New York Senators Demand FEMA Clarify the Lawsuit Deadline
While FEMA has extended the Proof of Loss deadline to April 28, 2014 for the thousands of Sandy flood victims in New York and New Jersey still fighting with their flood insurance companies, the extension has created ambiguity regarding the deadline for a lawsuit to be filed. Hopefully, an answer is on its way.
On October 22, 2013, U.S. senators from New York – Charles E. Schumer and Kirsten Gillibrand – called on FEMA to issue a clear and immediate ruling that extends the statute of limitations for Sandy victims to challenge their insurance companies in court for shortfalls in award amounts. Under FEMA’s current guidelines, policyholders have only one year from the date they received the “first” written “denial” — or insufficient payment — to challenge the amount in court. That day is rapidly approaching, as some homeowners received their first response within months of the storm. In many cases, those homeowners are still submitting documentation and proof to their insurance companies. FEMA’s current policy ensures many homeowners lose the option to take civil action even before they are done negotiating with the insurance companies.
FEMA’s policy on the statute of limitations is particularly puzzling because FEMA granted Sandy-affected households an extension to April 28, 2014 to submit supporting documents to their insurance companies – such documents are called “Proof of Loss.” Effectively the Proof of Loss allows households to present their flood insurance claims for the full amount they believe is owed. But while the Proof of Loss deadline was extended, FEMA has not done the same for the statute of limitations for filing a lawsuit against an insurance company if, in the end, the insurance check is insufficient. FEMA appears to maintain that the one-year limitations period in which to file suit starts from the “first” written “denial” from the insurer, and it has since indicated that this denial may be based exclusively on the report made by the insurer’s own insurance adjuster without any documentation from the homeowner. This could create a situation where a homeowner is still allowed to submit evidence but is not allowed to sue in a court if the claim doesn’t come back at a sufficient amount.
According to the press release issued by Senator Shumer’s office, Schumer said FEMA should not start the clock on the one-year statute of limitations period to pursue civil action until all administrative appeals have been completed and the homeowner has received a final determination from the insurer. That would have the effect of giving Sandy victims an additional 18 months or more to hold their insurance companies accountable. Let’s hope FEMA responds to the New York senators’ demands, as thousands will be facing this issue in the next few months.
About the Author: Christopher W. Gerold is an attorney in Wolff & Samson’s Disaster Recovery Claims Group. Chris represents homeowners and businesses with their Sandy related insurance claims with a special focus on flood insurance. For more information on flood insurance and ways Wolff & Samson can help you with your flood insurance claim, please contact Chris at (973) 530-2061.