Originally published by Patrick McGinnis.
It is the general understanding when one brings a lawsuit on a flood claim under the National Flood Insurance Program (NFIP) that the only recovery available to the policyholder is actual damages. The policyholder is not entitled to attorney fees or bad faith (extra-contractual) damages, which might be recoverable in other first-party property damage cases. In an unusual case out of the Eastern District of North Carolina, a federal district court found Allstate acted in bad faith for unfair claims handling in a flood claim and assessed extra-contractual damages.1
The facts are probably very familiar to anyone who has handled flood cases. Allstate hired Rimkus, who came up with a ridiculous theory as to why flood waters from Hurricane Irene were not the cause of the Woodson’s flood damages. After a bench trial, the court found as a matter of fact that Allstate had breached its contract and had committed bad faith. The court said that Allstate’s “denial of benefits to…
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