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Insurance Reduction

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1909-DR-TN
ApplicantNashville-Davidson County
Appeal TypeSecond
PA ID#037-52004-00
PW ID#4706 and 5511
Date Signed2015-05-20T00:00:00

Conclusion:  The Applicant’s insurance policy does not provide coverage for the damaged elements of two golf courses for which Project Worksheets were written; therefore, the reductions in the PWs for anticipated insurance proceeds should be reinstated.

Summary Paragraph

Between April 30, 2010 and May 18, 2010, severe storms, flooding, straight-line winds, and tornadoes caused damage throughout the state of Tennessee, resulting in major disaster declaration (FEMA-DR-1909-TN).  Floodwaters caused damage to two golf courses operated by the Metropolitan Government of Nashville-Davidson County (Applicant).  The flooding damaged electrical components of irrigation controller boxes, sand bunkers, golf cart pathways, and four putting greens.  FEMA prepared two Project Worksheets (PWs) to address the damage to the golf courses: PW 4706 to address the McCabe Golf Course and PW 5511 to address the Ted Rhodes Golf Course.  During project formulation, FEMA determined that the Applicant’s property insurance policy provided coverage for the damage to the golf courses and, accordingly, determined that the Applicant was not eligible for Public Assistance funding to restore the damage.  The Applicant appealed this decision, asserting that its insurance policy did not cover the damage to the golf courses because, whether the damage was considered “Infrastructure” or “Landscaping” under the policy, neither affords coverage when the damage is caused by flood.  The Region IV Regional Administrator denied the appeals, concluding that policy covered the damage because the damage was located at an “Insured Location” and/or “Miscellaneous Unnamed Location” under the policy.  The Regional Administrator also denied the Applicant’s request for an additional $13,090.75 for additional repair work it asserted was eligible under PW 4706 and not captured in the PW.  On second appeal, the Applicant asserts that all of the types of damage addressed in PWs 4706 and 5511 constitute “Landscaping” under the policy, coverage for which is not afforded when the damage is caused by flood.

Authorities

  • Stafford Act § 312(a), 42 U.S.C. § 5155(a)
  • Public Assistance Guide, FEMA 322 at 119 (June 2007)

Headnotes

  • Under the Stafford Disaster Act § 312(a), an applicant for federal disaster assistance cannot obtain assistance with respect to any part of a loss if the applicant has received financial assistance “under any other program or from insurance or any other source.”  Thus, under the Public Assistance Program, FEMA is required to reduce the amount of assistance for eligible work by the amount of any actual or anticipated insurance proceeds available for that work.

The Applicant’s insurance policy does not provide coverage for the damage under the two PWs written for the two golf courses and, therefore, the reductions in the PWs for anticipated insurance proceeds was not warranted.

Appeal Letter

James H. Bassham
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, Tennessee  37204

Re:     Second Appeals—Nashville-Davidson County, Insurance Reductions, FEMA-1909-DR-TN, Project Worksheets 4706 and 5511

Dear Mr. Bassham:

This is in response to a letter from your office dated September 18, 2012, which transmitted the referenced second appeal on behalf of the Metropolitan Government of Nashville-Davidson County (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) reduction of anticipated insurance proceeds from the amounts awarded under two Project Worksheets addressing damage to golf courses caused by flooding in 2010.

As explained in the enclosed analysis, the Applicant’s insurance policy does not provide coverage for the damage under the two PWs and, therefore, the reductions in the PWs for anticipated insurance proceeds should be reinstated.  The Applicant’s request for $13,090.75 for additional repair work under PW 4706 is eligible work, not covered under its insurance policy. Consequently, the Regional Administrator is instructed to review the Applicant’s supporting documentation and award eligible costs based on such.

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
 

Sincerely,

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc: Garcia Szczech
      Regional Administrator
      FEMA Region IV

Appeal Analysis

Background

Between April 30, 2010 and May 18, 2010, severe storms, flooding, straight-line winds, and tornadoes caused damage throughout the state of Tennessee. A major disaster (FEMA-DR-1909-TN) was declared on May 4, 2010.  Floodwaters caused damage to two golf courses operated by the Metropolitan Government of Nashville-Davidson County (Applicant), the Ted Rhodes Golf Course and the McCabe Golf Course. 

