On Sunday, Whistleblower wrote about Rick and Pam Grey, a couple whose retirement home near Duluth suffered extensive damage in a record-breaking June flood. Though they were insured against flood damage by Auto-Owners Insurance, headquartered in Denver, the insurer told the Greys that it had mistakenly issued the policy and would not honor their flood claim.

Rick Grey said Auto-Owners told him to get a lawyer.

Two days after the article was published, Grey received a call from Auto-Owners, Grey said. The company told him that while it was not resposible for the mistake, it is moving forward on paying the claim, according to Grey. The house was insured for $150,000 and the contents for $60,000. The policy lists replacement cost as $139,000. Grey said the company is currently offering less than $60,000, citing depreciation of the three-year-old house.

Read the full article here.

Whistleblower has subsequently heard from John Lindauer at Auto-Owners.

". . . we are honoring their flood insurance policy. The Greys have every right to expect coverage for their policy, and Auto-Owners will honor that. A licensed and FEMA-approved claim representative is working with the Greys toward a final estimate of the damages. We understand that the representative has been in contact with them. We will handle this fairly and appropriately according to the conditions and terms of their policy," Lindauer wrote.

Lindauer also pointed out that FEMA is the actual provider of the insurance, Auto-Owners being the "conduit" and said it was FEMA who denied the claim. He added that at the time the policy was issued in 2009, Auto-Owners relied on the most recent FEMA floodplain map, produced in 1991 when the Greys' land was in an unincorporated area of Pine County designated as eligible for insurance.

FEMA told Whistleblower last week that insurance companies that provide flood insurance policies are responsible for issuing a valid policy and that may entail checking local goverment records at the time of issuance to determine eligibility.

Lindauer wrote that the insurance company was never told by Sturgeon Lake officials or FEMA that the Greys were ineligible for coverage, though the state's floodplain coordinator, Ceil Strauss said she notified the city and FEMA in 2010 of the issue.

"We are addressing these issues with the government entities. The Greys have a right to expect coverage. We will honor this policy with or without the support of FEMA," Lindauer wrote.