom’s key findings embrace:
1. No Specific Exclusion: The courtroom famous that Article VII(Ok)(2)(e) 2 doesn’t explicitly exclude protection for prior unrepaired damages. It merely offers the insurer with the choice to request proof of restore.
2. Ambiguity within the SFIP: The courtroom discovered that the SFIP is ambiguous as to its protection of prior unrepaired damages. In insurance coverage regulation, ambiguities are sometimes resolved in favor of the insured.
3. Structural Interpretation: The courtroom identified that protection exclusions are sometimes present in Articles IV and V of the SFIP, not in Article VII. Neither Article IV nor V excludes protection for unrepaired prior flood damages.
4. Adjuster’s Position vs. Protection: The courtroom distinguished between the adjuster’s obligation to exclude unrepaired prior damages from the adjustment (as per the FEMA Adjuster Claims Handbook) and the precise scope of protection underneath the SFIP.
Whereas this case doesn’t set a binding precedent for all jurisdictions, it presents a compelling argument that the SFIP could not categorically exclude protection for unrepaired prior damages merely primarily based on an absence of documentation.
Implications for Policyholders
The Westmoreland case probably opens the door for policyholders to argue for protection of beforehand broken objects that had been repaired, even when they lack complete proof of repairs. “Doubtlessly” is the important thing phrase on this sentence. I don’t see any NFIP service agreeing to pay for beforehand broken property that has not been repaired or changed. The NFIP carriers will need to see proof of the broken property being mounted. In fact, if the injury was beforehand slight and the brand new injury is bigger than earlier than, I can admire quite a few instances will come up with this Westmoreland dilemma.
Nevertheless, it’s essential to notice:
1. Westmoreland is a district courtroom resolution and will not be binding in different jurisdictions.
2. FEMA and WYO insurers will proceed to require proof of repairs normally. I do know they’re doing so as a result of individuals are calling me and asking if they will achieve this.
3. Having thorough documentation of prior repairs stays one of the simplest ways to make sure easy declare processing.
If the NFIP service denies the declare in complete or half, please think about hiring authorized counsel as quickly as attainable. Being confronted with a denial primarily based on lack of proof of prior repairs makes the declare a authorized matter. Think about consulting with an lawyer skilled in flood insurance coverage claims. The Westmoreland case could present a foundation for difficult such denials.
Navigating NFIP claims, particularly with a historical past of prior flood injury, shall be complicated. The standard stance has been to require proof of repairs for beforehand broken objects, and when you can not achieve this, the Westmoreland case suggests there could also be room for a extra nuanced interpretation of the SFIP.
As at all times, thorough documentation stays your finest device within the claims course of. Nevertheless, policyholders dealing with denials primarily based solely on lack of proof of prior repairs could have grounds to problem these selections, notably contemplating the Westmoreland case. I nonetheless consider that if the property was beforehand broken and never mounted, it is going to be nearly unimaginable to prevail. Nevertheless, the query could also be one of many diploma of harm which will present the kind of Westmoreland state of affairs for protection.
As we proceed to face growing flood dangers resulting from local weather change, it’s essential for policyholders to remain knowledgeable, doc diligently, and advocate for clear, truthful insurance policies that defend their pursuits whereas sustaining the integrity of the NFIP. When you didn’t learn yesterday’s publish, Modernizing the Nationwide Flood Insurance coverage Program: A Name for Greater Protection Limits, please take a minute to take action. It is a crucial difficulty within the property insurance coverage trade.
Thought For The Day
If at first you don’t succeed, then skydiving undoubtedly isn’t for you.
—Steven Wright
1 Westmoreland v. Constancy Nationwide Indem. Ins. Co., No. 13-564 (M.D. La. Could 29, 2015).
2 Now, VII.(H)(2)(e).