VIEWPOINTS: Flood Insurance Policy Must Be Strictly Construed

Bary Zalma

The National Flood Insurance Program (NFIP) is not the same as commercial insurance. Every claim that is paid, is eventually paid by the U.S. Treasury. Therefore, federal courts are obligated to strictly construe NFIP policies as required by the NFIP statutes. Since an NFIP policy is also a type of insurance the insured is required to deal fairly and in good faith with the insurer and the U.S. Government.

In Migliaro v. Fid. Nat’l Indem. Ins. Co., 880 F.3d 660 (3rd Cir. 2018) the Third Circuit was called upon to determine whether the rejection of a policyholder’s proof of loss constituted a “written denial of all or part of the claim,” thereby triggering the one-year private limitations of action that is set forth in every Standard Flood Insurance Policy (“SFIP”) and if so, whether a suit filed two years after the letter could be maintained.


After receiving a payment from Fidelity National Indemnity Insurance Company, based on an adjuster’s assessment of the damage to his property caused by Hurricane Sandy, Anthony Migliaro submitted a sworn proof of loss seeking additional compensation. Fidelity sent Migliaro a letter rejecting his proof of loss, and he filed suit. Since Migliaro filed his complaint almost two years after he received the letter, the District Court dismissed the suit as time-barred.

The National Flood Insurance Program

Congress authorized the creation of the NFIP to “enable interested persons to purchase insurance against loss resulting from physical damage to or loss of . . . property . . . arising from any flood occurring in the United States.” 42 U.S.C. § 4011(a).

The NFIP is an unusual hybrid of government and private insurance, but it is essentially a government program. The United States government ultimately pays all SFIP claims. Because SFIP claims are ultimately paid by the United States government, all SFIPs must be identical to the form codified at 44 C.F.R. pt. 61, app. A (1).

Every SFIP provides: “You may not sue us to recover money under this policy unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim[.] . . .”


Migliaro purchased an SFIP for his New Jersey property. The property sustained flood damage in October 2012 as a result of Hurricane Sandy. The adjuster recommended a payment of $90,499.11 which was paid.

Five months later, Migliaro submitted a proof of loss, claiming an additional $236,702.57 in damages. Fidelity, the servicing insurer sent Migliaro a letter titled “Rejection of Proof of Loss.” The letter rejected the proof of loss because “the amount claimed is not an accurate reflection of covered damage.”

Migliaro responded with a suit against in federal court.


Migliaro necessarily admitted, by filing suit, that he viewed the July 15, 2013 letter rejecting his proof of loss as a written denial of his claim.

By statute the policyholder’s cause of action arises “upon the disallowance . . . of any [SFIP] claim, or upon the refusal of the claimant to accept the amount allowed upon any such claim.” [42 U.S.C. § 4072.]

The only communication of the disallowance was the written rejection of the proof of loss in the July 15 letter. Thus, by filing suit, Migliaro himself held out the July 15 letter rejecting his proof of loss as a denial of his claim.

When Congress created the NFIP, its authorization of policyholders to sue FEMA upon disallowance of their claims constituted a limited waiver of the sovereign immunity typically enjoyed by the federal agency. An appellate court cannot enlarge the waiver beyond what the language requires. Strictly construed, 42 U.S.C. § 4072 provides a limited right to sue upon the disallowance of all or part of a claim, i.e., the complete or partial denial of a claim.

Because an SFIP policyholder may only bring a suit as authorized by the SFIP and are paid out of the United States Treasury, a claimant under a standard flood insurance policy must comply strictly with the terms and conditions that Congress has established for payment.

The United States, as sovereign, is immune from suit, save as it consents to be sued. A policyholder must also wait until his claim has been denied before he can file suit. Because a policyholder cannot bring suit until his claim has been denied in writing, Migliaro must have accepted that this had occurred when he brought suit. By bringing suit, Migliaro acknowledged that the letter constituted a written denial of his claim.

Because Migliaro’s complaint was filed almost two years after he received the July 15, 2013 letter, his suit was properly dismissed as time-barred.

By filing suit Mr. Migliaro was hoist on his own petard. Since the statute only allows suit after a claim is denied, the filing of suit was an admission that his claim had been denied. Had he simply provided Fidelity with evidence of additional damage not covered by the initial assessment that claim would have been considered or denied and he could have then promptly sued within a year of a detailed denial or could have had his supplement paid. Failing to treat the NFIP fairly by proving his claim Migliaro destroyed his right to recover additional sums.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. Mr. Zalma is the author of the following books from and  Full Court Press: The Insurance Law Deskbook; California Insurance Law Deskbook; Zalma on Property and Casualty Insurance; Insurance Law Deskbook; and Insurance Bad Faith and Punitive Damages.

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