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Citation:         FEMA-1909-DR-TN; Nashville Metropolitan Transit Authority (Applicant), PWs 3653 and 3739

Cross

Reference:     Insurance; Duplication of Benefits

Summary:       The Applicant sustained the loss of 53 transit vehicles at the 130 Nestor Street service terminal as a result of flooding from severe storms during the period of April 30 through May 4, 2010.  FEMA prepared PW 3653 in the amount of $188,377 to cover the total cost to replace 21 facility support vehicles damaged at the Nestor Street location.  FEMA also prepared PW 3739 for $4,186,232 to cover the total cost to replace 32 buses damaged at the same location.

A provision of the Applicant’s insurance policy, Endorsement 004 Limit of Liability, provides $10,000,000 in flood coverage on a per occurrence basis for vehicles specifically listed on the policy.  The policy exception to the $10,000,000 per occurrence flood coverage states, “Flood $10,000,000: except 130 Nestor Street, $10,000,000 ‘annual aggregate’ Nashville, TN.”  FEMA determined that the policy exception changes the coverage at the Nestor Street location from $10,000,000 for each and every occurrence to an annual aggregate policy limit amount of $10,000,000 for the Nestor Street location.  As a result, PW 3653 was reduced to $33,592 for the market value of four (4) of the 21 vehicles that were uninsured plus $677 for direct administrative costs.  PW 3739 was reduced to $1,289 for direct administrative costs.

                        The Applicant submitted its second appeal on February 3, 2012, which the State transmitted to FEMA on April 17, 2012.  The Applicant reiterates its position from the first appeal that the vehicles damaged at the 130 Nestor Street location were not covered for flood damage.  The Applicant filed a lawsuit against the insurance company in the Chancery Court of Davidson County seeking a declaratory judgment as to whether the insurance policy excludes flood damage and proposes that FEMA not take action on the second appeal until after the court ruling.

Issues:            Did the Applicant demonstrate that flood is not a covered peril under the provisions of the insurance policy?

Findings:         No.

Rationale:       Section 312(a), Duplication of Benefits; 44 CFR §206.250(c), General; 44 CFR §206.206(c)(3), Appeals, Time Limits