By Joseph Mascali

Procor Vice President and West Coast Team Leader

The short answer is yes, for the long answer read on.

Since 2017, the United States has been impacted by major Natural Disasters, such as Hurricanes Harvey, Irma, Maria, and Michael. As a result, many organizations have been faced with the challenge of documenting not only an Insurance Claim but a FEMA Claim as well, which can become extraordinarily complicated and time-consuming. One of the major challenges an organization will face is identifying, coordinating and allocating all potentially available funding from insurance and the FEMA Public Assistance Program. Often times there is a misconception in the Disaster and Recovery industry that FEMA cannot obligate funds without resolution of the organization’s insurance claim. This article is intended to provide clarification in response to this common misconception.

Insurance proceeds simply put; are the monies an organization can collect from its Insurance Company following an insurance claim. FEMA cannot provide Public Assistance (“PA”) funding for the same work that has been funded/reimbursed by another source. This would result in a duplication of benefit[1], which FEMA is legally prohibited to provide. FEMA is intended to be the “payer of last resort”. In areas where funding has been provided via insurance reimbursement, FEMA will reduce eligible costs by the amount received, for expenses and cost categories where duplication of benefit exists. This can be done in one of two ways:

  • Reduced by actual insurance proceeds received, or
  • Through a reduction based on anticipated insurance proceeds based on the Applicant’s insurance policy.

Reductions based on anticipated insurance proceeds are the mechanism FEMA utilizes to move a FEMA Applicant’s claim forward to obligation, in circumstances where the insurance claim is ongoing. However, it is important for such an Applicant to work with its FEMA Program Delivery Manager (“PDMG”) team, to ensure any anticipated insurance reductions are calculated accurately and in accordance with the insurance policy. Accuracy on the front-end will serve to expedite reimbursement and provide accurate reimbursement projections for internal Finance Departments. This is critical when managing cash flow. The anticipated insurance reductions will be reconciled when the insurance claim is resolved and all proceeds have been received. 

Source of Information: FEMA Recovery Policy (FP) 206-086-1, Public Assistance Policy on Insurance

[1] Please note, FEMA does not provide reimbursement for all insurable cost categories. For example, FEMA does not reimburse Applicants for Business Interruption losses, which an Applicant’s insurance policy may provide coverage for. Therefore, in this example a duplication of benefit would not exist. Always seek expert guidance after a loss to have an accurate understanding of your particular loss situation. For full detail of FEMA eligible costs please refer to the, FP 104-009-2, Public Assistance Program and Policy Guide.

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