Failure to file proof of loss doomed claim for hurricane damage

A court ruled that the insureds could not recover payments under their flood insurance policy to cover Hurricane Irma damage.

Mobile homes stand in a flooded neighborhood in Bonita Springs, Florida, U.S., on Tuesday, Sept. 12, 2017. Hurricane Irma smashed into Southern Florida as a Category 4 storm, driving a wall of water and violent winds ashore and marking the first time since 1964 the U.S. was hit by back-to-back major hurricanes. (Photo: Daniel Acker/Bloomberg)

A federal district court in Florida has ruled that insureds could not recover supplemental payments under their standard flood insurance policy (SFIP) because they did not file a sworn proof of loss — even if their insurer did not let them know that they had to do so.

Failure to file sworn proof of loss

Joseph and Grace Zumpano asserted that their home in Tavernier, Florida, suffered damage due to flooding after Hurricane Irma went through the area on September 10, 2017.

They reported a flood claim for the property  to American Bankers Insurance Company of Florida, which had issued an SFIP covering the property in its capacity as a write-your-own (“WYO”) insurance carrier under the National Flood Insurance Program (NFIP).

American Bankers admitted coverage for the flood damage to the property and remitted payments to the Zumpanos.

The Zumpano subsequently sued American Bankers on June 8, 2017, alleging a breach of the policy and seeking supplemental payment for their Irma flood claim.

American Bankers moved for summary judgment, asserting that the Zumpanos had not submitted a sworn proof of loss for the Irma flood claim and that the deadline (which had been extended from the usual 60 days to one year by FEMA) to do so had passed.

The Zumpanos did not dispute that they had not submitted a sworn proof of loss for their claim, and conceded that their claim would fail if American Bankers could demand strict compliance with the SFIP, including its proof of loss requirement.

However, the Zumpanos argued that American Bankers was not entitled to strict compliance with the policy because it did not provide notice to the Zumpanos of their obligation to timely file a proof of loss at the time American Bankers made payments for the flood claim.

American Bankers did not dispute that it failed to provide such notice, but it argued that, as a matter of law, its failure did not allow the Zumpanos to avoid strict compliance with the policy, including the proof of loss requirement.

The court’s decision

The district court granted American Bankers’ motion.

In its decision, the district court explained that the SFIP required that the Zumpanos provide a sworn proof of loss to American Bankers. The district court said that although FEMA in a memorandum had extended the deadline from 60 days of the loss to one year, it “did not waive the proof of loss requirement for all claims, but only those claims that were undisputed.” The Zumpanos, the district court ruled, still were required to submit a proof of loss for any supplemental payment of their flood claim within one year after Hurricane Irma.

The district court rejected the Zumpanos’ argument that, despite case law requiring strict compliance with an SFIP, American Bankers could not strictly enforce the proof of loss requirement because it did not notify the Zumpanos of their obligation to submit a proof of loss for a supplemental payment. The district court ruled that the fact that American Bankers failed to inform the Zumpanos of the proof of loss requirement was insufficient to excuse their failure to strictly comply with the SFIP. It also said that even if an estoppel argument were available, the Zumpanos failed to demonstrate any affirmative and egregious misconduct that could support estoppel in this case.

The district court concluded that because the Zumpanos failed to strictly comply with the SFIP’s proof of loss requirement by failing to file a sworn proof of loss, summary judgment in favor of American Bankers was appropriate.

The case is Zumpano v. American Bankers Ins. Co. of Florida, No. 4:18-cv-10085-JLK (S.D. Fla. July 18, 2019).

This piece first published at law.com.

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