A current resolution provides classes for policyholders beneath the Nationwide Flood Insurance coverage Program. In Zozo Investments LLC and Bertie & Neeka LLC v. First Neighborhood Insurance coverage Firm, the court docket dismissed a breach of contract go well with with prejudice, discovering that the plaintiffs filed their case too late beneath the strict closing dates imposed by federal legislation. 1
The plaintiffs owned property that was broken by flooding throughout Hurricane Ian. On the time of the loss, they had been coated by a Normal Flood Insurance coverage Coverage issued by First Neighborhood Insurance coverage Firm, a write-your-own program service collaborating within the Nationwide Flood Insurance coverage Program. After submitting a declare for the injury, they initially obtained a verify from the insurer. Nevertheless, that cost was later withdrawn, and on March 13, 2023, the insurer mailed a denial letter explaining that the declare was being rejected because of a previous cost made by Residents Property Insurance coverage Company that exceeded the pre-loss valuation of the property. The denial appeared to be an invalid purpose for the nationwide flood service to disclaim the declare, for my part.
Months later, after the plaintiffs submitted a sworn proof of loss, the insurer despatched a second denial letter on October 19, 2023. The plaintiffs filed go well with on October 4, 2024, asserting that the denial breached the insurance coverage contract and that they had been entitled to cost for his or her losses. They argued that the statute of limitations mustn’t have begun working till the second denial was issued, for the reason that earlier letter had not been primarily based on a sworn proof of loss.
The court docket disagreed. Citing 42 U.S.C. § 4072 and the phrases of the Normal Flood Insurance coverage Coverage, the court docket emphasised that policyholders should file any lawsuit inside one 12 months from the date a written denial is mailed. It discovered the March 13 letter was a transparent denial, explicitly informing the plaintiffs that their declare cost was denied and that they’d 60 days to enchantment. The court docket rejected the notion {that a} denial should be primarily based on a sworn proof of loss to set off the constraints interval. In actual fact, it cited a number of selections throughout the Center District of Florida that uniformly maintain the statute of limitations begins to run upon the primary written denial, no matter whether or not a proof of loss was concerned.
The plaintiffs relied on older authority from the Jap District of Louisiana that supported their place, however the court docket identified that the Fifth Circuit had since disapproved that line of reasoning, clarifying that Part 4072 doesn’t point out proof of loss in any respect. The primary denial letter, not the denial of the proof of loss, began the one-year clock. As a result of the lawsuit was filed greater than a 12 months after the March 13, 2023, denial, it was time-barred and needed to be dismissed.
Not like many insurance coverage disputes ruled by state legislation, NFIP claims are topic to federal statutes and rules that impose inflexible deadlines. As soon as a denial letter is mailed, the policyholder has precisely one 12 months to file go well with in federal court docket. There are not any tolling provisions or extensions primarily based on subsequent correspondence, together with denials primarily based on proofs of loss. Policyholders and their attorneys should deal with the primary denial letter as the beginning of the countdown. Delaying the choice to pursue litigation, even whereas submitting extra documentation or partaking in additional dialogue with the insurer, may be deadly.
The important thing lesson is that with nationwide flood insurance coverage disputes, timing is every little thing. The second a denial letter arrives, the authorized clock begins ticking. Any lawyer or public adjuster aiding a consumer with an NFIP declare should rigorously monitor that date. Ready too lengthy to file go well with, even with good-faith efforts to resolve the declare, will outcome within the courthouse doorways closing completely. That’s the onerous rule, and this case serves as one other agency reminder that it will likely be strictly enforced.
Thought For The Day
“Higher three hours too quickly than a minute too late.”
– William Shakespeare
1 Zozo Investments v. First Neighborhood Ins. Co., No. 2:24-cv-939 (M.D. Fla. June 25, 2025).
