The Standard Flood Insurance Policy Is Not a Typical Property Policy
Many insureds—including sophisticated corporate policyholders—assume that FEMA’s Standard Flood Insurance Policy (“SFIP”) functions like a traditional commercial property policy. It does not.
That assumption can be fatal to an otherwise valid flood claim. The SFIP is a federally codified policy governed strictly by statutory and regulatory requirements, and courts enforce those requirements rigorously. Failure to comply—often on purely procedural grounds—can bar recovery entirely, regardless of the merits of the claim.
For in-house counsel overseeing flood claims, understanding how the SFIP differs from standard property insurance is critical to avoiding early and irreversible missteps.
A Brief Overview of the SFIP and Why It Is Different
Congress established the National Flood Insurance Program (“NFIP”) to provide flood insurance coverage in participating communities. The program is administered by FEMA pursuant to federal statute and regulation. The terms of the SFIP are codified in federal regulations and have the force of federal law.
Although private insurers may issue and service SFIP policies through FEMA’s “Write Your Own” program, those insurers act as fiscal agents of the federal government. Claims payments are reimbursed directly from the U.S. Treasury.
Because SFIP claims involve federal funds, courts require strict compliance with the policy’s terms. Substantial compliance is insufficient, and failure to adhere to the SFIP’s procedural requirements deprives courts of authority to award benefits.
Two Common (and Often Fatal) Errors in SFIP Claims
Although the SFIP contains numerous technical requirements, two errors most commonly derail claims before they ever reach the merits:
- Failure to submit a timely, signed, and sworn proof of loss
- Failure to file suit within the applicable federal statute of limitations
Both are strictly enforced, and neither can be cured after the deadline passes.
Proof of Loss Requirements Under the SFIP
The SFIP requires insureds to submit a signed and sworn proof of loss within 60 days of the loss, unless FEMA issues a waiver extending that deadline. See 44 C.F.R. pt. 61, app. A(2), art. VII(G)(4).
The proof of loss must state the amount claimed and include supporting information such as:
- The date and time of the loss
- A brief explanation of how the loss occurred
- The insured’s interest in the damaged property and any interests of others
- Details of other insurance covering the loss
- Changes in title or occupancy during the policy term
- Specifications of damaged buildings and detailed repair estimates
- The names of any mortgagees or lienholders
- Information regarding occupancy at the time of loss
- An inventory of damaged personal property, where applicable
See 44 C.F.R. pt. 61, app. A(2), art. VII(G)(4)(a)–(i).
Courts consistently hold that failure to submit a compliant proof of loss within the required timeframe bars recovery—even where the carrier has investigated the claim or made partial payments.
What This Means for In-House Counsel
From a risk-management perspective, SFIP claims require immediate and disciplined coordination. To meet FEMA’s deadlines, insureds should begin working with adjusters, contractors, and internal stakeholders as soon as possible following a flood event.
Documentation must be organized, complete, and tracked carefully. Repair estimates, invoices, and damage assessments should be prepared with the SFIP’s technical requirements in mind—not merely standard commercial claims practices.
Although FEMA frequently issues waivers extending the proof-of-loss deadline following major disasters, those waivers are limited and strictly construed. Absent an applicable waiver, the 60-day deadline remains controlling. See 44 C.F.R. § 61.13(d).
The One-Year Statute of Limitations—and Why It Traps Insureds
The SFIP contains a strict federal statute of limitations. An insured must file suit within one year of the date of the written denial of all or part of the claim. See 44 C.F.R. pt. 61, app. A(2), art. VII(O).
Critically:
- The limitations period begins to run upon the first denial, partial denial, or rejection of the proof of loss
- Subsequent payments or correspondence do not toll or reset the deadline
- Courts have held that letters purporting not to be a “denial” may nevertheless trigger the statute of limitations[1]
As a result, insureds can lose the right to sue while continuing to engage in the claims process.
In-house counsel should ensure that all written correspondence from the issuing carrier is promptly requested and reviewed so the limitations period can be accurately calculated.
Avoid Sinking a Flood Claim Before Suit Is Ever Filed
SFIP litigation is federal litigation by design, and federal courts strictly enforce the policy’s procedural requirements. Treating an SFIP claim like a standard property claim can result in forfeiture of coverage long before a complaint is filed.
For in-house counsel, early engagement, strict deadline management, and coordination with experienced coverage counsel are essential to preserving flood claims and avoiding the policy’s pitfalls.
[1] Migliaro v. Fidelity National Indemnity Insurance Company, 880 F.3d 660 (3d Cir. 2018)
