The issue of oil mixed with flood waters is not new for the National Flood Insurance Program (NFIP). James A. Sadler, Director of Claims for the NFIP, issued a memo on June 7 to Write Your Own (WYO) carriers and producers outlining some general principles about when oil is mixed with flood waters. The memo notes that the information it contains is “not a comprehensive claims procedure, and if needed FEMA will provide a more in-depth process description.”

What It Means to Agents:  The way this memo is couched seems to give FEMA an “out.” Previous statements have been made in Louisiana by officials there indicating that more would be covered under NFIP policies than indicated in this latest memo, which is not definitive. PIA believes that flood carriers need to engage FEMA in this process and press for answers, so carriers can individually determine how various coverages do or do not respond, and under what circumstances. This needs to be conveyed to agents as soon as possible, so they can accurately communicate with their clients. You can read the FEMA memo here. 

June 9, 2010