We haven’t done a claim study in a while, mainly because this specific case took a long time to close and settle. But it’s finally finished, and it represents one of the largest claims we’ve ever handled.
This was a massive association flood claim, and I’m going to take you from A to Z through the life of this claim so you can learn exactly what it takes to manage a loss of this scale.
flood claim study
Table of Contents
The Secret Weapon for Catastrophic Losses: ALE Assistance
Before we dive into the flood details, I want to share a resource that is extremely valuable for any public adjuster, contractor, or attorney handling catastrophic losses (fire, storm, etc.).
If your client has to move out and incur Additional Living Expenses (ALE) or “Loss of Use” costs, you should look at Black Diamond Services.
When a home becomes uninhabitable, Black Diamond provides the necessary financial assistance so the homeowner doesn’t have to pay out-of-pocket for hotels or temporary housing. They bill the insurance policy directly. I’ve personally referred fire-damage clients to Millie Varela at Black Diamond, and they took care of everything without the client spending a single penny.
The Loss: A Miami Tidal Wave
The claim took place at a townhome association in Miami, Florida. This area is prone to heavy rain, but this event was extreme. The parking lot flooded so severely that every time a car drove through, it sent a “tidal wave” into the units.
Impact: 63 to 65 units were inundated with 4 to 8 inches of water inside.
The Challenge: Handling 63 individual homeowners while representing the association is essentially like working 63 claims simultaneously.
Understanding Association Flood Coverage
Flood insurance for an association works differently than a standard wind or water claim. Usually, an association covers “drywall-in,” and the unit owner covers everything else (cabinets, paint, flooring).
With Flood Insurance (NFIP/FEMA):
The Good News: The association’s flood policy actually covers the interior—paint, baseboards, cabinets, and flooring were all included.
The Bad News: Contents (furniture, personal items) were not covered under the association policy. Those required individual flood policies.
The Lesson: Always review the policy limits. In this case, the association had upgraded to a premium Residential Condominium Building Association Policy (RCBAP) just months prior, doubling their coverage limits.
The Mitigation: “Flood Cuts” are Non-Negotiable
We called in a high-capacity water mitigation company that had the manpower and equipment to moisture map and infrared-scan 63 units.
If you are a Public Adjuster, you must ensure your mitigation team performs flood cuts (cutting out the wet drywall). If they only remove baseboards and do a “surface dry,” the insurance company likely won’t pay for full drywall replacement. Flood insurance is finicky—they generally only pay for what the water physically touches.
Navigating FEMA Deadlines & Paperwork
Flood claims have very specific requirements that differ from your standard homeowners’ policy:
Unique Letter of Representation: FEMA requires specific add-ons in your LOR that aren’t in a standard letter. Ensure you have a separate NFIP-compliant LOR.
The Proof of Loss (POL) Deadline: Normally, you have 60 days from the date of loss to submit a signed and notarized Proof of Loss.
Note: While deadlines were extended for major events like Hurricane Ian, for “normal” flood losses, the 60-day rule is strict. We submitted estimates for all 63 units by day 50.
Settlement: From First Payment to Litigation
The initial payment was nearly $1.5 million, but we were targeting over $2 million.
We initially considered Appraisal, but in flood claims, you must agree on the “scope of work” before going to Appraisal. Because the adjusters wouldn’t agree on the scope for the wooden staircases and tile flooring, we couldn’t proceed with that route.
Eventually, the negotiations with the flood adjusters became difficult, and we moved into litigation. After a year of fighting, we settled for an additional $1.8 million, bringing the total recovery to a level that made the homeowners and the association very happy.
Final Thoughts for Adjusters
Flood insurance is tough, and many people avoid it. But as a professional, you have a duty to represent your client. Sit down with the adjusters, go line-item by line-item, and explain your estimate.
Work with Elite Resolutions
If you’re interested in becoming an adjuster or want to learn more about commercial claims:
Apply: Visit EliteResolutions.com to submit a resume.
Educate: Check out CommercialClaimsAdvocate.com for courses and books.