Cumberland River floodwaters covered the Ted Rhodes Golf Course to an approximate average depth of eight feet.  The flooding damaged electrical components of controller boxes that served as the course’s main irrigation control centers, rendering all of the controllers inoperable.  In addition, the flooding caused extensive damage to 41 sand bunkers throughout the golf course, with floodwaters washing sand away and filling the bunkers and drainage system with silt and debris.

Richland Creek floodwaters caused damage to the McCabe Golf Course, including damage to two irrigation control boxes, damage to asphalt golf cart pathways, and damage to the subgrade, drainage system, gravel, root zone mixture, and top mix covering on four golf putting greens.

FEMA prepared two Project Worksheets (PWs) to address the damage to the golf courses: PW 4706 and PW 5511 to address the McCabe Golf Course and the Ted Rhodes Golf Course, respectively.  During project formulation, FEMA determined that the Applicant’s property insurance policy provided coverage for the damage to the golf courses and, accordingly, determined that the Applicant was not eligible for Public Assistance funding to restore the damage.  FEMA deducted $181,767.96 in anticipated insurance proceeds for PW 4706 for the McCabe Golf Course, leaving only direct administrative costs applicable to the PW, and deducted $333,499.38 in anticipated proceeds for PW 5511 for the Ted Rhodes Golf Course. 

First Appeal

On May 27, 2011, June 8, 2011 and November 30, 2011, the Applicant submitted first appeals to the Grantee challenging FEMA’s reductions for anticipated insurance proceeds to PW 4706 and PW 5511, and denial of additional items necessary to complete the repairs in PW 4706.  In the appeals, the Applicant asserted that its insurance policy did not cover the damage to the golf courses because, whether the damage was considered “Infrastructure” or “Landscaping” under the policy, neither affords coverage when the damage is caused by flood.

The Region IV Regional Administrator (RA) issued a response to the three appeals dated May 11, 2012, denying them.  The RA described the damaged property in the PWs as “improvements to land, landscaping, and pavement,” and determined that the policy applied because the damage was located at an “Insured Location” and/or “Miscellaneous Unnamed Location” under the policy.  The RA also denied the Applicant’s request of $13,090.75 for additional repair work based on the conclusion that the policy provided coverage for such costs.

Second Appeal

The Applicant submitted a second appeal dated July 23, 2012.  The Applicant asserts that the damage did not take place at an “Insured Location” or “Miscellaneous Unnamed Location” under the policy and that the types of damage addressed in PWs 4706 and 5511—irrigation control centers, sand bunkers, cart pathways, and putting greens—constitute “Landscaping”. Because the policy does not provide coverage for damage to “Landscaping” if the damage is caused by flood, the Applicant argues, the policy does not afford coverage for the types of damage addressed in PWs 4706 and 5511. 

The applicant also reasserts that it is eligible for an additional $13,090.75 of actual costs for irrigation repair parts and consulting fees to recommend the proper methodology for repair of the golf course, not originally captured in PW 4706.  Some of the invoices were included as backup documentation.  

The Tennessee Emergency Management Agency (Grantee) transmitted the second appeal to the FEMA Region IV Regional Administrator in a letter dated September 18, 2012.  The Grantee supports the appeal.

Discussion

Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, an applicant for federal disaster assistance cannot “receive such assistance with respect to any part of [a] loss as to which he has received financial assistance under any other program or from insurance or any other source.” [1]  FEMA implements this requirement by reducing “the amount of assistance for eligible work by the amount of any actual or anticipated insurance proceeds available for that work.”[2]

Insured Location

The golf courses do not appear to constitute “Insured Locations” under the policy.  The policy insures property, including real property in which the insured has an insurable interest, “located at an Insured Location or within 1,000 feet thereof, to the extent of the interest of the insured in such property.”  The policy also states that coverage under it applies to an “Insured Location” unless otherwise provided.  Relevant here, an “Insured Location” is a location (1) listed on “Schedule of Locations” on file with the insurer or (2) “covered as a Miscellaneous Unnamed Location.” 

