205 F. 3d 386 - Irene Flick v. Liberty Mutual Fire Insurance Company

Irene Flick ("Flick") appeals from the order granting summary judgment in favor of the Liberty Mutual Fire Insurance Company ("Liberty Mutual"). Flick filed a civil complaint seeking damages resulting from Liberty Mutual's denial of a claim under a standard flood insurance policy that was underwritten by Liberty Mutual as part of the National Flood Insurance Program. The district court granted summary judgment in favor of Liberty Mutual on the basis that Flick had failed to comply strictly with the policy's 60 day sworn proof of loss requirement. Flick contends that the district court erred in applying the rule of strict compliance to the policy's sworn proof of loss requirement. We affirm. We conclude that the strict compliance rule is applicable to policies written by private insurance companies under the National Flood Insurance Program, because those insurers draw funds from the United States Treasury ("Treasury") to pay flood loss claims.

* Congress enacted the National Flood Insurance Act of 1968 in response to a growing concern that the private insurance industry was unable to offer reasonably priced flood insurance on a national basis. See 42 U.S.C. S 4001(a), (b); Van Holt v. Liberty Mut. Fire Ins. Co., 163 F.3d 161, 165 & n.2 (3d Cir. 1998). A report by the Secretary of the Department of Housing and Urban Development ("HUD") had indicated that it was not feasible for the private insurance industry, acting alone, to provide flood insurance at a reasonable price.1 See Staff of Senate Comm. on Banking and Currency, 89th Cong., 2d Sess., Insurance and Other Programs for Financial Assistance to Flood Victims 98-99 (Comm. Print 1966) (report from Robert C. Weaver, Secretary of HUD). The HUD report found that private insurers traditionally had refused to write flood policies in the belief that they lacked an adequate actuarial basis for providing coverage and that the public was not interested in purchasing flood insurance. See id . The report also found that, even if the private insurance industry were to have offered flood insurance on a sound actuarial basis, inhabitants of flood prone areas would have rejected unsubsidized coverage as too costly or too uneconomical.2 See id.

The National Flood Insurance Act, therefore, authorizes the federal government to establish the National Flood Insurance Program ("NFIP"), a program with "large-scale" federal involvement, to provide affordable flood insurance on a national basis and to discourage the construction of new structures in flood prone areas. See 42 U.S.C.SS 4001(b), 4011(a); 1968 U.S. Code Cong. & Admin. News 2873, 2966-67, 2969. To accomplish those goals, the act authorizes the federal government to offer flood insurance at below actuarial rates for high risk structures erected before the preparation of a community's flood insurance rate map. See 42 U.S.C. S 4015(a)(c); 1968 U.S. Code Cong. & Admin. News at 2969. The act does not, however, authorize the NFIP to provide a similar subsidy to owners of structures that are built after a community's actuarial rates are set. See 42 U.S.C.S 4015(c); 1968 U.S. Code Cong. & Admin. News at 2969.

The National Flood Insurance Act outlines two alternative frameworks for implementing the NFIP. See generally National Flood Insurers Ass'n v. Harris, 444 F. Supp. 969, 970-72 (D.D.C. 1977) (discussing the two authorized methods for implementing the NFIP). Part A allows an associated pool of private insurance companies to implement a privately operated program. See 42 U.S.C. SS 4051, 4052. Part B authorizes the federal government to implement an alternative program through the "facilities of the federal government." 42 U.S.C. S 4071.

Initially, the NFIP was implemented under Part A and administered by an associated pool of private insurance companies pursuant to an annual contract with HUD. See 42 U.S.C. SS 4051, 4052; National Flood Insurers Ass'n, 444 F. Supp. at 970-71 (discussing the implementation of the NFIP under Part A). The associated pool provided the risk capital, issued flood insurance policies, and paid all claims for flood losses. See Sandia Oil Co. v. Beckton, 889 F.2d 258, 263 (10th Cir. 1989); Kolner v. Director, Fed. Emergency Management Agency, 547 F. Supp. 828, 829 (N.D. Ill. 1982). The federal government made "premium equalization payments" to the associated pool to compensate for premiums that were set below actuarial rates. See 42 U.S.C.S 4054; Sandia Oil Co., 889 F.2d at 263. It also provided reinsurance to cover flood losses that exceeded the insurance risk assumed by the industry pool. See 42 U.S.C. S 4055; Sandia Oil Co., 889 F.2d at 263.

