What You Need to Know about Flood Insurance

In the past few years, cities have been battered by hurricanes and tropical storms, resulting in injuries and property loss to tens of thousands of Americans. Flooding, wind damage, and other problems have created financial difficulties for those who survive the disaster.  Recovering from such events can be challenging, and survivors may feel like their options are limited, even though they have insurance coverage. In some circumstances, legal recourse may be required.

Typically, homeowners’ insurance does not cover flood damage, and federal disaster assistance will help with damages from flooding only if the president issues a disaster declaration. However, the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP) offers some coverage. This program mandates insurance for properties in areas that are especially flood prone. Under the terms of this program, homeowners and renters in participating communities can purchase flood insurance through their own insurance agents, although disbursements are paid out of a federal fund maintained by NFIP. The program has some limitations that homeowners should be aware of – because payouts under NFIP are drawn from federal funds, homeowners and renters who want to recover damages must file proof of loss within 60 days of the event that caused the loss. Unlike filing deadlines under private insurance policies, this deadline is strictly enforced. Further, a homeowner or renter who believes their insurer has denied a claim in bad faith cannot file a state law claim because money to redress that claim would be drawn from federal funds.

Under some limited circumstances, people whose property is damaged in a flood can file suit against their insurers. For instance, individuals who have purchased insurance through a private insurer not funded by NFIP may have a cause of action for bad faith denials of claims. Occasionally, injured parties may be able to file suit against parties whose actions contributed to damages.  In the aftermath of Hurricane Katrina, individuals were allowed to file litigation against those who constructed and maintained the Mississippi River Gulf Outlet, including the Army Corps of Engineers. Currently, some victims of Hurricane Florence are seeking to file a class action lawsuit against a corporation that, they claim, not only failed to prevent flooding in their area but also hindered others’ efforts to prevent flooding.  As devastating storms and floods seem to grow more common, the legal implications of and remedies for these events are likely to become more common as well.

Kathleen Davies is a Staff Writer for GetLegal.com. She is a graduate of the University of Michigan Law School and has practiced law and taught legal writing and advocacy.