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Get It Right: SFIP is not enough to satisfy itself; insured must clearly provide amount of loss and justification for the claim Property Insurance Coverage Law Blog



It's been almost seven years since Superstorm Sandy hit New Jersey and Sandy cases are still turning through New Jersey Courts. A recent Third Circuit Court of Appeals decision discussed the importance of properly completed proof of loss when submitting a flood claim under a Standard Flood Insurance Policy (SFIP). 1

In this case, the policyholder's Jersey City property was damaged by flooding on October 29, 2012, during Superstorm Sandy. That property was covered by a SFIP issued by Selective.

On December 23, 2012, the policyholder submitted a proof of loss that contained conflicting information concerning the property loss. Where the document was provided with a blank space for "Actual Cash Value Loss," $ 1957.99 was listed. That amount was listed as a deductible. Therefore, on the line for "Net Amount Claimed," $ 0.00 is provided. The policyholder also included handwritten notations on the form, stating that it was signed under protest and demanded payment based on insurance adjuster's submission of both a report seeking $ 21,000. He also included an "advance payment request" for $ 30,000.

Submitted with the proof of loss form was a contractor's repair estimate or $ 26,000, which included items in the basement and third floor ceiling. Selective denied the claim on December 24, 2012, note that the "minimal damage to the building" totaled $ 334.06, which was less than the policy's $ 5000 deductible. Selective also explained that damages to the lower level of the home were excluded under the policy's basement limitation.

In October 2013, the policyholder filed a complaint in the district court against Selective for breach of contract and allegedly the insurer engaged in

Selective moved to dismiss the state law claims. The district court granted the insurer's motion but allowed the breach of contract to proceed. Selective filed with summary judgment, which the district court granted on May 8, 2018, ruling that the policyholder was barred from recovery because he failed to submit an adequate proof of loss as required by the SFIP.

The district court also denied policyholder's cross motion for summary judgment, observing that he attempted to raise claims outside the complaint and rejecting his claims for bad faith and sanctions against selective. The policyholder appealed

On appeal, the Third Circuit affirmed with the district court's decision. In its analysis, the court emphasized that strict adherence to the SFIP's conditions precedent is required. One requirement is submission of a signed and sworn proof of loss. The proof of loss must include, among other things, the amount of money the insured is claiming under the flood insurance policy, accompanied by detailed information about the property and damages. [TheSFIPprovidesthatwithin60daysaftertheloss(orwithinanyextensionauthorizedbyFEMA)theclaimantmustfileasignedandswornproofoflossthatincludesaninventoryofdamagedpropertyshowingthequantitydescriptionactualcashvalueandamountoflossTheThirdCircuitbelievesthatclaimingasumof$000andotherwisefailingtoclearlyindicatetheamountsoughttheproofoflossdidnotcomplywiththeSFIPrequirements

Although the policyholder did not dispute the inadequacy of his proof of loss. , he argued the proof of loss was waived by a FEMA bulletin issued after Superstorm Sandy. 2 The court disagreed, observing that the bulletin was stated that it was not a blank statement of the proof of loss requirements. In that regard, the bulletin did not eliminate the proof of loss requirement; the simply allowed insurance company's initial payment is based on the adjuster's report, rather than a proof of loss. Moreover, a policyholder who believes he is entitled to recover more than the amount set must submit a proof of loss.

Regarding the fraudulent scheme arguments, the Third Circuit agreed they were preempted by the NFIP.

Finally, the Third Circuit declined to consider the policyholder's argument that Selective canceled his flood insurance policy in retaliation for filing the lawsuit because the allegations were not put forth in the complaint, and there were now exceptional circumstances that warrant consideration or that claim for the first time on appeal. . The Third Circuit affirmed

As the Uddoh case makes clear, is properly completed and supported proof of loss is critical because it is a condition precedent to coverage. It appears in the policyholder in this case, rather than go-alone, and in public adjuster, and made fatal mistakes from the beginning of the claim process. If you have any questions about your insurance claim or submitting proofs of loss, please send us an (732) 704-4647 or email me directly at vpedro@merlinlawgroup.com with your questions.
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1 Uddoh v. Selective Ins. Co. or Am. no. 18-2274, 2019 WL 2085954 (3d Cir. May 13, 2019) 2 FEMA Bulletin W-12092a (Nov. 9, 2012), which attempted to speed up the process an initial claim payment by granting a conditional and partial waiver of the proof of loss requirement. The bulletin stated that FEMA would “permit the insurer to adjust and pay a loss based on the evaluation of damage in the adjuster's report instead of the signed Proof of Loss or insured-signed adjuster's report.”


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