In 1977, HUD decided to discontinue the private operation of the NFIP under Part A. It communicated its intent to Congress to provide flood insurance through the "facilities of the federal government" pursuant to Part B of the National Flood Insurance Act. See 42 U.S.C. S 4071; 42 Fed. Reg. 58569 (1979) (giving Congress notice of the transition to a Part B program); Kolner, 547 F. Supp. at 829-30. On January 1, 1978, HUD assumed full control of the program with the intention of retaining, to the extent practicable, the services of private insurers as "fiscal agents" of the United States. See 42 U.S.C. S 4071; 42 Fed. Reg. 58573 (1977); Kolner, 547 F. Supp. at 829. At that time, all flood insurance policies were deemed issued by the Federal Insurance Administration. See Kolner, 547 F. Supp. at 829.

In 1978, HUD delegated to the Federal Emergency Management Agency ("FEMA") its authority to operate both the NFIP and the Federal Insurance Administration.3 See Reorganization Plan No. 3 of 1978, SS 202, 304, 43 Fed. Reg. 41943, 41943-45 (1978). FEMA assumed managerial responsibility for the operation of the program and took full control of the payment or disallowance of all flood insurance claims. See Berger v. Pierce, 933 F.2d 393, 395 (6th Cir. 1991). It then established the National Flood Insurance Fund in the Treasury of the United States to pay claims and administrative expenses. See 42 U.S.C. S 4017(a), (d); Sandia Oil Co., 889 F.2d at 263.

In 1983, FEMA exercised its regulatory authority under 42 U.S.C. S 4081(a) and created the "Write Your Own" ("WYO") program to assist it in marketing flood insurance through the "facilities of the federal government." See 42 U.S.C. SS 4081(a), 4071; 44 C.F.R.S 62.23-24; 48 Fed. Reg. 46789 (1983) (amending the federal regulations to establish the WYO program); Van Holt, 163 F.3d at 165. The WYO program allows private insurers to write standard flood insurance policies under their own names. See 44 C.F.R. S 62.23. Coverage is provided under the auspices of the NFIP, pursuant to the program's regulations, and is identical in scope and in cost to policies issued directly by FEMA. See 48 Fed. Reg. 46789 (1983). Under the NFIP regulations, a claimant under a standard flood insurance policy must submit a sworn proof of loss within 60 days of any flood loss. See 44 C.F.R. pt. 61, app. A(1), art. 9(J)(3).

Liberty Mutual insured Flick for flood loss under an insurance policy that it issued as part of the WYO program. The Liberty Mutual policy, which was written as a standard flood insurance policy, required Flick to submit a sworn proof of flood loss within 60 days of any flood loss. On December 11, 1995, flooding caused the foundation of Flick's house to subside. Flick notified Liberty Mutual of her flood loss on February 6, 1996. She did not, however, submit a sworn proof of loss at that time. Liberty Mutual denied the claim on April 8, 1996, because, among other reasons, Flick had failed to file a sworn proof of loss within 60 days. Flick finally submitted a sworn proof of loss on September 17, 1996, approximately nine months after the flood loss had occurred.

Flick then commenced this lawsuit in district court, asserting state law causes of action for breach of contract and breach of the covenant of good faith and fair dealing. Both parties stipulated that the National Flood Insurance Act preempted those claims. Liberty Mutual moved to bifurcate the trial and to try the issue of whether Flick had failed to submit a sworn proof of loss within 60 days of the flood loss. Flick agreed that the sworn proof of loss issue should be summarily adjudicated before trial. In a pretrial conference, the district court granted summary judgment in favor of Liberty Mutual, because Flick had failed to file a sworn proof of loss within 60 days of her flood loss.

