Proof Of Loss – Must Be Timely Submitted

Mansfield insurance lawyers will tell their clients that a proof of loss must be submitted in a timely manner for losses. A 2015, US Southern District, Galveston Division opinion re-interates this point. The style of the case is, Fennelly v.Texas Farmers Insurance Company.
Following flood damage to his property caused by Hurricane Ike, Fennelly submitted two timely Proofs of Loss to Farmers, his insurer under a Standard Flood Insurance Policy issued through the National Flood Insurance Program. In response, Farmers paid Fennelly about $78,000,000. On August 9, 2009, the FEMA-extended deadline for filing a POL expired. On January 11, 2011, Fennelly filed his third POL for about $112,000.00 more in benefits. Farmers adjusted this claim and approved it in the amount of only about $7,000,000. On January 20, 2011, the adjuster’s supplemental report was sent to FEMA with a waiver request. On January 21, 2011, FEMA approved a waiver for the amount of the loss and scope of the damages outlined in the adjuster’s report. On January 25, 2011, Farmers sent Fennelly a letter informing him that it had approved the $7,000.00 supplemental amount, had rejected the remaining $105,000.00 of his claim and was “reserving all rights and defenses under the policy”; the supplemental settlement check was enclosed. On March 15, 2011, Fennelly demanded an appraisal of the remainder of his claim, but Farmers denied his request on March 22, 2011, because, in its opinion, its disagreement with the scope of damages claimed by Fennelly made an appraisal inappropriate. On January 24, 2012, Fennelly sued Farmers in an effort to recover the remainder of his POL under the policy.
The sole, dispositive issue in this case is whether, as Fennelly argues, FEMA expressly waived any challenge to the entirety of his third POL or whether FEMA’s waiver was, as Farmers argues, limited to only the $7,000.00 portion of the POL approved by Farmers’s adjuster. This Court agreed with Farmers.
Initially, the Court noted that it is beyond question that, absent a waiver by FEMA, a POL must be timely filed or else no benefits are recoverable. It is also irrefutable that only FEMA’s Federal Insurance Administrator under the National Flood Insurance Program can waive any provision of the SFIP. Farmers, therefore, could not do so. In the instant case, the Administrator’s waiver, in pertinent part, reads as follows:
Based on the information you submitted, your request for a waiver of the 60-day Proof of Loss policy provision is approved. This limited waiver is for only the amount of the loss and scope of the damages outlined in this request and otherwise does not waive the Proof of Loss or any other requirement of the Standard Flood Insurance Policy and makes no other comment because of a lack of information.
This Court conceded that the waiver could have been more artfully drafted or, as suggested in the adjuster’s email of February 8, 2011, a replacement POL could have been prepared for Fennelly’s signature, a procedure FEMA does utilize, but had apparently already disregarded in this case. Nevertheless, when considered in conjunction with the adjuster’s supplemental report it is clear that the waiver was limited to the $7,000.00 recommendation of the adjuster and that FEMA, and Farmers, reserved the right to otherwise rely upon a limitation defense. In fact, the SFIP expressly provides that Farmers, acting in its capacity as fiscal agent of the United States, had the option to “accept the adjuster’s report of loss instead of Fennelly’s proof of loss.”
Insofar as Fennelly may urge that the POL provision for timely submission was completely waived by reliance on, for example, Farmers’s continued investigation of his claim or the invitation that he seek reconsideration through an appeal, his argument would fail. The mere fact that an insurer continued to evaluate an otherwise untimely claim will not, alone, constitute a waiver of that defect.

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