Flood insurance coverage circumstances typically look deceptively easy from a distance. Water got here in, injury 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 injury occurred. It’s about paperwork, timing, and unforgiving federal guidelines that always collide head-on with the sensible realities of rebuilding after a disaster.
A latest case resolution involving Hartford and a condominium affiliation broken by Hurricane Ian illustrates this present drawback 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 programs. 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 a precise greenback quantity for each extra merchandise it later sought to recuperate.
The court docket 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 cost and swimsuit. Invoices, contractor estimates, engineering studies, 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 circumstances, shut sufficient will not be sufficient relating to submitting the insurance coverage paperwork.
The court docket’s reasoning adopted an extended pattern of federal authority. Flood insurance policies aren’t handled like odd insurance coverage contracts. They’re federal laws backed by the U.S. Treasury. As a result of each greenback paid is a cost in opposition to public funds, courts repeatedly emphasize that policyholders should “flip sq. corners” when in search of cost. Fairness, cooperation, and customary sense give approach to formal compliance. I’ve written about this quite a few instances, together with NFIP Escapes Cost with Type-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 set window, typically earlier than demolition is full, earlier than hidden injury 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 programs fail later. Contamination spreads. Prices escalate. Complete classes of injury are found solely after partitions and flooring are opened.
Beneath this ruling, if these extra damages weren’t captured in a signed and sworn proof of loss inside the deadline, they’re legally misplaced perpetually. 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, crucial, and flood-caused. In the event that they weren’t decreased to a sworn quantity on the suitable type on the proper time, they could as effectively not exist.
This locations policyholders in an inconceivable place. File early and danger being flawed, or look forward to accuracy and danger forfeiture. Guess low and depart cash on the desk, or guess excessive and invite scrutiny and denial. The legislation 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 defend them. Continued adjustment, extra funds, FEMA waivers for particular quantities, and merit-based attraction choices don’t waive the proof-of-loss requirement until FEMA expressly says so in writing. Silence will not be waiver. Course of will not be forgiveness.
For policyholders and public adjusters dealing with these flood losses, the lesson is obvious. In flood claims, the proof of loss is not only paperwork. It’s the declare. If a injury merchandise will not be included in a well timed, signed, sworn proof of loss stating a sum sure, federal courts might by no means permit it to be paid, irrespective of how professional it’s.
This isn’t how most individuals assume insurance coverage ought to work. It’s, nonetheless, how federal flood insurance coverage works, based mostly on interpretation by federal judges. Till Congress or FEMA modifications the system, accuracy and completeness in proofs of loss aren’t aspirational targets. They’re survival necessities which, from a sensible standpoint, aren’t 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 Condominium. Assoc. v. Hartford Ins. Co. of the MidwestNo. 2:24-cv-696 (M.D. Fla. Jan. 14, 2026). (See additionally, Hartford Movement for Abstract Judgmentand Bay Haven Response to Movement for Abstract Judgment).