In this appeal, Flick contends that the district court erred in granting summary judgment. She argues that the rule of strict compliance, which is applicable to policies issued by the federal government that provide for payment of losses from public funds, is inapplicable to the sworn .proof of loss requirement in insurance policies issued under the NFIP. To support that proposition, she asserts that flood insurance losses under the NFIP have been, and will continue to be, paid entirely out of a surplus of retained flood insurance premiums. Flick suggests that we (1) adopt a rule of substantial compliance or notice prejudice to govern the sworn proof of loss requirement in the standard flood insurance policy or, in the alternative, (2) find an exception to the rule of strict compliance for flood induced subsidence cases.

We have jurisdiction pursuant to 42 U.S.C. S 1291.4 We review de novo a grant of summary judgment. See Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. See id.

"The law is clear that, as contracts, [standard flood insurance policies] issued under the National Flood Insurance Program . . . are governed by federal law applying standard insurance law principles." McHugh v. United Serv. Auto. Assoc., 164 F.3d 451, 454 (9th Cir. 1999) (citing Brazil v. Giuffrida, 763 F.2d 1072, 1074-75 (9th Cir. 1985)). There is a compelling interest in assuring uniformity of decision in cases involving the NFIP. See Brazil, 763 F.2d at 1075 (quoting West v. Harris, 573 F.2d 873, 881 (5th Cir. 1978)). "Since the flood insurance program is a child of Congress, conceived to achieve policies which are national in scope, and since the federal government participates extensively in the program both in a supervisory capacity and financially, it is clear that the interest in uniformity of decision present in this case mandates the application of federal law." Id.

Federal law has long recognized that an insured must comply strictly with the terms and conditions of a federal insurance policy. See Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947). In Merrill, the Supreme Court recognized a general "duty of all courts to observe the conditions defined by Congress for charging the public treasury." Id. at 385. The Court held that a group of farmers could not recover for crop losses under a federal crop insurance policy, because their claims did not comply with the terms and conditions for coverage set forth in the Wheat Regulations.5 See id. In so holding, the Court noted that "not even the temptations of a hard case" may provide a basis for a recovery that is contrary to federal regulations. Id. at 386.

In the context of flood insurance, we have recognized the heavy burden that a claimant must overcome in order to avoid the sworn proof of loss requirement in the standard flood insurance policy. See Wagner v. Director, Fed. Emergency Management Agency, 847 F.2d 515, 518-19 (9th Cir. 1988). In Wagner, we held that a group of claimants could not estop FEMA from denying their claims for failure to file a timely sworn proof of loss. Id. at 519-20. In reaching that decision, we reasoned that the sworn proof of loss requirement is a condition precedent to a waiver by the federal government of its sovereign immunity and, as such, a procedural requirement that must be taken seriously. See id. at 518. We then concluded that the claimants could not establish the more stringent requirement necessary to estop the federal government from insisting on strict compliance with the sworn proof of loss requirement. See id. at 519-20.

While our result in Wagner is sound, the Supreme Court has since recognized that our power to avoid the terms and conditions of a federal insurance policy is even more curtailed. In Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), the Court acknowledged that the Appropriations Clause prohibits the judiciary from granting any money claim against the federal government that is not authorized by statute. Id. at 424, 434. That clause succinctly provides that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." U.S. Const. art. I, S 9, cl. 7. Its fundamental purpose is "to assure that public funds will be spent according to the letter of the difficult judgments reached by Congress as to the common good and not according to . . . the individual pleas of litigants." Richmond, 496 U.S. at 428.

In Richmond, the Supreme Court considered whether a retired federal employee could prevent the federal government from enforcing a statutory earnings limit in a federal disability annuity. See id. at 415-16. The employee had qualified for disability payments under the annuity, but after receiving erroneous advice from a federal official, had disqualified himself by exceeding the earnings limit. See id. at 417-18. The employee sued the federal government to recover the unpaid disability benefits, alleging that it was estopped from applying the earnings limit. See id. at 415-16. The Supreme Court held that the employee could not recover the unpaid disability payments, because, in enacting the disability statute, Congress had appropriated funds to pay benefits to only those individuals who earned less than a specified amount. See id. at 424-27, 434. In reaching that decision, the Court recognized that the Appropriations Clause prohibits the judiciary from awarding claims against the United States that are not authorized by statute. See id. at 424-26. It then concluded that the "judicial use of the equitable doctrine of estoppel cannot grant [a claimant] a money remedy that Congress has not authorized." Id. at 426.

