Appeals Court Sets 1-Year Limit On Flood Insurance Claim Lawsuits

Jan. 31--Suing an insurance company over a flood insurance claim converts the company's last written decision into a denial of your claim regardless of what the letter said, a three-judge panel of the U.S. Third Circuit Court of Appeals ruled this week.

Consequently, you have only one year from that decision, instead of the normal two, to file that lawsuit under the federal law that established the program, the court ruled.

The decision sets a precedent for all federal courts in the Third Circuit, which covers Pennsylvania, Delaware, New Jersey and the Virgin Islands.

The government pays all claims under the National Flood Insurance Program, but private insurers handle the paperwork as agents for the government. The law setting up the program gives homeowners one year to sue if they want to challenge a partial or complete denial of a claim.

The clock starts ticking with the written notice of the company's decision even if that letter says, "This is not a denial of your claim," the appellate court ruled in a New Jersey case where a property owner disagreed with the amount Fidelity National Indemnity Insurance Co. paid him for damage Hurricane Sandy caused in 2012.

The July 15, 2013, letter rejecting his "proof of loss" included the sentence that it wasn't a claim denial.

Under his policy, the man had several options other than filing a lawsuit but didn't follow any of them, the court said in its ruling. Instead, he waited almost two years before filing his lawsuit.

Fidelity argued that the letter was clearly a denial of the man's claim and triggered the one-year statute of limitations. The man said that since the letter said it wasn't a denial, it didn't trigger the statute of limitations and he could file a lawsuit at any time.

The court disagreed with both sides. If the man had pursued one of the other options, the letter wouldn't have constituted a denial. But he "closed the door by failing to seek an appraisal, file an amended proof of loss within sixty days or submit additional documentation."

Brian Bowling is a Tribune-Review staff writer. Reach him at 724-850-1218, [email protected] or via Twitter @TribBrian.

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