The panelists warned that most policyholders are likely underinsured and won’t receive enough money to fully rebuild, but they repeatedly warned policyholders not to take Federal Emergency Management Agency funds.
“FEMA cannot help you with losses covered by insurance,” Riddle said, adding that’s true even if a policyholder has a high deductible.
Although FEMA provides coverage for uninsured and underinsured fire victims, the government doesn’t clearly define what it considers underinsured, and in many instances, FEMA will demand money back if the agency learns a fire victim has any kind of insurance, panelists said. In those instances, policyholders could not only be forced to return FEMA funds, but they can also be charged with a misdemeanor, panelists said.
“And when FEMA comes to you and asks for the money back, it does not ask nicely,” Riddle said. “They come back at you saying, ‘You defrauded the federal government by taking funds you should have not.'”
Any fire victim who is insured and has already received FEMA funds should immediately notify and disclose their insurance policy to FEMA and document their communications with FEMA, the panelists said. Riddle also noted that FEMA funds cannot be used to pay for items that were funded by GoFundMe or other donations.
