No Estoppel When Federal Funds Pay Insurance Proceeds
Wright v. Allstate Ins. Co. highlights a harsh result for insureds who have federally funded insurance policies. The insured filed a claim form under its flood insurance policy, but did not provide all of the information required under FEMA regulations. The insurance adjuster wrote back that the insurance company was accepting the claim form as complying with the policy. After the deadline for filing a claim form had passed, however, the insurance company rejected the claim because the form was incomplete.
Not surprisingly, the insured argued that the insurance company should be estopped from relying on the incomplete claim form since its own adjuster had accepted the form. The Fifth Circuit Court of Appeals did not agree. The policy was a Standard Flood Insurance Policy, with payouts on the policy coming from the federal treasury via FEMA. The insured was responsible for being aware of the applicable FEMA regulations, including filing of a complete form. Where federal funds are implicated, there cannot be a claim based on estoppel.