Flood insurance coverage instances typically look deceptively easy from a distance. Water got here in, harm occurred, repairs have been required, and insurance coverage ought to reply. However anybody who has dealt with Nationwide Flood Insurance coverage Program claims is aware of that the actual battle isn’t about whether or not flood harm occurred. It’s about paperwork, timing, and unforgiving federal guidelines that usually collide head-on with the sensible realities of rebuilding after a disaster.
A latest case determination involving Hartford and a condominium affiliation broken by Hurricane Ian illustrates this present downside with the Nationwide Flood Insurance coverage Program. 1 The case didn’t activate whether or not the buildings flooded. It didn’t activate whether or not Class 3 water contaminated drywall, flooring, or mechanical methods. It didn’t even activate whether or not the insurer and FEMA reviewed the extra claimed damages on the deserves. As an alternative, the case turned on whether or not the policyholder filed a signed and sworn proof of loss stating an actual greenback quantity for each further merchandise it later sought to get well.
The courtroom granted abstract judgment to Hartford, holding that, beneath the Commonplace Flood Insurance coverage Coverage, strict compliance with the proof-of-loss requirement is a situation precedent to each fee and go well with. Invoices, contractor estimates, engineering stories, FEMA appeals, and ongoing adjustment exercise have been all deemed legally inadequate substitutes for a sworn proof of loss stating a sum sure. In federal flood instances, shut sufficient is just not sufficient with regards to submitting the insurance coverage paperwork.
The courtroom’s reasoning adopted a protracted development of federal authority. Flood insurance policies usually are not handled like unusual insurance coverage contracts. They’re federal laws backed by the U.S. Treasury. As a result of each greenback paid is a cost towards public funds, courts repeatedly emphasize that policyholders should “flip sq. corners” when in search of fee. Fairness, cooperation, and customary sense give option to formal compliance. I’ve written about this quite a few occasions, together with NFIP Escapes Fee with Kind-Over-Substance Guidelines—The Want For Reform of the Nationwide Flood Insurance coverage Program.
What makes this ruling particularly troubling is how divorced it’s from the way in which flood losses truly unfold. Even with FEMA extensions, policyholders are anticipated to submit exact proofs of loss inside a hard and fast window, typically earlier than demolition is full, earlier than hidden harm is found, and lengthy earlier than reconstruction pricing stabilizes. Anybody who has dealt with a critical flood loss is aware of that development work routinely takes months, not weeks. Mechanical methods fail later. Contamination spreads. Prices escalate. Total classes of injury are found solely after partitions and flooring are opened.
Beneath this ruling, if these further damages weren’t captured in a signed and sworn proof of loss inside the deadline, they’re legally misplaced eternally. It doesn’t matter if the insurer knew about them. It doesn’t matter if FEMA reviewed them on attraction. It doesn’t matter if the damages have been actual, obligatory, and flood-caused. In the event that they weren’t decreased to a sworn quantity on the correct type on the proper time, they may as nicely not exist.
This locations policyholders in an unattainable place. File early and threat being improper, or look ahead to accuracy and threat forfeiture. Guess low and depart cash on the desk, or guess excessive and invite scrutiny and denial. The regulation calls for certainty at exactly the second when certainty is least achievable.
The choice additionally sends a message to policyholders who imagine cooperation with adjusters and FEMA will shield them. Continued adjustment, further funds, FEMA waivers for particular quantities, and merit-based attraction choices don’t waive the proof-of-loss requirement except FEMA expressly says so in writing. Silence is just not waiver. Course of is just not forgiveness.
For policyholders and public adjusters dealing with these flood losses, the lesson is evident. In flood claims, the proof of loss is not only paperwork. It’s the declare. If a harm merchandise is just not included in a well timed, signed, sworn proof of loss stating a sum sure, federal courts could by no means permit it to be paid, regardless of how professional it’s.
This isn’t how most individuals suppose insurance coverage ought to work. It’s, nonetheless, how federal flood insurance coverage works, primarily based on interpretation by federal judges. Till Congress or FEMA adjustments the system, accuracy and completeness in proofs of loss usually are not aspirational objectives. They’re survival necessities which, from a sensible standpoint, usually are not going to be met.
Thought for the Day
“In a flood of evils, when the boat is low, the very first thing thrown overboard is dignity.”
— Aristotle
1 Bay Haven at Coco Bay Rental. Assoc. v. Hartford Ins. Co. of the Midwest, No. 2:24-cv-696 (M.D. Fla. Jan. 14, 2026). (See additionally, Hartford Movement for Abstract Judgment, and Bay Haven Response to Movement for Abstract Judgment).