When the Unthinkable happens Subrecipients have their ducks in a row? Property Insurance must be in effect at the time of a Natural Disaster. When facing Hurricanes, Floods, Wildfires, Tornadoes, Ice Storms or Earthquakes – communities often face not just emotional loss but also staggering financial damage. Two key sources of recovery funding are property insurance and FEMA Public Assistance (PA) Grants, but investigating the overlap between the two can be challenging. In this post, we’ll break down how these resources work, how they interact, and what public entities and private nonprofits need to keep in mind.
What is Property Insurance?
Property insurance covers damage to buildings, equipment, and other physical assets caused by covered perils such as fires, windstorms, earthquakes or vandalism. This includes:
- Commercial Property Insurance (for businesses)
- Homeowners Insurance
- Flood Insurance (usually through the National Flood Insurance Program)
- Specialized Policies for schools, utilities, government agencies, or municipalities
Property Insurance is typically the first line of financial defense after a disaster. However, not all types of property damage are covered. Deductibles, policy conditions or policies limits, statute of limitations and local ordinances among others can leave serious gaps.
What is the FEMA Public Assistance (PA) Grant Program?
FEMA’s PA Program provides federal grants to state, local, tribal, and territorial governments and certain private nonprofits (like hospitals and schools) for:
- Debris Removal
- Emergency Protective Measures
- Permanent repairs to damaged Public Infrastructure (roads, utilities, buildings)
Importantly, the FEMA PA Program does not duplicate insurance coverage. FEMA is the payer of last resort –which means if insurance can cover something, it must be used before the PA funds are applied.
How Do Property Insurance and FEMA PA Grants Work Together?
The interaction between the two systems is complex, but there are key principles:
- First, file an insurance claim. FEMA requires applicants to pursue insurance settlements first.
- Report anticipated insurance proceeds to FEMA.
- FEMA will only reimburse costs not covered by the Property Insurance Company (like deductibles or uninsured damages)
- Coordination is critical. Mistakes or delays in reporting insurance information can slow down or reduce your PA award. When in doubt First Party Law Firms are a practical resource.
Common Challenges and Tips
- Delayed Insurance Settlements: It can take months to finalize an insurance payout. FEMA may provide interim funding, but the subrecipient needs to “true up” the records when insurance payments come in.TIP: Maintain detailed records of all claims and communications with the insurance agent and the insurer.
- Undocumented Damages: Keep in mind that insurance adjusters might miss hidden damage or exclude items FEMA might consider eligible.
TIP: Work with both your Insurance Company and your FEMA Program Delivery Manager (PDMG) to ensure comprehensive damage assessments.
- Non-duplication of Benefits (NOBs); FEMA carefully audits to make sure it’s not reimbursing for what insurance already paid.
TIP: Transparency is crucial. Misreporting can result in deobligation or clawback of FEMA funds.
Preparation Wins Every Time!
Both Property Insurance and FEMA PA Grants play vital roles in disaster recovery, but they work best when the Subrecipient understands the rules of engagement:
- Insure what you can – Choosing a qualified Insurance Agent is a key. FEMA won’t backstop uninsured losses that should have been covered.
- Documentation, Documentation, Documentation – photos are never enough! Keep receipts, adjuster reports, save the emails and correspondence with the Property Insurance Company and the Assigned Insurance Adjusters.
- Engage early – Notify the Property Insurance Company, the Insurance Agent in record and FEMA as soon as possible to avoid delays or potential denials due to policy condition violations.
- FEMA requires the Subrecipient to keep the Property Policy in effect without a lapse in coverage.
Need Help Navigating the FEMA PA Process?
We at ARC with our Blue Ocean Strategy concierge approach are here to assist with documentation, FEMA PA eligibility reviews, oversite and strategically bring projects to completion with our funding program utilizing the FEMA funds as the collateral.
Contact us Today: (800) 481-3607 or (407) 967-1950
Email: ArcNews@alternativerecoveryconsulting.com
More about the Author:
Hernando a graduate of UCONN with a postgraduate degree from the Insurance Institute of America, is a Court qualified storm damage assessment expert witness, former General Adjuster serving the National Flood Insurance Program is a dynamic leader with extensive experience in Commercial and Residential insurance property claims having served in both sides of the fence, natural disaster response, and strategic planning. With 42 years of expertise, he has guided organizations through high-stakes scenarios, including catastrophic events, by designing and executing effective response strategies that ensure business continuity and customer support. A co-author of ARC’s Blue Ocean Strategy implementation, Hernando has a proven ability to identify innovative solutions and untapped opportunities, driving operational excellence and sustainable growth from a unique and extraordinary perspective. He is passionate about fostering resilience through immediate critical emergency response solutions, mitigating risks, and delivering proactive storm hardening strategies that help organizations navigate the complexities of natural disaster recovery and beyond.