A United States District Court ruled that an NFIP insured who failed to provide proof of loss was not entitled to federal funds. The case is Bay Haven at Coco Bay Condo. Ass'n v. Hartford Ins. Co. of the Midwest, 2026 U.S. Dist. LEXIS 6847 (M.D. Fla. 2026).
Background
Bay Haven manages condominium buildings in Fort Myers, Florida, which sustained significant flood damage during Hurricane Ian in September 2022. Its flood insurance was written by Hartford Insurance Company. Hartford was operating as a "Write-Your-Own" carrier, acting as a fiscal agent that managed NFIP policies and handled claims while paying with federal funds.
Following Hurricane Ian in September 2022, there was widespread flood damage to Bay Haven's properties. Due to how catastrophic the hurricane was, FEMA extended the standard 60-day deadline to file a proof of loss to a full year, or until September 28, 2023.
However, Bay Haven missed the extended deadline, submitting a signed and sworn proof of loss in November 2023. Hartford requested a limited waiver from FEMA to pay the late claims.
FEMA agreed to the waiver, with limitations. The waiver applied to specific amounts in the November requests but maintained the standard proof of loss requirement for all other claims.
Bay Haven sought additional funds for items like ceramic tile replacement and HVAC line sets, submitting invoices and estimates but no sworn proof of loss. Bay Haven sued Hartford for the additional amounts it believed it was owed. Hartford moved for summary judgment.
National Flood Insurance Program
The court first noted that it is important to make the distinction between a typical insurance policy and the Hartford policy, which was a flood policy issued through the NFIP. Hartford was not acting as a typical insurance carrier, but as a fiscal agent of the United States.
The court noted that because policies are paid using the public treasury, they are governed by federal regulation. Federal law requires NFIP policies to be treated differently from standard homeowners policies. In order to access federal funds, claimants must strictly adhere to the conditions set by Congress.
The court stated that "the standard flood insurance policy imposes a clear and non-negotiable obligation on the insured to substantiate their claim." The proof of loss must be submitted within 60 days, or in this situation, within the extended deadline of one year.
Sworn Proof of Loss
Bay Haven failed to submit a sworn proof of loss within the deadline. Bay Haven argued that although it did not submit a proof of loss, it substantially complied with the requirement by sending Hartford contractor invoices, environmental labor reports, HVAC estimates, and a detailed FEMA appeal letter. Bay Haven argued that it complied with the spirit of the contract.
However, the court was not convinced. It noted that the documents submitted by Bay Haven may have been enough if the policy were in the private market, but NFIP flood policy requirements must be strictly adhered to.
The court noted that a sworn proof of loss is essential to the claims process. A proof of loss is a signed statement by the insured that details the exact amount claimed and includes information about the damaged property and repair estimates. The documents submitted by Bay Haven were not functionally equivalent to a proof of loss.
The court concluded, "In this arena, close enough is not enough; strict compliance is the price of admission. Because Bay Haven failed to submit a sworn proof of loss for the additional damages it now seeks, it has not met the conditions needed for payment."
Bay Haven also argued that because FEMA reviewed its appeal on its merits and discussed scope and pricing rather than immediately rejecting it for a missing form, the proof of loss requirement was waived. The court rejected this, noting that for federal flood insurance contracts, silence is not a waiver. A waiver must be express and in writing.
Editor's Note
As the court pointed out, this case may have gone differently if the insurance contract in question had been from the private market as opposed to an NFIP policy. Because NFIP policies are paid using federal funds, they must strictly adhere to the conditions set by Congress.
Even though Bay Haven produced a large number of documents to Hartford, the court determined they were not functionally equivalent to a sworn and signed proof of loss. Since the proof of loss was not submitted within the extended deadline, the court ruled that Bay Haven was not entitled to coverage.
All policies contain specific duties after a loss that the insured is required to perform in order for a claim to be considered. If the failure to perform the duties is prejudicial to the insurer, then the insurer has no duty to provide coverage. One of those duties is the provision of a signed, sworn proof of loss form that sets forth the time and cause of loss, specifications of damaged property and repair estimates, and other information. Adherence to the duties after a loss is an important part of submitting a claim to an insurer.
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This article originally appeared on FC&S Expert Coverage Interpretation and may not be reprinted.
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