In the past, court have strictly enforced the 60-day deadline within which to file a proof of loss -- i.e., a failure to comply has resulted in a total forfeiture of coverage. Flood victims always are sympathetic plaintiffs, but the courts have not always been responsive. For example, the Eleventh Circuit, in a decision issued three months before Katrina, held that a policyholder forfeited coverage by not submitting the proof of loss within 60 days, even though the insurance adjuster first came to the policyholder's property 90 days after the loss. Lucien v. US Security Ins. Co. (11th Cir. June 8, 2005).

On September 21, 2005, FEMA promulgated guidelines for the adjustment of Katrina-related losses. Moroever, FEMA has authorized payment of claims based on an adjuster's report alone, rather than requiring a separate proof-of-loss submission. If the policyholder does not agree with the adjuster's analysis of the covered loss, the policyholder then must file a proof of loss and that proof of loss must be submitted within twelve months of the date of loss. (Note that the twelve-month period is from the loss date not the date of the adjuster's report.) If the insurer then denies the policyholder's claim based on the proof of loss, the policyholder is required to file its lawsuit within twelve months of the date of claim denial.

This revised process applies to all flood-events between August 23, 2005 and December 31, 2005.

Individuals and businesses that suffered loss from Katrina should not wait until the adjuster comes knocking to put a marker down, that is, even if one is not be in a position to submit the full proof of loss, it is still advisable to submit a partial proof of loss, noting that the entire amount of the loss is not yet determined. Personally, I would not be comfortable in allowing the 60-day period to elapse if I knew I had flood coverage and the adjuster had not yet arrived (as the Lucien case shows). FEMA has a guide to submitting claims, and the insurers have set up a website that seeks to provide comprehensive contact information for flood insurers.

One must be careful that in submitting a claim for flood that one is not undermining a claim under a property or homeowners policy. Accordingly, it is advisable in submitting the proof of loss to the flood program to temporize by stating that "[Policyholder] submits this proof of loss to comply with the requirements of its flood-insurance policy, although it is uncertain at this time the extent to which the items claimed were caused by flood or caused by another hazard covered by other insurance policies."

For the moment, protective claims should be submitted to any possibly available insurance, flood, property, or homeowners.