State Insurance Commissioner Jim Donelon and Federal Emergency Management Agency officials on Wednesday warned homeowners with flood insurance about the importance of a New Year Eve's deadline to seek additional money for uncompensated repair costs from the August 2016 floods.
Known as a "proof of loss," the documentation typically comes after a homeowner's initial flood insurance claim and often outlines other post-flood repair costs not caught by insurance adjusters or that are in dispute.
The officials pointed out that filing a proof of loss before the Dec. 31 deadline also acts to preserve homeowners' legal rights to seek additional compensation through later appeals with FEMA or in court even after the deadline has passed.
"Step one is if you think you're owed more on your flood insurance policy, FEMA wants to know about it. Your insurer wants to know about that. … And the way you tell us about that is through a proof of loss," David Goldberg said during a media meeting in the state Department of Insurance building.
Goldberg, an attorney adviser with FEMA, and another FEMA official urged homeowners to start the process by contacting their insurer first and then submitting the necessary forms and supporting documentation to ensure they are in by the deadline. The proof of loss process is individual to each insurer, they said.
Donald Waters, FEMA’s insurance examiner, also warned homeowners not to worry about contacting their insurance adjuster or waiting for another inspection before filing the proof of loss. FEMA and state officials appeared at the meeting Wednesday on Donelon's invitation.
FEMA has extended the proof of loss deadline a few times already at Donelon's and other officials' urging, but Donelon said during the meeting he doubted another extension would happen due to a number of factors.
Donelon pointed to the severe damage from this year's hurricanes in Texas, Louisiana, Florida, Puerto Rico and elsewhere and the low number of appeals filed so far with FEMA from the August 2016 flood.
He added the state's Congressional delegation is also trying to hammer out a bill to reauthorize the National Flood Insurance Program itself.
"(Another extension) is so conflicted with our need and priority to reauthorize the program at an affordable level. You can only go to the well and ask so many times for relief," Donelon said.
Nearly 30,000 insurance claims have been filed over the August 2016 flood statewide. Through Nov. 16, some 305 claims have been appealed to FEMA and, of those, 38 have received additional money as a result of an appeal, Goldberg said.
Appeals to FEMA can’t be filed until after a proof of loss has been filed and denied by an insurer, the officials said.
More than 99 percent of the post-flood claims have been closed, but FEMA considers a claim closed after a policyholder receives payment under the initial damage estimate.
Waters said the agency doesn’t keep data on the number of policyholders seeking supplemental funds from their insurers above the initial estimate.
The NFIP is a federally subsidized program supported by premiums collected from the more than 5 million policyholders nationwide. Private insurance companies, known as "write your owns," administer claims for about 80 percent of NFIP policyholders. The program directly handles the remaining policyholders.
The insurers pay claims not from their own funds but from policy premiums and the U.S. Treasury. Until hurricanes Katrina and Rita in 2005, the program was able, generally, to manage its costs with premium dollars and occasional influxes of cash from the U.S. Treasury that the program paid back, a 2017 Government Accountability Office report says.
But hurricanes Katrina and Rita, Superstorm Sandy, last year's Louisiana floods and Hurricane Matthew helped run up the program's outstanding debt to the Treasury to nearly $25 billion. This year's storms pushed the system past its $30 billion borrowing limit until Congress forgave $16 billion in debt in October.
Some in Congress are pushing to align premiums more closely with actuarial risk or even privatize the system entirely, potentially raising insurance costs in flood-prone coastal states like Louisiana.
Some plaintiffs' lawyers who are handling insurance claims for flooded homeowners say that in recent months, FEMA has been enforcing through the insurers an interpretation of the national flood insurance policy that requires homeowners to provide proof of additional spending first to receive supplemental insurance claims.
Plaintiff lawyer Michael Breinin said in an interview this week that the interpretation requires homeowners to come out of pocket before they can get the additional insurance proceeds.
“That is the single biggest issue that prevents the resolution of claims,” said Breinin, who spent more than a decade of his legal career defending flood insurance companies.
Known as Bulletin 14058, the interpretation was adopted after Sandy, but Breinin said it was not really implemented until after last year’s floods.
When questioned Wednesday, Goldberg and Waters said the bulletin is an interpretation of long-standing NFIP policy and was written after a lot of discussion about the issue following Sandy.
But FEMA officials also maintained that contractors' estimates still could suffice to support a supplemental claim. Goldberg said the point of the bulletin is to encourage homeowners to tell their story and show why they have added costs.
“What we’re trying to suggest is, you have to give us something in order for us to take care of that supplement for you,” Waters said.
Waters added, however, that NFIP is working on clarifying language in the bulletin to make it “friendlier.”