Insurance Litigation

Proof of Loss and SOL in Flood Claim

Floods are the most common natural disaster in the United States. In 2016, intense flood events caused loss of life and property all over the country. One study showed that the states of Texas, Louisiana, Oklahoma, and Arkansas alone experienced 18 major flood events between March 2015 and August 2016. In Harris County, the third most populous county in the United States and home to the city of Houston, an unfortunate blend of outdated infrastructure, development of hundreds of thousands of acres of prairie land to accommodate rapid population growth, climate change, and torrential rain events all coalesced to produce three rare and devastating flood events in only the past 15 months.


Unfortunately, a great deal of the Houston flooding occurred in areas outside flood plains and where homeowners are unlikely to carry flood insurance. For those who do carry flood insurance, it is imperative that they are aware that the presentation of a flood claim differs in critical ways from other property insurance claims. This article highlights two of those distinctions: the proof of loss and the deadline to file a lawsuit.


A proof of loss is a policyholder’s statement of the amount of money being requested to cover the claim. It is the insured’s official claim for damages. Regardless of the identity of the insurance carrier, proofs of loss are mandatory and time sensitive in flood cases. FEMA provides an official proof of loss form. The flood insurance policy and the statutes governing flood claims detail specific requirements for submitting a proof of loss.


Importantly, the deadline to submit a proof of loss is 60 days after the date of loss. That deadline can only be extended by FEMA, who will typically only do so in an official bulletin for policyholders en masse in a widely devastated region, such as the extensions provided to victims of Super Storm Sandy on the eastern seaboard. Absent official FEMA action, there are no exceptions to the proof of loss deadline.


Furthermore, the proof of loss must be signed and sworn to under oath. Specific information must be provided with the proof of loss, such as the date and time of the loss, an explanation of how the loss happened, your interest (i.e., ownership interest) in the property, the interest of others, the identity of the mortgage holder, specifications of damaged buildings, an inventory of damaged personal property, and other pieces of information. Documentation supporting the proof of loss, such as detailed repair estimates and photographs, must be provided also. The full requirements for a proof of loss are found within the insurance policy and should be complied with precisely.


The homeowner’s submission of a proof of loss for every dollar of flood damage that she suffered is essential. Failure to do so is fatal. Frequently, insurance companies will provide policyholders with “completed” proofs of loss for amounts that the insurance company and insured agree are covered under the claim. Ostensibly, the purpose of this practice is to facilitate payment of damages that are not in dispute. Claimants, oblivious to the formal proof of loss requirements, only attempt to supplement their claim with new estimates or invoices they obtain from contractors and never submit a new proof of loss on the damages controverted by the insurance company. Once the claim is ultimately rejected by the insurance company the claimant will likely file a lawsuit. However, such a lawsuit is subject to dismissal for failure to comply with the policy and submit a proof of loss that covers all damages claimed, including those supported by documentation supplemented after submitting an earlier proof of loss that may or may not have been paid by the insurance company. A perusal of reported cases in jurisdictions around the country show dismissals against policyholders for failure to submit a proof of loss for all damages claimed and acts as cautionary tales for the homeowner.


A second aspect of the presentation of a flood claim that differs from typical insurance claims concerns the policyholder’s avenue for redress when her claim is denied. If the insurance company rejects a policyholder’s claim, she has two options: file a formal appeal with FEMA or file a lawsuit. The appeal to FEMA must be in writing and the written appeal letter must be sent to FEMA within 60 days of the insurance company’s denial letter. The policyholder must include a copy of the denial letter and the documentation that supports the appeal. A majority of claimants whose flood claims are denied opt for the latter choice and forego the FEMA appeal to file a lawsuit. The deadline to file a lawsuit is one year from the insurance company’s first written denial of any portion of the claim. The lawsuit must be filed in the United States district court covering the district where the property is located at the time of the loss. The law is unforgiving on those claimants that file their lawsuit after the statute of limitations has expired.


Policyholders who suffer flood losses must confront a myriad of legal issues under strict deadlines while in the throes of an emotionally and financially trying event in their lives. It is imperative that the duties and obligations imposed upon policyholders in the flood insurance policy are complied with precisely. Failure to do so can result in outright loss of claim.


More information about presenting a flood claim can be found on FEMA’s website.

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