It’s been almost seven years since Superstorm Sandy hit New Jersey and Sandy cases are still wending through New Jersey Courts. A recent Third Circuit Court of Appeals decision discusses the importance of a properly completed proof of loss when submitting a flood claim under a Standard Flood Insurance Policy (SFIP).1

In this case, the policyholder’s Jersey City property was damaged by flooding on October 29, 2012, during Superstorm Sandy. That property was covered by a SFIP issued by Selective.

On December 23, 2012, the policyholder submitted a proof of loss form that contained conflicting information concerning the property loss. Where the document provided a blank space for “Actual Cash Value Loss,” $1957.99 was listed. That same amount was listed as a deductible. Therefore, on the line for “Net Amount Claimed,” $0.00 is provided. The policyholder also included handwritten notations on the form, stating that it was “signed under protest” and demanded payment based on an insurance adjuster’s submission of both a report seeking $ 21,000. He also included an “advance payment request” for $30,000.

Submitted with the proof of loss form was a contractor’s repair estimate of $ 26,000, which included items in the basement and third floor ceiling. Selective denied the claim on December 24, 2012, noting that the “minimal damage to the building” totaled $334.06, which was less than the policy’s $5000 deductible. Selective also explained that damages to the lower level of the home were excluded under the policy’s basement limitation.

In October 2013, the policyholder filed a pro se complaint in the district court against Selective for breach of contract and alleging the insurer engaged in a fraudulent scheme to deny him benefits.

Selective moved to dismiss the state law claims. The district court granted the insurer’s motion but allowed the breach of contract claim to proceed. Selective filed a motion for summary judgment, which the district court granted on May 8, 2018, ruling that the policyholder was barred from recovery because he failed to submit an adequate proof of loss as required by the SFIP.

The district court also denied policyholder’s cross motion for summary judgment, observing that he attempted to raise claims outside the complaint and rejecting his claims for bad faith and sanctions against Selective. The policyholder appealed.

On appeal, the Third Circuit affirmed the district court’s decision. In its analysis, the court emphasized that strict adherence to the SFIP’s conditions precedent to payment is required. One requirement is timely submission of a “signed and sworn” proof of loss. The proof of loss must include, among other things, the amount of money the insured is claiming under the flood insurance policy, accompanied by detailed information about the property and damages.

The SFIP provides that within 60 days after the loss (or within any extension authorized by FEMA), the claimant must file a signed and sworn proof of loss that includes an inventory of damaged property showing the quantity, description, actual cash value, and amount of loss. The Third Circuit held that by claiming a net amount of $0.00 and otherwise failing to clearly indicate the amount sought, the proof of loss did not comply with the SFIP requirements.

Although the policyholder did not dispute the inadequacy of his proof of loss, he argued the proof of loss requirement was waived by a FEMA bulletin issued after Superstorm Sandy.2 The court disagreed, observing that the bulletin specifically stated it was not a blanket waiver of the proof of loss requirements. In that regard, the bulletin did not eliminate the proof of loss requirement; it simply allowed an insurance company’s initial payment to be based on the adjuster’s report, rather than a proof of loss. Moreover, a policyholder who believes he is entitled to recover more than the adjusted amount must still submit a proof of loss.

Regarding the fraudulent scheme arguments, the Third Circuit agreed they were preempted by the NFIP.

Finally, the Third Circuit declined to consider the policyholder’s argument that Selective cancelled his flood insurance policy in retaliation for filing the lawsuit because the allegations were not set forth in the complaint, and there were no exceptional circumstances that warrant consideration of that claim for the first time on appeal. Accordingly, the Third Circuit affirmed.

As the Uddoh case makes clear, a properly completed and supported proof of loss is critical because it is a condition precedent to coverage. It appears the policyholder in this case tried to go it alone, rather than hiring coverage counsel or a public adjuster, and made fatal mistakes from the beginning of the claim process. If you have questions about your insurance claim or submitting proofs of loss, there are several excellent archived posts by my colleagues discussing proofs of loss, or call us at (732) 704-4647 or e-mail me directly at with your questions.
1 Uddoh v. Selective Ins. Co. of Am., No. 18-2274, 2019 WL 2085954 (3d Cir. May 13, 2019).
2 See FEMA Bulletin W-12092a (Nov. 9, 2012), which attempted to speed up the process for obtaining an initial claim payment by granting a conditional and partial waiver of the proof of loss requirement. The bulletin stated that FEMA would “permit the insurer to adjust and pay a loss based on the evaluation of damage in the adjuster’s report instead of the signed Proof of Loss or insured-signed adjuster’s report.”