Something On Flood Insurance Law

Weatherford attorneys who handle insurance claims need to be aware of laws related to flood insurance. Here are a couple of cases that are good to know.
The first case is styled, Wright v. Allstate Insurance Company. It is a Federal Court opinion that was issued in 2007, by the 5th Circuit.
The insured homeowner sued Write Your Own insurer for fraud and negligent misrepresentation arising out of Tropical Storm Allison flood damage. Allstate had rejected Wright’s claim because of failure to cooperate and failure to file an adequate proof of loss. The district court found that Wright had failed to prove all of his damages were caused by flooding. In a prior appeal, the 5th Circuit had ruled that state law claims were pre-empted. Wright sought to amend the complaint to assert federal common law extra-contractual claims for fraud and misrepresentation.
The Court held that there is no indication in the National Flood Insurance Program that suggests that Congress intended to create expressly or by implication extra-contractual causes of action against insurers under the program. The only claims to be made are those expressly authorized by the Act.
The other case is also a Federal Court case styled Lalani v. Texas Farmers Insurance Company. The opinion is from the Southern District of Texas and issued in 2006.
Farmers had issued an SFIP policy to Lalani prior to Lalani’s mobile home being flooded on two occasions, in 2001 and 2002. Lalani submitted a partial proof of loss statement seeking damages of $55,997.96. Farmers rejected the proof of loss and requested certain documentation to confirm that Lalani had in fact, repaired the damage to its home caused by the 2001 flood. After Lalani failed to provide the requested documentation, Farmers denied the claim and this lawsuit resulted.
The Federal District Court granted Farmer’s motion for summary judgment, holding that a waiver of the proof of loss requirement must be express, not implied, as was the case in this proceeding. The Court rejected Lalani’s argument that Farmers failed to complain of the late filing of a complete proof of loss until after the 60 day deadline had elapsed, thus waiving the proof of loss requirement. The Court noted that although the SFIP provides that an insurer may, at its option, waive the proof of loss requirement and accept instead an adjuster’s report signed by the insured, “the federal regulations provide that no provision of the policy may be altered, varied, or waived without the express written consent of the Federal Insurance Administrator.” This Court further noted that, according to the Adjuster Claims Manual, the proof of loss requirement may be waived only for claims for $7,500 or less.
One thing that is noteworthy about these Federal flood insurance programs is that the cases end up in Federal Court. Federal Court is usually a favorable place for insurance companies to fight claims. The reasons for this vary and an experienced Insurance Law Attorney needs to be consulted to get a good explanation. Further, an experienced Insurance Law Attorney can usually find ways to keep from having a case in Federal Court.