Where repairs have been made before a request for additional payment is submitted, the NFIP Insurer must determine that funds previously provided were spent to make repairs and that the supplemental request does not duplicate the prior payment. Once payment is made to the policyholder, the NFIP has no control over the use of the funds. The policyholder may use the funds to repair the covered loss, repair losses that are not covered by the SFIP, or for any other use. Also, the deductible and any applicable depreciation are the responsibility of the policyholder and cannot be reimbursed as a part of any additional payment(s). Accordingly, a policyholder’s lack of funds to complete repairs does not per se show an underpayment. To be eligible for additional NFIP payment, the policyholder must document that funds previously paid were used to repair or replace covered damage and must show with specificity that additional funds to repair covered damage are required. The NFIP insurer should carefully review the evidence of actual loss, together with paid receipts, paid invoices, canceled checks, and other evidence of payment for repairs, to ensure that the insured is not seeking duplicate payments, payment for uncovered losses, or the values of applicable deprecation and the deductible(s) in a request for additional payment.<\/p>\n<\/blockquote>\n

These changes are coming on the heels of some of the issues we are currently facing in the Federal Courts in New Jersey and New York litigating Superstorm Sandy flood claims. As I’m sure many of you are aware, after Sandy, people were desperate to get their homes and businesses back together. This desperation, along with insufficient supplies and overburdened contractors, led to many individuals doing work themselves, relying on the charity of others, paying cash and not saving every scrap of paper or receipt they were handed. I can only imagine that keeping a tidy filing cabinet was not the most pressing thing on these folks’ minds.<\/p>\n

Now, because FEMA, the WYO Carriers, and the NFIP are feeling the heat of the pending litigation of thousands of flood claims, they change the rules to benefit themselves at the detriment of their policyholders. The Catch-22 of it all is there is also a duty to mitigate in the SFIP. So the insureds who follow the policy, make the repairs, and help to mitigate their damages will now be punished for doing so if they fail to document every dime of the funds used to make the repairs—whereas those individuals who have made no repairs need only provide an estimate.<\/p>\n

Wouldn’t it be great if we all could change the rules mid-way through any game we were playing when we knew we were going to lose?<\/p>\n

As always, here is a (mildly) related tune, Queen with “Play the Game<\/em>”:<\/p>\n