National Flood Insurance Program And Limitations

Lawyers who handle National Flood Insurance Program claims, otherwise known as the National Flood Insurance Act of 1968 (NFIA) need to understand the difference between NFIA claims and other insurance claims.  One of the big differences is the shortened statute of limitations that applies to NFIA claims.

This is illustrated in a U.S. Fifth Circuit Court of Appeals opinion styled, Al Cohen v. Allstate Insurance Company; Rachael G. Ray.

NFIA was created 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 allows private insurance companies such as Allstate, to issue insurance policies on behalf of the federal government.  These companies are called Write Your Own (WYO) carriers.

The government underwrites the polices, while WYO carriers act as fiscal agents of the United States government, by performing administrative tasks, including adjusting, settling, paying, and defending all claims.  Private insurance companies, such as Allstate, 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.  While the central role played in these policies is by WYO insurance carriers, the claims are paid from the U.S.Treasury.

Pursuant to 42 U.S.C., Section 4072, all SFIP claims are subject to a statute of limitations.  Pursuant to 44 C.F.R. pt. 6, app.A(1), 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.  This limitations provision applies to any claim brought under the policy and to any dispute arising from the handling of the claim.

The Court then went through the timeline applicable to this case and ruled against Cohen based on the passing of the statute of limitations.