NFIP FLOOD CLAIM Guidance: Contractor Estimates & Invoices

Contractor estimate and invoice guidance with red flags, required itemization, and payment expectations.

Dear POLICYHOLDER &/OR CONTRACTOR,

 

As part of the flood claim process under the National Flood Insurance Program (NFIP), I want to provide clear guidance for both insureds and contractors regarding how estimates, invoices, and payments are handled. This will help ensure a smoother review process and avoid delays, reductions, or denials.

 

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🚨 CRITICAL – ITEMS THAT CANNOT BE INCLUDED IN ANY ESTIMATE OR INVOICE

The following items are not covered under the NFIP and should not be included in any estimate or invoice submitted for review, as they will be denied:

 

⛔ Upgrades, betterments, or improvements beyond pre-loss condition
⛔ Code upgrades, compliance items, or ordinance-related costs (unless specifically covered by the policy)
⛔ Warranties, permits, inspections, project management, overhead not tied to direct repair, or service contracts
⛔ “Matching” of undamaged materials
  • Example: Replacement of an entire system when only one component sustained flood damage
  • Common example: Replacing an interior furnace/air handler solely to match a damaged exterior condenser unit
⛔ Lump-sum invoices with no detailed breakdown
⛔ Any work not directly caused by flood (even if discovered during repairs)
⛔ Charges lacking proper documentation
  • No photos, no measurements, no clear scope = not payable
⛔ Excessive, inflated, or unsupported pricing
⛔ Work performed in areas or for items not covered under the SFIP
  • Example: All basement finishes and most contents are limited or excluded (please see NFIP basement exclusions guidance previously provided)

⛔ IMPORTANT: Contractor statements such as “insurance will cover this” or “this is required” do NOT determine coverage under the NFIP.

 

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🏛️ IMPORTANT UNDERSTANDING – NFIP CLAIM STRUCTURE

The NFIP operates under the Standard Flood Insurance Policy (SFIP), which has very specific rules regarding what is covered, how it is documented, and how payments are issued. NFIP flood claims are not typical private carrier property claims and are governed by strict federal rules and coverage limitations.

 

⚠ NO PAYMENTS ARE EVER ISSUED DIRECTLY TO CONTRACTORS UNDER AN NFIP FLOOD CLAIM
⚠ All payments are issued from the Carrier to the insured and any listed mortgage lender only

 

▪️ Payment is based on direct physical loss by or from flood only
▪️ The NFIP does NOT automatically accept contractor bids or invoices as payable amounts
▪️ All costs must be reasonable, necessary, and directly related to covered flood damage

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🛠️ CONTRACTORS – WHAT SHOULD BE INCLUDED IN ESTIMATES / INVOICES

To be properly considered and help reduce delays, contractor estimates and invoices should include:

 

🧾 Room-by-room or area-specific scope with a clear line-item breakdown for each repair or replacement item
📋 Quantities, unit costs, and totals, with clear line-item descriptions such as replace 6-inch baseboard or replace sheetrock to 4 feet, etc.

👷 Do NOT separate labor and materials

💩 Do NOT  lump-sum any rooms, invoices, estimates, repairs, etc.

🔎 Clear explanation of how each item was directly damaged by flood and why repair or replacement is required

📸 Photo documentation before, during, and after repairs, especially for concealed or removed materials such as wall cavities, subfloor, and insulation

📅 Clearly identify start and completion dates 

💵 Proof of payment (if applicable, such as receipts, canceled checks, or invoices clearly marked as PAID)

 

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🌊 IMPORTANT NOTES & BEST PRACTICES FOR THE INSURED

 

▪️ You are not required to use any specific contractor, but you are responsible for ensuring proper documentation is provided
▪️ Entering into a contract does not guarantee payment under the NFIP
▪️ You are ultimately responsible for any costs not covered by the policy

 

✔ Take and retain photos throughout all stages of cleanup and repair
✔ Request fully itemized estimates before work begins
✔ Avoid lump-sum contracts whenever possible
✔ Ask questions before proceeding with uncertain or large-scope work

 

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If you or your contractor have any questions about documentation or whether certain work may be eligible under NFIP guidelines, please reach out prior to proceeding whenever possible.

 

I’m here to help guide this process and ensure everything is properly documented for the best possible outcome under the policy.

 

 

Christopher T. Gutshall

Insurance Adjuster

NFIP FCN 0070008289

 

M 330.437.9168  |  E  gutflood@outlook.com <mailto:gutflood@outlook.com> 

 

Authority & Disclaimer: Field adjusters cannot approve/deny coverage or authorize payment. Final claim decisions are made only by the carrier. 

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