Because the holding in Richmond was based on the Appropriations Clause, its scope is not limited to the applicability of estoppel to the federal government. See Richmond, 496 U.S. at 426 (noting that the presidential power to pardon does not override the command of the Appropriations Clause) (citing Knote v. United States, 95 U.S. 149 (1877)). It is an axiomatic principle of constitutional law that the judiciary's power is limited by a valid reservation of congressional control over public funds. See Richmond, 496 U.S. at 425. "Any exercise of a power granted by the Constitution to one of the other branches of Government is limited by a valid reservation of congressional control over funds in the Treasury." Id. Indeed, we would equally usurp Congress's exclusive power to appropriate money were we to award an unauthorized money claim based on a theory of substantial compliance or notice prejudice. We therefore interpret Richmond to preclude a court from granting a remedy that draws funds from the Treasury in a manner that is not authorized by Congress.

In light of that conclusion, it is clear that a claimant under a standard flood insurance policy may not avoid strict enforcement of the 60 day sworn proof of loss requirement, except through a valid waiver by the Federal Insurance Administrator.See 44 C.F.R. S 61.13(d); 44 C.F.R. pt. 61, app. A(1), art. 9(J)(7) (setting forth the conditions for waiver). FEMA currently operates the flood insurance program under Part B of the National Flood Insurance Act and pays claims out of the National Flood Insurance Fund, which is located in the Treasury. See 42 U.S.C. 4017(a), (d) (authorizing the creation of a flood insurance fund in the Treasury to disburse claims made under a federally operated program); Sandia Oil Co. v. Beckton, 889 F.2d 258, 263 (10th Cir. 1989) (stating that the National Flood Insurance Fund is the ultimate risk bearer under the Part B flood insurance program). The Director of FEMA has authority to borrow an additional $500 million from the Treasury to pay claims when the National Flood Insurance Fund has insufficient funds.6 See 42 U.S.C. S 4016.

Under the NFIP regulations, WYO insurers also pay claims out of the National Flood Insurance Fund. The federal government is a guarantor and assumes full liability for flood insurance policies that are issued by WYO insurers. See 44 C.F.R. S 62.23(f); 64 Fed. Reg. 27705, 27708 (1999) (stating that WYO insurers "do not have to pay for reinsurance for their flood business since the Federal Government assumes the liability for flood losses"). WYO insurers must remit to the Federal Insurance Administration for deposit in the National Flood Insurance Fund all funds that are not necessary to meet their current expenditures. See 44 C.F.R. pt. 62, app. A, arts. II(E), VII(B). WYO insurers may later draw money from the National Flood Insurance Fund, through letters of credit issued by FEMA, to pay claims or expenses that exceed the funds retained to meet current expenditures. See 44 C.F.R. pt. 62, app. A, arts. II(E), IV(A), VII(A).

Flick contends that WYO insurers retain a sufficient amount of premiums in segregated accounts to pay flood losses as they occur.7 We reject that assertion. The NFIP regulations plainly indicated thatWYO insurers may retain no more funds than are necessary to meet their current expenditures. See 44 C.F.R. pt. 62, app. A, arts. II(E), VII(B). The WYO Accounting Procedures Manual limits that amount to a cash reserve of $5,000 plus "established payables " and requires WYO insurers to transmit any excess funds to the Treasury on a weekly basis.8 See National Flood Ins. Program, Fed. Emergency Management Agency, WYO Accounting Procedures Manual pts. B-5, C-2 (7th ed. 1997); see also Van Holt, 163 F.3d at 165 (stating that current expenditures are limited to $5,000).

We do not believe, nor has Flick provided any basis for us to believe, that WYO insurers' retained funds are sufficient to cover claims for flood losses. Flood losses, when they occur, are typically sudden, widespread, and costly. A large percentage of those losses are insured under policies that have been issued at below actuarial rates.9 It is doubtful, then, that WYO insurers can satisfy their obligations to pay flood losses entirely with the funds that they have retained to meet current expenditures. We thus join the Third and Fifth Circuits in concluding that WYO insurers typically deplete their net premium income and draw funds from the National Flood Insurance Fund to pay losses under standard flood insurance policies.10 See Van Holt, 163 F.3d at 165 (stating "when WYO companies deplete their net premium income, a phenomenon that occurs regularly because the companies must forfeit a significant portion of the proceeds from their premiums, they draw money from FEMA through letters of credit to disburse claims"); Gowland v. Aetna, 143 F.3d 951, 955 (5th Cir. 1998) (stating that payments made pursuant to a WYO issued policy are "a direct charge on the public treasury") (quotations omitted).

