If the insurer pays for adjusted flood damage, can the insured sue for additional coverage when no proof of loss is filed?  Following its own precedent, the Fifth Circuit determined no coverage was due above the adjusted amount when the insured failed to file a proof of loss ("POL").  See Talbott v. Fidelity Nat. Ins. Co., No. 09-30028, 2009 U.S. App. LEXIS 26728 (5th Cir. Dec. 8, 2009).

   The insured purchased a Standard Flood Insurance Policy ("SFIP") from Fidelity.  The policy covered the insured's two story property in New Orleans.  The policy specifically stated there was "no basement" in the property. 

   Hurricane Katrina damaged the insured's property on August 29, 2005.  The insured filed a claim for flood-related property damage five days after the storm.  On November 1, 2005, an adjuster determined the exterior damage was $10,697.68, which Fidelity paid.  Subsequently, another $2,480.90 was paid by Fidelity for interior damage and contents.  Finally, on April 3, 2007, Fidelity sent the insured a check for $419.80 to cover adjusted interior and contents damage.

   On March 26, 2007, Fidelity retroactively changed the property description from stating "no basement" to "basement enclosure unfinished." 

   The insured sued Fidelity, claiming it failed to properly adjust the claim by paying only a fraction of the total property damage.  Prior to filing suit, however, the insured failed to submit a POL in accordance with the SFIP.  Although Fidelity argued the failure to file a POL excused any obligation owed under the policy, the insured contended that Fidelity repudiated the policy on March 26, 2007, when the basement description was altered, thereby relieving the insured from filing a POL.  The district court held in favor of Fidelity, holding that the failure to file a POL meant the insured was not entitled to any payment above the amount Fidelity determined was owed.

   The Fifth Circuit affirmed. Regulations implementing the SFIP required the insured to file a POL within sixty days after the loss occurred.  The Fifth Circuit had consistently held that when the insured fails to file a POL, the insurer is relieved of its obligation to pay an otherwise valid claim.  However, case law also established that repudiation of a policy relieved the insured from the obligation to file a POL. 

   Here, there was no repudiation.  The insured had to show that the insurer owed coverage that it refused to provide.  Fidelity agreed the insured had coverage, but disputed the amount of loss.  Because there was no repudiation, the insured was required to file a POL.