Comment Submitted by Anonymous

**PROPOSED FEMA POLICY ENHANCEMENT** Protecting Federal Disaster Assistance Funds Through Independent Damage Verification and Insurance Recovery Accountability Executive Summary The Stafford Act and FEMA's Public Assistance Program and Policy Guide (PAPPG) establish FEMA as the payer of last resort and prohibit Duplication of Benefits (DoB). Applicants are required to pursue available private insurance before seeking FEMA assistance. However, a significant gap exists in the current framework that can allow undervalued insurance claims to shift costs from private insurance carriers to FEMA and, ultimately, federal taxpayers. To address this issue, FEMA should strengthen its Public Assistance policies by requiring independent damage verification for larger claims and creating a Safe Harbor Provision that encourages applicants to actively pursue insurance recoveries before relying on federal disaster assistance. The Problem Following major disasters, public entities often rely on damage assessments prepared by adjusters, engineers, and consultants retained by their insurance carriers. These carrier-directed assessments frequently serve as the primary basis for determining the scope and value of damages. Many applicants do not obtain an independent evaluation of their losses and may unknowingly accept insurance determinations that materially undervalue disaster-related damages. When insurance proceeds prove insufficient, applicants commonly seek FEMA Public Assistance funding for the remaining costs. As a result, FEMA may fund losses that should have been covered by private insurance. This issue is particularly relevant for municipalities, public housing authorities, special districts, educational institutions, and other public entities that may lack the expertise, resources, or incentive to challenge insurance carrier determinations. Consequences The current process creates several unintended consequences: * Federal disaster assistance may fund losses that should be covered by private insurance. * Taxpayers effectively subsidize insurance underpayments. * FEMA expends resources evaluating and funding projects with unresolved insurance issues. * Applicants may have limited incentive to pursue additional insurance recoveries once FEMA funding becomes available. * FEMA may later be required to de-obligate funds or recover payments after additional insurance proceeds are obtained. * Public confidence in disaster recovery programs may be diminished. Proposed Policy Change #1 Independent Damage Verification Requirement For Public Assistance projects exceeding a predetermined threshold, FEMA should require applicants to obtain an independent damage assessment performed by a qualified professional with no contractual relationship to the insurance carrier. The assessment should: * Document the full scope of disaster-related damages. * Include photographs, measurements, engineering observations, and cost estimates, where applicable. * Be prepared independently of the carrier's adjusters, engineers, consultants, or vendors. * Be submitted to FEMA as part of the insurance documentation package. Where material discrepancies exist between the carrier's assessment and the independent assessment, applicants should demonstrate reasonable efforts to reconcile the difference or pursue additional insurance recovery. Proposed Policy Change #2 Safe Harbor Provision for Insurance Recovery Efforts To encourage compliance without creating unnecessary administrative burdens, FEMA should establish a Safe Harbor Provision. Applicants would be deemed to have satisfied FEMA's requirement to make reasonable efforts to pursue insurance recovery if they: * Obtain an independent damage assessment. * Provide FEMA with both the carrier's assessment and the independent assessment. * Pursue available supplemental claims, appeals, or other reasonable insurance remedies when material discrepancies exist. * Cooperate with FEMA during insurance reconciliation. Applicants meeting these requirements would receive a rebuttable presumption that they have fulfilled their insurance obligations under the Stafford Act and FEMA policy. Benefits of the Proposed Changes These policy enhancements would: * Reinforce FEMA's role as the payer of last resort. * Reduce the use of federal funds for losses that should be covered by insurance. * Increase accountability within the insurance claims process. * Encourage applicants to maximize insurance recoveries before seeking FEMA assistance. * Reduce future de-obligation actions and reconciliation disputes. * Improve stewardship of taxpayer dollars. * Increase transparency and public confidence in disaster recovery programs.