Denial of Flood Claim Starts the Limitation Period Running

Post number 5324

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Unlike Insurance Companies the NFPA is Enforced Strictly

Unlike Insurance Companies the NFPA is Enforced Strictly
In ZOZO Investments LLC, Bertie & Neeka LLC, Foreign Limited Liability Companies v. First Community Insurance Company, a Florida Corporation, No. 25-12492, United States Court of Appeals, Eleventh Circuit (April 15, 2026) Zozo Investments LLC and Bertie & Neeka LLC (“Zozo”) owned property in Fort Myers Beach, Florida, insured under the National Flood Insurance Program (NFIP) through First Community Insurance Company (“First Community”) and appealed the dismissal of their suit when their claim was denied..

FACTS

After the property suffered flood damage from Hurricane Ian, Zozo filed a claim. First Community initially paid the claim but later stopped payment and withdrew the funds. On March 13, 2023, First Community sent a denial letter.

Zozo responded with a sworn proof of loss to appeal, but First Community issued a second denial on October 19, 2023. Zozo filed suit on October 4, 2024, less than a year after the second denial but more than a year after the first.

LAW

The central legal issue involves 42 U.S.C. § 4072, which requires that claimants challenge the denial of “any claims for proved and approved losses” within one year after notice of denial is mailed. The question is whether the loss must be “proved” by a sworn proof of loss before the denial, or if the claim is considered “proved” upon the initial denial regardless of such proof.

DISCUSSION & ANALYSIS

Congress enacted the National Flood Insurance Act of 1968 (NFIA), which authorized the establishment of the National Flood Insurance Program” (NFIP). The NFIP is managed by the Federal Emergency Management Agency (FEMA). The NFIP provides Standard Flood Insurance Policies (SFIPs) to property owners. FEMA uses private insurers-like First Community-to issue SFIPs and to process SFIP claims on FEMA’s behalf, under terms and conditions controlled the NFIA and its corresponding regulations. The claims are paid out of the U.S. Treasury.

First Community moved to dismiss, arguing that more than year had elapsed since it mailed the first denial letter, so Zozo’s action was time-barred by Section 4072.

The NFIA grants FEMA the authority to adjust and disallow any claims for proved and approved losses covered by flood insurance. Further, upon the disallowance by the Administrator of any such claim, or upon the refusal of the claimant to accept the amount allowed upon any such claim, the claimant, within one year after the date of mailing of notice of disallowance or partial disallowance by the Administrator, may institute an action against the Administrator on such claim in the United States district court.

The Eleventh Circuit Court of Appeals examined whether Zozo’s loss was “proved” for purposes of § 4072 at the time of the first denial letter, or only after Zozo submitted a sworn proof of loss. If the loss was “proved” at the first denial, the one-year statute of limitations began then, making Zozo’s suit time-barred.

If a sworn proof of loss was required to “prove” the loss, the clock started with the second denial, allowing Zozo’s suit to proceed. The district court concluded that a sworn proof of loss was not required for a loss to be “proved” under the statute, so the limitations period began with the first denial.

CONCLUSION

The Eleventh Circuit affirmed the district court’s decision, holding that Zozo’s loss was “proved” without a sworn proof of loss, and the suit was therefore barred by the one-year limitations period in 42 U.S.C. § 4072.

The district court’s dismissal of the case with prejudice was AFFIRMED.

ZALMA OPINION

Normal insurance policies issued by corporate insurers have private limitation of action provisions that are applied with courtesy and warnings with courts giving empathy to those who fail to sue within the private limitation. Since the money to pay claims under an NFPA policy comes from the US Treasury US District Courts act differently, they interpret the private limitation of action strictly. As a result the plaintiff, who filed suit more than a year after denial, had their suit dismissed.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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