Multiple Proofs of Loss May Be Required in Flood Claims (and it’s time for some Football!)

The NFL season is finally upon us. I hope you took time this weekend to watch some football. If you watched the Kansas City Chiefs beat up on the Houston Texans, you saw not only a great game but also one that made history. Sarah Thomas, the first full-time female referee made her regular season debut. I’ve been anxiously awaiting this day and am very proud that her first game was one with the Chiefs and am excited that they won (they are the only undefeated team, counting pre-season).

In another first, the Fifth Circuit addressed whether multiple proofs of loss are required in flood claims.¹ Ron and Patricia Ferraro owned a house in Louisiana and had a Standard Flood Insurance Policy (SFIP) through Liberty Mutual. The home suffered damage during Hurricane Isaac and the Ferraros made a claim. An adjuster inspected the property, recommended a payment be made and prepared a proof-of-loss (“POL”). The homeowners signed the POL and wrote on it, “Will send supplement later.”

The Ferraros then hired a public adjuster to evaluate the damages to their home. They submitted his estimate to the insurance company. They did not submit another POL, and an insurance company adjuster told them no additional forms were necessary. No further payments were made.

The homeowners filed suit and the insurance company moved for summary judgment claiming that a signed POL was required within 240 days of a loss attributed to Hurricane Isaac. The court found that the NFIP requires strict compliance and the homeowners’ failure to provide a second POL was fatal.

Article VII of the SFIP states as follows:²

In case of a flood loss to insured property, you must:

. . . .

4. Within 60 days after the loss, send us a proof of loss, which is your statement of the amount you are claiming under the policy, signed and sworn to by you, and which furnishes us with the following information:

a. The date and time of loss;
b. A brief explanation of how the loss happened;
c. Your interest (for example, “owner”) and the interest, if any, of others in the damaged property;
d. Details of any other insurance that may cover the loss;
e. Changes in title or occupancy of the covered property during the term of the policy;
f. Specifications of damaged buildings and detailed repair estimates;
g. Names of mortgagees or anyone else having a lien, charge, or claim against the insured property;
h. Details about who occupied any insured building at the time of loss and for what purpose; and
i. The inventory of damaged personal property. . . .

Whether a second proof of loss must be submitted to recover an additional amount on a preexisting claim was a matter of first impression. The Court of Appeals found that the SFIP guidelines require strict compliance, and failure to provide the second proof of loss relieved the insurer of its obligation to pay the claim. Since the additional claim was not accompanied by a sworn proof of loss, the handwritten note stating that a supplement would be provided was not sufficient. This holding follows the reasoning in other cases in the First and Eighth Circuits.

When you are working on a claim, follow the rules of the game and make sure there is no flag on your play. Flood claims have many requirements and you must follow them exactly, or be penalized for playing offside.

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¹ Ferraro v. Liberty Mutual Fire Insurance, 2015 WL 4666106 (5th Cir. August 6, 2015).
² 44 C.F.R. pt. 61, app.A(1) art. VII(J).