Star Tribune (Minneapolis) Jane Friedmann column [Star Tribune (Minneapolis)]
By Jane Friedmann, Star Tribune (Minneapolis) | |
McClatchy-Tribune Information Services |
After days of rain, the river was rising and both their cabins were in peril. When Grey got there, he had to paddle up the road in a canoe and saw the tip of his cabin roof jutting above the floodwaters.
When the water receded six days later, Grey and his wife found their shed toppled and their belongings saturated.
"I was sick. My wife, she was bawling because we knew it was shot and what are you going to do?" Grey said. "But we figured, OK, well, we've got flood insurance, so that will help."
In fact, they had paid the flood insurance premiums for
Then the Greys got a shock. In September,
Properties in communities that aren't part of the NFIP are ineligible for federal flood insurance. But Auto-Owners mistakenly issued the policy to the Greys anyway, according to
Both
"In our agreement about selling and servicing flood insurance there are provisions for just this event. It happens," said
"We understand that we have an innocent party here who got flooded and paid premiums in good faith," Schein said. "So we have to go back to the folks responsible for delivering a valid policy."
City was warned
The land that Greys' cabin sits on used to be eligible for flood insurance, as part of unincorporated
But in 1998, the city annexed the land.
The Greys bought their newly built cabin in 2009. A year later, city officials and
But the city didn't begin to act on recommendations to enroll until late 2011 and still hasn't completed the process. "It just took a long time to get going on it. There were so many other things that happened," Mayor
But the Greys never had any reason to believe their policy was invalid. They paid about
In drawing up the insurance policy, however, Auto-Owners mistakenly used a code that indicated the property was still in unincorporated
The responsibility to write a valid policy rests with the insurance company and its agents, according to Schein, the
It is up to insurers to verify eligibility "by being familiar with the property or checking with local government officials or consulting
If a policy is issued in error, the flood program must be reimbursed for any claims paid and the insurance company must take action, which may entail refunding premiums or utilizing its professional liability insurance, called "errors and omissions" insurance, Schein said. "Insurance companies are insured for their mistakes."
"The bottom line is we paid our premiums," Grey said. "I wasn't trying to scam anybody. I had a perfectly good flood policy ... and then after it all happens they're saying no, I should have never sold you that policy? Come on."
"Here I am with no cabin, no retirement," he said. "This is the worst thing I've ever had to deal with. My beautiful place is trash."
Grey said Auto-Owners told him to get a lawyer, so the couple met with one on Friday. Grey said he and his wife are going to fight to have their policy honored.
Even if it does require a long, upriver paddle.
For a post-publication response from Auto-Owners, click here.
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