M.D. Phelps and Irene K. Phelps v. Federal Emergency Management Agency

ROSENN, Circuit Judge.

This appeal raises the troublesome question whether a government insurance agency is barred from asserting as a defense the failure of its insured to file a written proof of loss when misrepresentations of the agency induced the failure. Our specific task is to determine whether, under the circumstances we have here, the insurer’s status as a federally subsidized agency precludes the application of traditional estoppel against it.

Because many factors have made it uneconomical for the private insurance industry to make flood insurance available to those in need of such…