Superstorm Sandy Litigation – Failure to File Proof of Loss Will Jeopardize the Claim
https://sites.google.com/site/metroforensics3/superstorm-sandy-litigation-failure-to-file-proof-of-loss-will-jeopardize-the-claim
As we informed the public several
months ago, Federal
Emergency Management Agency (FEMA) granted another
six-month extension for National Flood Insurance Program (NFIP) policyholders
affected by Hurricane Sandy to file proof-of-loss claims. The new deadline is
Oct. 29, 2014. NFIP usually requires
policyholders to submit a fully documented, signed and sworn proof-of-loss
claim within 60 days from the date of their loss. The magnitude of the Sandy disaster is the
reason for this extension that will give policyholders additional time to file
claims. This is the third six-month extension.
Submitting general information under oath or talking to
the insurer over the phone or sending letters, etc. is not a substitute for a
proof of loss under the NFIP. Since the overwhelming majority of case law suggests that
the courts will dismiss the damage claims unless proof of losses are submitted,
we
strongly urge New Jersey, New York, Connecticut and other insureds to submit
their proofs of loss timely and not risk jeopardizing claim recovery rights.
What is the
“proof of loss” and why is it important?
A proof of
loss is the formal written claim you use to support the amount of money you are
claiming under your policy. Your proof of loss forms must be signed, sworn, and
submitted with supporting documentation.
Submission of
your proof of loss is required by federal regulations under the National Flood
Insurance Program. You will not be able to recover all of your claim or sue
your insurer if you do not submit your proof of loss on time!
Depending on
the coverage you are claiming, you might need to submit more than one proof of
loss form before the deadline. We advise Sandy survivors to (1) submit each of
the three forms listed below that applies to your case on time, (2) complete
them fully and sign them, (3) state specific dollar amounts, (4) state what you
believe to be the full value of your claim, (5) attach all supporting
documentation, and (6) meet all requirements in Section VII (J) of the flood
policy. A copy of each of the three forms is attached, and they are also
available at the FEMA website
.
·
The standard “Proof of Loss”
details the full value of your claim. Even if your insurance adjuster already had
you sign and submit a proof of loss, that proof of loss may be considered
“courtesy only” and it probably undervalued your loss (especially if you
submitted it early in the claim process before you knew how much money you
needed for repairs). You need to submit another proof of loss which details
what you believe is the full value of losses for your claim. See FEMA
Form #86-0-9
·
The “Increased Cost of Compliance
Proof of Loss” supports your claim to recover up to $30,000 for eligible
“elevation, flood-proofing, relocation, or demolition” See FEMA
Form #86-0-10
·
The “Statement as to Full Cost of
Repair or Replacement” states your full actual or estimated costs to
rebuild, repair, or replace the property. Generally you can recover the full
repair or replacement cost for damages to the building itself if the building
was a single-family home, it was your principal residence, and it was either
insured for 80% or more of its full replacement value, or you purchased the
maximum amount of insurance. See FEMA
Form #86-0-12
SS Sandy Placeholder Row
The above cautionary note brings us to the
latest Superstorm
Sandy row regarding the so-called placeholder claims.
On 12 August 2014 a New York federal
court in the Eastern District of New York managing the consolidated Superstorm
Sandy insurance litigation deferred ruling on a crucial insurance issue on the validity of so-called placeholder proofs of loss
provided by policyholders who couldn't meet deadlines pending the
outcome of mediation by FEMA.
The issue arose
after policyholder law firm Gauthier Houghtaling & Williams LLP and claims
administrator Canopy Claims developed a formula that allowed policyholders to
provide proofs of loss from SS Sandy to FEMA for the time being while later
submitting supplemental proofs of loss with more specific information. FEMA took issue with the placeholders, saying
that it had not waived the requirement that plaintiffs provide information
about their actual losses from SS Sandy.
Our opinion is that these placeholders will lose their claims unless
they submit these proofs of losses. The
case law is pretty adamant about it.
There have been several 6-month extensions and there is no excuse in
failing to follow the procedures. What are
these law and claim management firms think?
They could be sued for damages if the placeholder claims are dismissed
by the court. Will shall see.
The Eastern
District of New York decided not to take a side on the placeholder proofs of
loss dispute following FEMA's decision to allow private insurers that
administer flood policies to participate in mediation on these cases and to ask
for permission from the Federal Insurance and Mitigation Administration to
waive provisions of the standard flood insurance policy, on a case-by-case
basis.
FEMA’s position is that insureds must strictly adhere to the
SFIP's proof of loss requirements before bringing suit against FEMA
However, FEMA
has made its position very clear for the last fifty years of the NFIP and
re-iterated this position to the judges in New York as follows:
FEMA's commitment to support mediation and efficient
resolution of claims does not conflict with its position that insureds must
strictly adhere to the SFIP's proof of loss requirements before bringing suit
against FEMA in United States district court
If a case is dismissed,
FEMA said it would encourage insurers to continue discussions out of court and
allow policyholders to demonstrate covered damage. Good luck with that. When comes to money, unless you follow all
procedures to the so-called “substantial compliance” standard”, then you will
recover zero dollars for your loss.
Unfortunately, most insureds have no idea what substantial compliance means. If an insurer denies their property damage
claim, they will start huffing and puffing and filing complaining letters,
blaming everything and everybody for their loss and their failure to follow the
required procedures. As investigating
engineers we take quite a bit of this “abuse” because the insurers use our professional
investigations (and other factors of course) to deny or accept a claim. There have been quite a few “bad faith”
claims filed already against insurers. However,
in June, the three federal judges in the Eastern District of New York directed
courts to dismiss bad faith claims against insurers, as well as requests for
punitive damages and attorneys' fees, after plaintiffs in more than 150 cases
didn't file necessary paperwork.
Please do not
blame the forensic engineer or the insurer.
Just find a knowledgeable claim management and law firm and hire a competent
professional engineer to collect the evidence and prepare an unbiased report
FOR YOU. Please remember that the insurer’s
engineers’ report represents the results of their investigation. YOU HAVE THE RIGHT TO HIRE YOUR OWN ENGINEER
AND PERFORM YOUR OWN INVESTIGATION. YOU
DO NOT HAVE TO RELY ON THE INSURER’S REPORT.
This is the way to do it and not to file lawsuits against people for
your failure to read the insurance policy or follow the prescribed procedures. The of proof in on the insured and not the
other way around.
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