Because flood losses, whether insured by FEMA or by a participating WYO insurer, are paid out of the National Flood Insurance Fund, a claimant under a standard flood insurance policy must comply strictly with the terms and conditions that Congress has established for payment. See U.S. Const. art. I, S 9, cl. 7 (stating that funds may be drawn from the Treasury only by act of law); Richmond, 496 U.S. at 424, 434. That is the simple, but powerful command of the Appropriations Clause.11 Congress, through a valid act of delegation to FEMA, has authorized payment of flood insurance funds to only those claimants that submit a timely sworn proof of loss.12 See 44 C.F.R. pt. 61,app. A(1), art. 9(J)(3), (6). We therefore have no more power to award a money remedy to a flood insurance claimant who submits a sworn proof of loss after the 60 day time limit than we have to award a money remedy to a disability benefits claimant whose income exceeds a statutory earnings limit. See U.S. Const. art. I, S 9, cl. 7; Richmond, 496 U.S. at 424, 434. The 60 day sworn proof of loss requirement is a condition precedent to payment for which all claimants are strictly accountable.

Flick nevertheless suggests that the rule of strict compliance should be inapplicable where the National Flood Insurance Program earns sufficient premiums to pay flood losses entirely out of written premiums.13 We decline to accept that suggestion, because it ignores the simple fact that policyholder premiums are deposited in the National Flood Insurance Fund. That fund is located in the Treasury. See 44 U.S.C. S 4017(a), (d); Sandia Oil Co., 889 F.2d at 263-64. Money may only be withdrawn from it through an act of law. U.S. Const. art. I, S 9, cl. 7. It is not relevant that the National Flood Insurance Fund may be currently self sustaining. See Richmond, 496 U.S. at 425 (stating "[h]owever much money may be in the Treasury at any one time, not a dollar of it can be used in the payment of any thing not thus previously sanctioned") (quoting Reeside v. Walker, 52 U.S. 272, 291 (1850)). Nor is it relevant that the fund may consist entirely of policyholder premiums. See id. (stating that once "proceeds have been paid into the [T]reasury, the right to them has so far become vested in the United States that they can only be secured to the former owner of the property through an act of Congress") (quoting Knote v. United States , 95 U.S. 149, 154 (1877)).

We also decline to accept Flick's suggestion that we find an exception to the rule of strict compliance for flood induced subsidence cases. The terms and conditions of the standard flood insurance policy, which are defined by FEMA under authority from Congress, specifically limit the payment of funds from the National Flood Insurance Fund to claimants who submit a sworn proof of loss within 60 days of a flood loss. See 44 C.F.R. pt. 61, app. A(1), art. 9(J)(3), (6). Those same terms and conditions also permit FEMA to waive the sworn proof of loss requirement at its own behest. See id. at art. 9(J)(7). When read together, the provisions of Article 9(J) indicate that FEMA sought to reserve to itself the exclusive power to dispense with the proof of loss requirement. That reservation of power is also a reservation of the delegated power to allocate public funds to claimants under exceptional circumstances. Though the circumstances of flood induced subsidence may tempt one to read the NFIP regulations leniently, the Supreme Court has cautioned us that not even the temptation of a hard case may elude the clear meaning of federal regulations. See Richmond, 496 U.S. at 420 (citing Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 386 (1947)). Under the Appropriations Clause, we are powerless to order the payment of funds to claimants in circumstances that FEMA has not deemed exceptional.

