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.
METROPOLITAN ENGINEERING, CONSULTING & FORENSICS (MECF)
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