Chapter 6 › XX.A Insurance Proceeds

How does insurance affect our FEMA funding?

FEMA term

Insurance reductions; duplication of benefits

Short answer

FEMA cannot duplicate insurance. It reduces eligible costs by actual insurance proceeds, or by anticipated proceeds under your policy until the claim settles, then adjusts. You must make reasonable efforts to pursue the claim.

What FEMA requires

FEMA limits funding if your policy provides coverage you should pursue.
Reasonable costs of pursuing a larger settlement can offset the reduction, if tied to FEMA-eligible work and documented as winning more than the first offer.
If proceeds cover both eligible and ineligible losses, such as business interruption, FEMA apportions them by settlement allocation, policy limits or the ratio of eligible to ineligible losses.

Documentation

Policies: property, auto, flood, wind, and self-insurance or self-insured retention.
Policy documents: declaration pages, schedule of covered locations, forms and endorsements, inland marine and equipment breakdown sections.
Settlement records, as soon as available: final statement of loss, adjuster estimates, settlement checks, correspondence on allocation, and any denial letter.

Source: PAPPG Table 19. See also FEMA Recovery Policy FP 206-086-1.

Watch out · Govstar practitioner advice

Get the insurer’s allocation of the settlement in writing. Without it, FEMA applies its own formula, often to your disadvantage.

Govstar summarizes FEMA’s Public Assistance Program and Policy Guide in plain language and links to the official text. Govstar is independent and not affiliated with FEMA. This is general guidance, not legal advice.