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Adjustors Giving False Information Supplemental Payments

CLAIMS ADJUSTORS GIVING FALSE INFORMATION REGARDING SUPPLEMENTAL PAYMENTS

 

We have received numerous reports that flood adjustors are giving incorrect information that could prevent a homeowner with flood insurance from collecting a supplemental payment after a low or inadequate initial payment. Initial payments for flood insurance for structure and contents are often low. However, the flood adjustors are telling unsatisfied homeowners if repayments are deficient, supplemental payments will be made after the completion of the work. However, the flood insurers are not informing the policyholder that a timely FEMA designated Proof of Loss Claim must be filed by the policyholder to preserve the maximum extent of damages.

In order to collect the full extent of damages, the homeowner must fully comply with the absolute requirement to file a FEMA designated Proof of Loss Claim by December 12, 2016 with an attached detailed estimate of the full extent of flood damages (not necessarily the damages determined by the Claims Adjustor) and a detailed list of damaged contents. If a FEMA designated Proof of Loss Claim is not filed for the maximum amount of damages, then a flooded homeowner will not have any right to supplemental payments, even if the flood insurer acknowledged that the homeowner was underpaid in the initial payment.

For example, a flooded home has $100,000.00 in damage to building and $50,000.00 in contents. The flood insurers submitted an initial payment of $50,000.00 for building and $10,000.00 for contents. Accordingly, the claims adjustor will request the homeowner to sign a FEMA designated Proof of Loss for $50,000.00 for structure and $10,000.00 for contents in order to obtain the initial payment. In such case, the policyholder must file a separate and distinct FEMA designated Proof of Loss Claim reflecting $100,000.00 in damages for building with an attached estimate and $50,000.00 with listing of damaged contents to preserve the right to collect the full extent of flood damages. The homeowner's Proof of Loss must be filed before the December 12, 2016 deadline. If a Proof of Loss is not filed for the full extent of damages, ($100,000.00 structure and $50,000.00 contents in this example) before December 12, 2016 deadline, homeowners would not be entitled to any supplemental payments.

Please note, if the FEMA Proof of Loss Claim is filed for the full extent of damages, then the homeowner preserves his right to receive a supplemental payment for the full extent of damages through further negotiation, appraisal process or court action. Unfortunately, the claims representatives (in most cases, unknowingly) are stating that homeowners can file for a supplemental claim complying with the absolute requirement to file their own FEMA Proof of Loss Claim with an estimates and list of damaged contents. This failure to inform homeowners of this requirement occurred after Hurricanes Katrina, Gustav, Isaac and Sandy. The courts have uniformly ruled that even thought the claims adjustor gave improper or misleading information regarding the procedure to obtain a supplemental payment, the homeowner is still responsible for filing a timely FEMA Proof of Loss Claim.

Unfortunately, the misinformation will cause many homeowners to lose the right to collect the full extent of damages for failing to preserve the full extent of their claim. Please note, it is ok to sign the Proof of Loss provided by the flood insurer but the homeowner must submit their own Proof of Loss with an attached estimate of the full extent of flood damages to the home and list of damaged contents. Admittedly, this provision in the National Flood Policy is confusing and misleading, especially given the misinformation provided by the many flood insurers. Summarily, the homeowner's failure to comply with the Proof of Loss requirement allows the flood insurer to limit its payout for flood damages.

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