Although most property owners know the importance of insuring homes and businesses, not all realize that standard homeowners’ insurance policy may not cover flood or hurricane damage. Even a flood insurance policy has its limitations, and some losses may not be covered. Some homeowners’ policies may include additional coverage for floods or hurricanes. In some instances, your insurance agent may have neglected to procure the coverage that you wanted, making them liable for your loss due to their professional negligence. Sometimes the homeowners’ insurer may be responsible for water damage even when your home flooded.
We will review all of your insurance policies and take the time to fully understand your situation so we can maximize your compensation. Our insurance dispute lawyers can help you pursue your property damage claim and secure the compensation you and your family deserve.
Understanding the National Flood Insurance Program
Many homeowners rely on the National Flood Insurance Program (NFIP) for flood insurance, including flooding caused by hurricanes. An NFIP policy may be required if the property is in a high-risk flood zone and is mortgaged through a federally-regulated or federally-insured lender. Properties in moderate- or low-risk flood zones may not require flood insurance, but many residents in these areas obtain such insurance in case of a hurricane. In addition to flood insurance through the NFIP, some private insurers also provide flood insurance.
Flood insurance typically covers the following types of property
- Contents. Flood insurance typically pays the actual cash value of the contents of a house or business flooded by a hurricane or other event. “Actual cash value” is generally understood to be the cost to replace damaged or lost property, based on its actual value at the time it was lost. It takes into consideration the age, depreciation, and other qualities of the contents. As a result, “actual cash value” can easily be subject to interpretation.
- Property. For most homes covered by NFIP insurance that are damaged by hurricanes, the policy will cover 80 to 100 percent of the full replacement cost of the building – in other words, the cost to rebuild new, without subtracting depreciation. However, the insurance may cover only one primary building on the site. Homes with outbuildings like barns, pool houses, or other structures may have coverage for the house only.
Although flood damage claims are paid by the federal government, most policies are issued and adjusted by private insurance companies.
What Flood Insurance Doesn’t Cover
Flood insurance may not cover all losses in the event of a hurricane. Some common types of losses are not included in a standard NFIP policy or in many policies sold by private insurers. Purchasers of flood insurance should review their policies carefully to make sure they have coverage for the following losses, if that coverage is desired.
Coverage that your flood insurance policy may not offer after a hurricane includes
- Water that comes from inside the building, such as from a burst pipe or an overflowing toilet,
- Water that comes from a swimming pool, hot tub, or landscaping malfunction on the property,
- A “flood” that covers fewer than two acres or doesn’t affect any property except yours,
- Living expenses related to the damage to your home, such as the cost of renting a hotel room until the house is fixed,
- Financial losses caused by a hurricane that disrupts business you do out of your home,
- The value of currency and important papers, like stocks or bond certificates,
- Improvements and contents in most below-ground areas, like basements.
Hurricane Insurance Disputes
Insurance policies that cover flood and hurricane damage are complex, and many families may have multiple policies that address hurricane damage. As a result, disputes over what insurance should cover and in what amounts are all too frequent – and, when a family is struggling to get back to daily life after a hurricane, are all too frustrating. An experienced insurance dispute attorney can help you get back on your feet and get the coverage you deserve.
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. We 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.