FEMA Sends Out 1st Round of Letters Offering to Review Sandy Flood Claims

By | May 19, 2015

The Federal Emergency Management Agency on Monday mailed out its first round of letters to the National Flood Insurance Program policyholders who filed Superstorm Sandy-related claims, asking whether they want their claims reviewed.

FEMA is mailing its letters beginning Monday in batches by ZIP codes over several weeks to nearly 142,000 policyholders who filed Sandy-related claims. The policyholders will have 90 days from the date of the notice to contact FEMA if they decide to initiate the review process.

The NFIP has paid out more than $3.5 billion in flood insurance claims to policyholders whose homes were damaged or destroyed. However, the program has drawn scrutiny in recent months after allegations of fraud involving how some insurance companies assessed damage after the October 2012 storm. Insurers have denied wrongdoing.

“The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) is offering you the opportunity to have your Hurricane Sandy flood insurance file reviewed if you believe that we underpaid your claim,” the letter begins. FEMA provided a copy of the letter to Insurance Journal.

“After we receive your request, a case worker who is a highly skilled NFIP-certified insurance adjuster will work with you to review your file, examine any additional information you submit, coordinate inspections by an adjuster or engineer (if required), and determine if the NFIP should make any additional payments to you for losses covered under your Standard Flood Insurance Policy,” the letter states.

FEMA says once the policyholder submits a request, it should take the case worker less than 90 days to complete the review.

The letter notes that if the policyholder doesn’t agree with the outcome of the case worker review, the policyholder will have the opportunity to request that an expert third-party neutral talk with the policyholder and review the file to help resolve the claim.

“This neutral party will then make a recommendation to FEMA about your claim. FEMA will give substantial weight to the neutral party’s recommendation,” the letter states. “If the final review supports additional payment under your policy, then your insurance company will issue a check for the additional funds.”

Commenting on FEMA’s letter and the claims review process, U.S. Senators Bob Menendez and Cory Booker, D-N.J., issued a statement urging Sandy victims who filed flood insurance claims and feel they were underpaid to participate in the review process.

“While the wait has been far too long, starting today, all Sandy victims with flood insurance will have the opportunity to get what they were entitled to so they can finally end this nightmare and move on with their lives,” Menendez said in a statement Monday.

“It’s unacceptable that victims of Superstorm Sandy’s devastation are still fighting to get what they rightfully deserve from their insurers,” said Booker. “Every New Jerseyan who filed claims with NFIP and feels they were underpaid should follow the instructions they will soon receive in the mail.”

In its letter, FEMA explains a few points that the federal agency wants the policyholders to know before choosing to participate in the Sandy claims review. They include the following:

  • Policyholders who have received the maximum amount under the policy or are in litigation related to the claim do not qualify for this review. (According to media reports, there are some 2,200 claims that are currently in litigation.)
  • FEMA’s letter and participation in the Sandy claims review does not create, extend, or modify the coverage or terms under the Standard Flood Insurance Policy, including but not limited to the one year time limit to file suit after written denial of part or all of the claim.
  • The review does not alter or affect the policyholder’s rights or the rights of the policyholder’s insurer.
  • The review may result in a determination that the policyholder previously received an overpayment or a duplicated benefit. Federal law may require the policyholder to repay an overpayment to the U.S. Treasury. To help assess that risk, FEMA notes in the letter that its auditors have told FEMA that improper payments are made in less than two percent of the time.
  • FEMA may share policyholder information to certain partner agencies to identify potential duplication of benefits.
  • If the policyholder receives additional insurance proceeds as a result of the Sandy claims review and the policyholder has also received Sandy-related disaster assistance from another source like the U.S. Small Business Administration, the Department of Housing and Urban Development, or one of HUD’s state or local grantees, then the policyholder may have to repay the other disaster assistance if the original source determines the additional insurance proceeds duplicate a benefit they’ve previously provided.

The following is a copy of the letter:

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