Al Cohen sued Allstate Insurance Company (“Allstate”) and its agent, for breach of contract after Allstate refused to pay a claim for flood damage.

Congress enacted the National Flood Insurance Act of 1968 (“NFIA”) “to make flood insurance available on reasonable terms and to reduce fiscal pressure on federal flood relief efforts.” NFIA established the National Flood Insurance Program (“NFIP”), which permits private insurers, such as Allstate, to issue insurance policies—known as Standard Flood Insurance Policies (“SFIPs”)—on behalf of the federal government.

Under this arrangement, the government underwrites the policies, while carriers act as “fiscal agents of the United States,” by performing administrative tasks, including adjusting, settling, paying, and defending all claims. Private insurers are required to issue policies employing the precise SFIP terms and conditions outlined in FEMA regulations, which also dictate the way private insurers adjust and pay claims.

All SFIP claims are subject to a statute of limitations. 42 U.S.C. § 4072. An individual suing to recover money under an SFIP must initiate the lawsuit “within one year after the date of the written denial of all or part of the claim.” 44 C.F.R. pt. 61, app. A(1), art. VII(R) (“article VII(R)”). The limitations provision applies to any claim brought under the policy and to any dispute arising from the handling of such claim.

In October 2015, Cohen sought to purchase an SFIP from Allstate to cover his house and his detached garage apartment and bought a single policy for both. After a flood on April 18, 2016, which damaged the house and apartment and their contents, Cohen discovered that his SFIP did not cover the apartment or its contents. He notified Allstate of the damage and initiated two claims: one for building damage and another for personal-property damage. Based on an independent adjuster’s report, Allstate determined that the damage under the building policy was $ 55,506.28. On May 27, it sent a proof-of-loss form for that amount. On July 19, Cohen executed Allstate’s original proof-of-loss form for building damage, and Allstate issued payment two days later.

Separate from Cohen’s execution of the proof-of-loss form for building damage, Allstate mailed Cohen another letter (the “July 19 letter”). It purported, inter alia, to (1) “close the personal property portion of [Cohen’s] claim without payment until such time as [Allstate] receive[d] further supporting documentation,” (2) “deny coverage for various items that [Cohen] claim[ed] pending documentation of replacement from [his] prior flood loss,” and (3) “deny coverage for the damage to [Cohen’s] second residence,” a detached garage apartment.

Allstate also dispatched an independent adjuster to evaluate the flood damage; the adjuster made a damage estimate of $ 3,852.13. Allstate sent Cohen a proof-of-loss form for that amount on his personal-property claim, and Cohen executed the form on November 22. Allstate paid on December 2.

Cohen sued on August 14, 2017. The district court granted summary judgment, finding that Cohen’s breach-of-contract claim was barred by the one-year statute of limitations because the July 19 letter constituted a written denial of all or part of his claim.

On appeal, the US Fifth Circuit Court of Appeals recognized that “[t]hose seeking public funds are held to a demanding standard and are expected to comply with statutory requirements. ‘Where federal funds are implicated, the person seeking those funds is obligated to familiarize himself with the legal requirements for receipt of such funds.’ An SFIP claimant ‘must comply strictly with the terms and conditions that Congress has established for payment.’ That includes the relevant limitations period.”

On appeal, Cohen contended that the district erred in granting summary judgment because the purported claim denial in the July 19 letter did not identify any specific item denied. He noted that although no federal court has definitively outlined what constitutes an effective written denial, FEMA requires the insurer to identify the items denied. Consequently, because the July 19 letter merely denied “coverage for various items,” it did not qualify as a written denial of all or part of the claim sufficient to trigger limitations.

Despite Cohen’s contention that the July 19 letter was not a claim denial because it failed to identify specific items of personal property, the Fifth Circuit Court of Appeals noted that he failed to cite a single authority — other than a FEMA Bulletin —in support of that position.

The July 19 letter stated that Allstate was “writing to [Cohen] in regard to the Personal Property Coverage claim submitted under [his] National Flood Insurance Policy #4806043711.” It denied coverage for all or part of his personal property claim, while expressing a willingness to reconsider that disposition upon receipt of additional documentation. That Allstate continued to process Cohen’s claim does not change this conclusion. Consequently, the July 19 letter was a written denial. Because Cohen failed to sue within one year of that denial, the claim is barred by the relevant statute of limitations.

A copy of the decision may be found here.