Though our decision is premised on the Appropriations Clause, the outcome of this case is equally supported by the unique interests involved when the federal government participates extensively in a flood insurance program that is national in scope. The success of the NFIP, so far, has depended on the ability of the federal government and participating insurers to offer flood insurance at below actuarial rates. We find no reason to conclude that FEMA has structured flood insurance premiums in anticipation of the possibility that the federal government may have to pay the additional claims of policyholders who fail to comply strictly with the sworn proof of loss requirement or who fail to obtain a valid waiver from the Federal Insurance Administrator. In adhering to a rule of strict compliance, we thus avoid disturbing the delicate balance, which FEMA has sought to strike, between the need to pay claims and the need to ensure the long term sustainability of the NFIP. We also avoid the inconsistent results that would occur were we to treat standard flood insurance policies differently depending on whether they are written by WYO insurers or FEMA.14

Our holding does not suggest that claimants must always strictly comply with the 60 day sworn proof of loss requirement. In the case of a loss due to flood induced subsidence or a similar misfortune, the federal government may well wish to grant relief from the rule of strict compliance. In fact, FEMA has designed a specific mechanism for requesting such relief. See 44 C.F.R. pt. 61, App. A(1), art. 9(J)(7) (allowing the Federal Insurance Adminsitrator to waive the sworn proof of loss requirement).15 Our decision merely recognizes the fact that, in the absence of congressional action or a valid waiver by FEMA, we may not dispense with the terms and conditions established for the payment of flood losses that are insured under standard flood insurance policies.

Having decided that a claimant under a standard flood insurance policy muststrictly comply with the 60 day sworn proof of loss requirement, we turn to the facts of this case. In the proceedings below, the parties stipulated that Liberty Mutual insured Flick against flood loss under a standard flood insurance policy. That policy was issued as part of the National Flood Insurance Program. The parties also stipulated that Flick suffered a flood loss on December 11, 1995, and that Flick did not submit a sworn proof of loss until September 17, 1996, approximately nine months after the date of loss. Because Flick failed to comply strictly with the policy's 60 day sworn proof of loss requirement, the district court properly granted summary judgment in favor of Liberty Mutual.

AFFIRMED.

This flood insurance claimant gave the insurance company timely notice of the existence of her claim and informed it of the full amount of the claim as soon as it was known. In holding she must nevertheless be denied insurance benefits because of a failure to comply to the letter with the policy provision requiring a sworn proof of loss within 60 days, the majority announces an unduly harsh and unworkable rule. The holding conflicts with our prior recognition that standard insurance law principles should apply to the administration of the National Flood Insurance Program and with generally recognized state-law principles that literal compliance with a proof of loss provision is not required where compliance was not possible, or where substantial compliance provided the insurer with adequate notice of the claim.

In this case, Irene Flick made a claim on February 6, 1996, under a flood insurance policy underwritten by Liberty Mutual. This was 56 days after the flood loss occurred. Liberty Mutual dispatched a claims adjuster who inspected the home, completed a national flood insurance report, and noted the resettlement under the home, but concluded that the damage was not a result of the December 11th flooding. Flick attempted repeatedly to provide further information. On March 28, 1996, Flick's attorney offered to provide any information available in a proof of loss and requested a blank form for that purpose. However, the adjuster handling the claim insisted that Flick sign the report prepared by the adjuster which, according to Flick, contained numerous errors. Flick's claim was formally denied on April 8, 1996. On May 24, 1996, Flick's attorney again requested a form to be used for submitting proof of loss; on June 14, 1996, the adjusters again insisted that Flick sign the allegedly erroneous report.

After concluding the geophysical, structural, and financial analyses needed to evaluate the damage to her home, Flick's attorney submitted a sworn proof of loss on his own form on September 17, 1996. In a letter dated October 9, 1996, an adjuster rejected Flick's proof of loss form and stated that "the insured was given the form by the adjuster and I sent one to [Flick's attorney's] office with my 6/14/96 correspondence," apparently referring to the flawed report prepared by the original claims adjuster. This suit followed.

Flick contends, and the government does not dispute for purposes of this appeal, that she could not have provided a complete proof of loss statement within 60 days of the date of the flooding. In fact where, as here, the damage is caused by flood-induced ground subsidence under a foundation, it is probable that the full amount of loss can almost never be known within 60 days. Flick offers reports by experts in geotechnical engineering, structural engineering, construction and real estate appraisal in support of that position.

