The title of this post is not correct. But it is safer than saying the correct rule of law. A recent order dismissing a case involving a claim brought under the National Flood Insurance Program (NFIP) for failing to bring suit within the one-year limitations time shows why my practical rule may be better than the more liberal and correct rule of law. 1
Like so many policyholders and public adjusters, the policyholders in the case understandably wanted to avoid litigation. They engaged in months of discussion with NFIP adjusters and even filed an administrative appeal regarding their claim. However, doing all these activities to avoid a lawsuit may result in being unable to bring a lawsuit.
The rule of law regarding the deadline to file a lawsuit for an NFIP claim was stated by the court as follows:
When Congress created the NFIP, it gave policyholders a limited private right of action to challenge the denial of a claim in federal court. 42 U.S.C. § 4072. Every SFIP specifies that ‘[i]f you do sue, you must start the suit within 1 year after the date of the written denial of all or part of the claim, and you must file the suit in the United States District Court of the district in which the insured property was located at the time of the loss.’ 44 C.F.R. pt. 61, app. A(1), art VII(O) (emphasis added). The National Flood Insurance Act similarly requires that lawsuits against FEMA administrators be filed ‘within one year after the date of mailing of notice of disallowance or partial disallowance by the Administrator.’ 42 U.S.C. § 4072.
The “partial disallowance” is what causes so many to blow the statute of limitations and cause me to say it is safer to write down one year from the date of loss. The problem is that there is not a certain date, and because of that, claimants do not believe a partial denial has occurred or overlook that a “partial denial” has technically occurred. For public adjusters, it is much easier to place in your claim software (I endorse Claims Wizard software because it is the best and has a very cool name I can relate to) that the statute of limitations is one year from the date of loss. You can never go wrong if you do.
This is what the court noted about determining whether a partial denial has been made:
To determine whether a letter is a partial written denial, courts closely examine the letter’s content. See, e.g., Brusco, 2014 WL 2916716, at *6 (finding that a letter ‘denying all non-covered items located in the basement,’ and referring to the letter as a ‘decision to deny your claim,’ constituted a partial written denial, despite its enclosed partial payment); Cohen v. Allstate Ins. Co., No. H-17-2484, 2018 WL 1144761 (S.D. Tex. Mar. 2, 2018) (finding that a letter ‘deny[ing] coverage for various items that you are claiming pending documentation of replacement,’ and informing plaintiff of their right to appeal ‘within 60 days of this denial letter,’ was an express denial), aff’d 924 F.3d 776 (5th Cir. 2019); McInnis v. Liberty Mutual Fire Ins. Co., No. 22-30022, 2022 WL 4594609 (5th Cir. 2022) (finding that a letter informing plaintiff that certain items ‘were not able to be included in your claim,’ that defendant was ‘deny[ing] coverage’ for those items, and that plaintiff had a right to appeal, was a partial denial).
Even if the adjusters continue to engage in dialogue and even pay more on the claim, it does not extend the time frame from the partial denial:
The fact that the Palmers continued to ‘provide[ ] any and all requested documents’ to Selective after receiving the 2021 letter does not alter our conclusion. See Lionheart Holding GRP v. Phila Contribution Ship Ins. Co., 368 F. App’x 282, 284-85 (3d Cir. 2010) (holding that a June 2005 partial denial letter triggered the statute of limitations even though the parties continued to engage in a ‘lengthy … investigation and adjustment process’ for claims related to the same flooding event); Malik, 2024 WL 1635687 (finding that a November 2021 letter constituted a partial denial, and ‘Plaintiff’s argument that a subsequent denial of Plaintiff’s claim starts the tolling of the statute of limitations is unavailing.’); Cohen v. Allstate Ins. Co., 924 F.3d 776, 782 (5th Cir. 2019) (‘That Allstate continued to process Cohen’s claim does not change this conclusion [that the claim is time-barred].’).
The practical result is that even innocuous letters referencing not paying for various items can be argued to be “partial denial” letters. When the initial payments are made, the letters often explain what is not being paid for, and those are partial denial letters.
I made this warning to everybody dealing with NFIP claims in National Flood Lessons: Strict Enforcement of Deadlines Dooms Policyholder’s Flood Claim—A Reopened Claim Does Not Stop the Ticking Time Bomb:
Policyholders and public adjusters need to be aware that National Flood Insurance claims are very technical with demanding deadlines that must be met. While speaking in a webinar last night, I kept repeating the mantra—file the proof of loss exactly right, delivering it on time to the insurer and with all documentation on a filled out NFIP form. Filing a lawsuit on time if there is a dispute was also discussed because even that can be tricky. For example, a written letter indicating the claim is reopened does not mean that a prior written partial denial is to be ignored when determining the one-year limitation to file a federal lawsuit.
My mother often gave me sage advice after observing my nature as a child: “Chip, why not be safe rather than sorry?” I think that is good advice when dealing with NFIP deadlines.
Thought For The Day
“An ounce of prevention is worth a pound of cure.”
—Benjamin Franklin
1 Palmer v. Selective Ins. Co., No. 24-1599, 2024 WL 5126265 (E.D. Penn. Dec. 16, 2024).