Does an application for flood insurance payments estop an insured from later claiming wind damage?

I was reading a recent opinion by Judge L.T. Senter Jr. about a question of estoppel — does an application for payment under a federal flood insurance policy, as distinct from acceptance of flood policy money, serve to estop an insured from later claiming wind damage under a homeowners policy? According to Judge Senter, the answer is no, although of course actual acceptance of the flood money means at least that amount cannot be re-compensated as wind damage.  The case is Robichaux v. Nationwide, click here to read it.

I read this case to say the same thing that other Katrina cases, such as Esposito v. Allstate, have said: acceptance of flood policy money means that you can’t have a double recovery for wind from some other policy.  You can call this estoppel, you can call it a prohibition against redundant indemnity for the same loss, you can call it an admission, whatever, it all comes out the same.  Here’s a post I wrote earlier this year on the Esposito case and others concerning the effect of acceptance of flood money. 

Robichaux focuses on a somewhat different issue, however — whether the flood application, apart from the acceptance, binds the insured’s ability to later claim wind damage.  Judge Senter said no.  This sounds right.  Under the circumstances of Katrina, where FEMA waived the requirement for proof of loss statements, holding that the flood application alone estops the policyholder from claiming wind damage, to the degree there is damage to the home that is uncompensated by flood money, would seem a harsh application of estoppel.  Also, as Judge Senter pointed out, in the aftermath of Katrina, many people didn’t really know whether their loss was caused by wind or flood.  I suppose if you did have reason to know the cause of the damage, however, the application could constitute an estoppel.

Unusually for a legal ruling, Robichaux has a surprise ending. As it turns out, Judge Senter said there was no diversity of citizenship, so the court had no jurisdiction over the case — nevertheless, he took several pages to clarify the court’s position on the estoppel issue.  

1 Comment

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One Response to Does an application for flood insurance payments estop an insured from later claiming wind damage?

  1. Patrick Kemp

    Judge Senter should not have included his conclusions of law on the substantive issues in the Robichaux case. The court lacked jurisdiction and he had remanded the case. This is an advisory opinion.