This court has held that "[i]n creating the[National Flood Insurance] Program, Congress did not intend to abrogate standard insurance law principles." Brazil v. Giuffrida, 763 F.2d 1072, 1074-75 (9th Cir. 1985)(citing Hanover Building Materials v. Guiffrida, 748 F.2d 1011, 1013 (5th Cir. 1984)); Drewett v. Aetna Casualty & Surety Co., 539 F.2d 496, 49798 (5th Cir. 1976)). Accordingly, although we are dealing with a federal insurance program, we are to "draw[ ] upon standard insurance law principles" when interpreting policies issued under this program. Id. (citing West v. Harris, 573 F.2d 873, 881 (5th Cir. 1978)).

Under ordinary principles of insurance law applicable in a majority of states, including California, Flick's claim would be considered adequately presented and the 60-day proof of loss requirement excused on grounds of substantial compliance. See Windt, Insurance Claims and Disputes S 3.03 n.23 (3d ed. 1995) (citing cases); Croskey, Kaufman et al., California Practice Guide: Insurance LitigationS 3:166-67 (Rutter 1995). The claim Flick made on February 6, 1996, was sufficient to put the insurer on notice that further inquiry was required. In fact, after receiving Flick's notice of claim the insurance company did make further inquiry.

Also, in a growing majority of states an insurer can deny coverage for failure to submit a timely notification of loss only if the insurer proves prejudice as a result of the delay. See Ostrager & Newman, Handbook on Insurance Coverage Disputes S 4.02(c)(2)-(4) (9th ed. 1998) (citing cases); Insurance Litigation at S 3.168-69; see also Insurance Claims and Disputes at S 3.03 n.27 (noting that, in a majority of jurisdictions, a failure to submit a timely proof of loss will not result in denial of coverage unless prejudice is shown). It is difficult to see how the insurer was prejudiced by the failure to submit a sworn claim on a designated form until after February 10, 1996.

In rejecting the claimant's strong legal arguments, the majority confuses this case with cases against the United States involving sovereign immunity and claims of estoppel on the basis of inaccurate statements by government agents. See Wagner v. Director, FEMA, 847 F.2d 515, 518-20 (9th Cir. 1988) (60-day proof of loss requirement for federal flood insurance claims had to be strictly construed in action against FEMA because it constituted a "condition[ ] precedent to a waiver by the federal government of its sovereign immunity"); Federal Crop. Ins. Corp. v. Merrill, 332 U.S. 380 (1947) (estoppel not available against the government despite reliance on erroneous statement by official); Office of Personnel Management v. Richmond, 496 U.S. 414 (1990) (estoppel not available against the government for monetary claim because Congress had not appropriated funds for such claims). This is not an estoppel case, nor is it a suit involving sovereign immunity. It is an insurance policy interpretation case that happens to involve insurance issued under a governmental subsidy program.

Moreover, there is nothing on the face of the policy to suggest the insured has a contractual relationship with anyone other than a private insurer, or that a claim made under the policy would be a direct charge on the public treasury. This case is therefore unlike Seattle Fur Exchange v. FCIA, in which this court required strict compliance with the terms of an insurance policy because it "specifically identifie[d a government agency] as the reinsurer" and therefore "provide[d] a direct contractual link" between the insured and the government agency. 7 F.3d 158, 163 (9th Cir. 1993). In fact, the matter before us more closely resembles Lovell Mfg. v. Eximbank, 777 F.2d 894 (3d Cir. 1985), a case distinguished by the Seattle Fur Exchange panel. In that case, the Third Circuit held that because no provision in a privately issued insurance policy outlined the reinsurance agreement between the private insurer and a government agency, the insured's claim was only against the private insurer and did not involve a charge on the Treasury. See Lovell Mfg., 777 F.2d at 901.

There is no indication anywhere in the legislative history of the National Flood Insurance Act, and certainly not in the case law of our circuit, that harsher rules should apply in the flood insurance context than apply in the ordinary insurance context. Indeed, the majority's result thwarts one of Congress' primary goals in enacting the National Flood Insurance Act of 1968--ensuring that flood insurance coverage is "available on reasonable terms and conditions to persons who have need for such protection." 42 U.S.C. S 4001(a).