Android ModalBottomSheet in API 35+

As you may know starting with SDK 35 Google decided that apps should be "edge-to-edge" now.

So I'm working on adapting my old app to edge-to-edge.

I've encountered a problem with Material3 ModalBottomSheet. While it's parent activity works edge-to-edge, the sheet for some still hovers above navigation bar.

So far I've tried:

• Using "ThemeOverlay.Material3.BottomSheetDialog" as a theme
• Using "enableEdgeToEdge=true" in theme
• Using "app:paddingBottomSystemWindowInsets=false"
• Using "android:fitsSystemWindows="false" on both sheet layout and parent activity
• Deleting all content from the layout in case the problem is causes by margins/paddings

None of the above worked. For testing purposes the layout looks like this (in app it looks like the screehshot):

<?xml version="1.0" encoding="utf-8"?>
<androidx.coordinatorlayout.widget.CoordinatorLayout xmlns:android="http://schemas.android.com/apk/res/android"
    xmlns:app="http://schemas.android.com/apk/res-auto"
    android:layout_width="match_parent"
    android:fitsSystemWindows="false"
    android:layout_height="wrap_content">

    <com.google.android.material.card.MaterialCardView
        android:layout_width="match_parent"
        android:layout_height="wrap_content"
        android:layout_gravity="center"
        app:strokeWidth="0dp"
        >
        <FrameLayout
            android:layout_width="32dp"
            android:layout_height="32dp"/>

   </com.google.android.material.card.MaterialCardView>

</androidx.coordinatorlayout.widget.CoordinatorLayout>

In code, it is CustomBottomModalDialog: BottomSheetDialogFragment(), where I inflate the layout and with viewbinding attach listeners to views. None of the code interacts with insets/margins/paddings so it's unlikely the problem is caused by the code.

I use Material3 ""com.google.android.material:material:1.13.0"" in case this is important.

ModalSheet ScreenShot