SFIP

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The terms and conditions of the Standard Flood Insurance Policy (“SFIP”) are specified by regulations promulgated under the National Flood Insurance Act (“NFIA”). One of the terms in the SFIP provides that the insured cannot sue the flood carrier unless the insured has complied with all requirements of the policy and the insured must “start the suit within one year after the date of the written denial of all or part of the claim, and . . . file the suit in the United States District Court of the district in which the covered property was located at the time of the loss.”

The Fourth Circuit recently determined that an SFIP insured is time barred from filing suit if the date that the suit was filed in federal court is more than the allowable year specified in the SFIP even if the insured filed an action in state court within the one-year period. Woodson v. Allstate Ins. Co., Docket No. 16-1935 (May 3, 2017). In Woodson, the insureds suffered damages to their home as a result of Hurricane Irene, and submitted a claim to Allstate for flood damages pursuant to their SFIP.  Allstate denied the Woodsons’ claim for flood damage on February 28, 2012, and the Woodsons filed suit in in state court on February 27, 2013 alleging breach of contract, and violation of the North Carolina Unfair and Deceptive Trade Practices Act.
Continue Reading Suit Limitation Period In Standard Flood Insurance Policy Is Not Tolled By Filing In State Court: Hurricane Irene Claim Dismissed By Fourth Circuit

A federal court in New Jersey recently dismissed state law claims brought by third party plaintiffs, including the insured’s broker, against a Write Your Own insurance carrier. The claims at issue in Residences at Bay Point Condo. Ass’n v. Chernoff Diamond & Co., LLC, Civil Action No. 16-5190, 2017 U.S. Dist. LEXIS 56451 (D.N.J. Apr. 13, 2017) arose out of damage sustained to a condominium complex during Storm Sandy. The insured, and later its broker, claimed that Standard Fire had failed to advise that the National Flood Insurance Policy had been written on the wrong form. After the loss, Standard Fire reformed the policy and applied a co-insurance penalty.

Moving to dismiss the third party state law claims against it, Standard Fire argued that such claims were preempted by federal law. The court agreed, turning first to the Standard Flood Insurance Policy (“SFIP”) provision regarding jurisdiction, which states that “all disputes arising from the handling of any claim under the policy” are governed by FEMA regulations, the National Flood Insurance Act, and Federal common law. Noting that federal courts have previously distinguished between claims sounding in policy procurement, which are not preempted, and claims sounding in handling, which are preempted, the court found the broker’s claims to be grounded in policy handling. Central to this determination was the status of the insured’s coverage at the time of the interaction with the Standard Fire. The condo complex’s claims, and consequently the third-party broker’s claims, arose while the condo complex was insured by Standard Fire, leading the court to conclude that the claims related to handling.
Continue Reading District of New Jersey Dismisses Third Party Claims Sounding in Policy Handling on Preemption Grounds