The “Schedule of Locations” lists eighteen specific locations on two appendixes.  The Ted Rhodes Golf Course and McCabe Golf Course are not included on the lists and, therefore, are not “Insured Locations” stemming from inclusion on the “Schedule of Locations.”

Under the policy, a Miscellaneous Unnamed Location is a “Location” that is “owned, leased, or rented by the Insured, but not specified in the Schedule of Locations.”  The policy further defines a “Location” as either “as specified in the Schedule of Locations” or, if not so specified, “a building, yard, dock, wharf pier or bulkhead (or any group of the foregoing) bounded on all sides by public streets, clear land space or open waterways, each not less than fifty feet wide.”  As discussed, the Ted Rhodes Golf Course and McCabe Golf Course are not included on the “Schedule of Locations,” and they are not a building, yard, dock, wharf pier or bulkhead.  Therefore, the golf courses are not “Insured Locations” by virtue of being “Miscellaneous Unnamed Locations.”

Landscaping

The policy provides “Additional Coverages” for physical loss or damage insured by the policy under several different types of categories, including “Infrastructure” and “Landscaping.” 

“Infrastructure” under the policy includes “street lighting, traffic signals, and control systems,” “underground piping,” “streets, roads, highways, sidewalks, bridges, tunnels, trestles, piers and docks,” and “street signs, traffic signs, and signs not attached to buildings.”  The types of damage elements addressed in PWs 4706 and 5511—irrigation control centers, sand bunkers, cart pathways, and putting greens—do not fall under the “Infrastructure” definition set forth in the policy.

“Landscaping” under the policy means “[l] and improvements including lawns, greens, fairways, tees; shrubs; trees; landscape gardening; and lawn sprinkler systems and related piping.”  The types of damage addressed in PWs 4706 and 5511 appear to fall within the definition of “Landscaping.”  The sand bunkers are landscape improvements that are part of the golf courses’ “lawns, greens, [and] fairways,” as are the golf cart pathways.  The golf courses’ irrigation control centers and boxes fall under the “Landscaping” definition as being part of “lawn sprinkler systems and related piping.”  Although the damage appears to fall within the coverage for “Landscaping,” that coverage only applies to “physical loss or damage to Landscaping caused by or resulting from fire, lightening, explosion, riot or civil commotion, vandalism or malicious mischief, aircraft, or vehicles.”  It, therefore, does not include physical loss or damage caused by flood; flood is not a listed peril associated with coverage for “Landscaping.”

A review of the Applicant’s insurance policy and associated materials submitted with its appeal indicates that the policy does not cover the damage captured in PWs 4706 and 5511 and, therefore, reductions for anticipated insurance proceeds should not have been applied.

Additional Costs

The applicant asserts that extensive repairs were needed to return the facility to its pre-disaster condition, and some of the lesser items were overlooked in the creation of the PW. These items included irrigation and fan parts, safety fence and irrigation repair for $5,355.75, as well as $7,735.00 in consulting fees related to the methodology to repair the facility. The Applicant requested the inclusion of these costs in the scope of work, but the request was denied as the RA determined these costs were covered under the Applicant’s insurance policy. As the policy does not apply, these costs are also eligible.

Conclusion

The damaged elements of the Ted Rhodes Golf Course and McCabe Golf Course are not located within an “Insured Location” under the Applicant’s policy.  Although the damaged elements may constitute “Landscaping” under the policy, coverage for landscaping does not apply to flood-related damage.  The Applicant’s policy does not provide coverage for the damaged elements of the Ted Rhodes Golf Course and McCabe Golf Course and, therefore, the reductions in PWs 4706 and 5511 for anticipated insurance proceeds should be reinstated.  Similarly, $13,090.75 for repair work that the Applicant asserts was excluded from the original PW and deemed covered by insurance, is also considered eligible work. Final costs for such work will be determined at project closeout, when all invoices and proof of payment can be reviewed.



[1]  See The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 312(a), 42 U.S.C. § 5155(a).

[2]  Public Assistance Guide, FEMA 322 at 119 (June 2007).

Last updated May 28, 2020