National Flood Insurance Program

Representing Municipalities and Property Owners

Congress created the National Flood Insurance Program in 1968 to provide insurance coverage in areas where private insurance coverage was not feasible, particularly those locales subject to continuous flooding, run-off or lake flooding. Over the years, the program has had difficulty covering loss claims from its premium income. In response, various policy restrictions and conditions have been instituted which make it more difficult for policy holders to obtain fair compensation when they incur losses.

For this reason, insured property owners and municipalities facing flood losses often need legal representation in order to obtain the compensation they deserve.

Flood Insurance Claims Are Unique

Litigation involving flood insurance claims is quite different from that involving other types of insurance. As the ultimate insurer, the federal government has many defenses available to it that private insurers do not, such as sovereign immunity, federal preemption and a requirement of strict compliance with regulatory requirements. In addition, there are many complicated issues involving the mandate on communities to adopt and enforce development regulations in flood-prone areas, mandatory purchase requirements, claims involving grandfathered structures and new structures allowed on the floodplain, and others.

Most significant for property owners are the rules involving coverage limits. These provide for compensation for the actual cash value of a building minus accumulated depreciation. For older buildings especially, where there is substantial depreciation, the actual cash value of damaged property is considerably less than the cost of repairing or replacing the damaged property.

The attorneys of Baker Donelson’s Disaster Recovery Team have extensive experience in National Flood Insurance Program issues. We offer support to organizations and property owners who participate in the program, including advice on preparing claims and during litigation efforts.