NFIP Escapes Payment with Form Over Substance Rules: The Need for Reform of the National Flood Insurance Program

A recent appellate decision in Woodland Villas Condominiums v. Wright National Flood Insurance Company ¹ highlights a harsh reality for policyholders seeking to recover under the National Flood Insurance Program (NFIP). Strict compliance with federal procedural requirements, especially the federal proof of loss requirement, can override substantive claims for damages, even when there is no real dispute about the loss itself.

In this case, Woodland Villas, a condominium association in Louisiana, sustained extensive flood damage from Hurricane Ida. The association submitted what it believed to be a compliant Proof of Loss form. This document, titled “Sworn Statement in Proof of Loss,” was signed by an architect retained to assist with the rebuilding and insurance claim. The proof of loss bore his professional seal. The association argued that this submission fulfilled its obligations under the Standard Flood Insurance Policy requirements. Their position was that the document outlined the claimed amounts and damages in detail, and the use of a professional architect to prepare and seal it gave the submission credibility and evidentiary value. ²

Wright National Flood Insurance Company, a Write-Your-Own (WYO) Program carrier acting on behalf of FEMA, disagreed. It contended that a valid Proof of Loss must be both “signed and sworn to by the insured,” not by a third-party professional. Wright argued that the document submitted by Woodland Villas was not notarized and did not contain a declaration made under penalty of perjury. It argued that meeting one of these two requirements was the only acceptable method under federal law to satisfy the “sworn to” requirement. Further, it was not signed by a board member or anyone authorized by the condominium association in their official capacity. Based on these technical deficiencies, Wright moved for summary judgment, asserting that Woodland failed to comply with a condition precedent to payment. ³

The trial court agreed with Wright and granted summary judgment, a decision later affirmed on appeal. The Fifth Circuit ruled that the architect’s seal and the title of the document were insufficient to meet the SFIP’s rigid standards. Citing long-standing precedent, the court emphasized that the U.S. Treasury funds the NFIP and, therefore, demands strict compliance with its regulations. The failure to provide either a notarized or penalty-of-perjury sworn statement by the insured voided the association’s ability to recover additional amounts, regardless of whether the form of the submission prejudiced the insurer.

This decision is a warning for policyholders and especially condominium associations and their property managers. It demonstrates that even where there is no question of the loss itself, and even where the insurer has been given detailed information, the lack of a properly executed Proof of Loss can bar recovery. In the context of condominiums, where boards often delegate claim duties to managers or external professionals, this case illustrates the vital importance of ensuring that statutory requirements are observed to the letter.

I also suggest that only a lawyer or a licensed public adjuster should prepare an insurance claim for a condominium. Other professionals are not licensed to do this.

While the court’s ruling may be doctrinally correct under current law, it exposes a deeper flaw in how FEMA administers the NFIP. The reliance on rigid formalities over substantive justice allows insurers to avoid payments on otherwise valid claims. There was no claim here of fraud, late notice, or even that Wright lacked knowledge of the loss or its magnitude. Instead, the defense rested purely on who signed the document and in what form. This form-over-substance approach leaves policyholders vulnerable, especially in the chaotic aftermath of disasters, and undermines the fundamental purpose of a federal insurance safety net.

The NFIP is long overdue for reform. As currently administered, it too often becomes a trap for the unwary, using technicalities to deny legitimate claims. Congress and FEMA must recognize that the law’s purpose should be to indemnify losses and not to look for a procedural escape hatch. Woodland Villas had real damages and submitted them in good faith. That should matter more than whether the declaration was notarized or included the magic words “under penalty of perjury.” Until reform occurs, policyholders must be meticulous in complying with every formal requirement, or risk being left with nothing.

I have written and warned about this topic before in NFIP Escapes Payment with Form-Over-Substance Rules—The Need For Reform of the National Flood Insurance Program, and Flood Insurance Claims With Corrosion and Collapse—A Call For Reform.

Thought For The Day

“The spirit of the law, not its letter, must guide our justice.”
—Oliver Wendell Holmes Jr.

¹ Woodland Villas Condominiums v. Wright National Flood Ins. Co., No. 24-30722 (5^th Cir. May 1, 2025).

² Woodland Villas Condominiums v. Wright National Flood Ins. Co., No. 24-30722 [Brief of Woodland Villas] (5^th Cir.).

³ Woodland Villas Condominiums v. Wright National Flood Ins. Co., No. 24-30722 [Brief of Wright National Flood] (5^th Cir.).