I have received three questions regarding proofs of loss in the last two days. This post will provide a general and basic understanding of a topic about which I could write a small book.
Proofs of loss are generally required in all insurance policies. They have been noted in insurance policies for hundreds of years. Property, automobile, health, life, and surety policies are among the many types of policies where the insured is required to submit a proof of loss.
The property insurance proof of loss usually is for the purpose of providing the insurer with the formal claim including:
- The amount;
- The parties claiming under the policy;
- Those with an interest,
- The date and cause of loss; and
- Some supporting documents of the amount of the loss.
The policy usually requires that the proof of loss be sworn to as truthful and a notarized signature by the insured.
After submittal of the property proof of loss, the insurer must raise any objections to the proof. These objections should only be technical in nature. Thus, where the policyholder has submitted a properly filled out proof of loss, an insurer should not reject the proof of loss merely because it disagrees with the insureds amount of the claim. Texas Windstorm (TWIA) and other insurers are doing this quite often regarding Hurricane Ike claims. It is a wrongful practice.
If there is a technical problem with the proof of loss, the insurer should specifically point out what the deficiency is so the insured can correct it. Usually, it is because the insured has not sworn to the proof or failed to provide supporting inventories of damage along with the proof.
The time to provide a proof of loss varies from policy to policy. Indeed, some states have regulations regarding the time to provide a proof of loss. The important aspect of this is to comply with the time requirements of submitting the proof of loss. In some instances and in some states, a late filed proof of loss may provide the insurer with a basis to deny an otherwise valid proof of loss.
National Flood Insurance has specific regulations which absolutely must be complied with. Under Federal law, the letter of the law is more important than the spirit. The proof has to be filled out timely and correctly per Federal Regulations. Oral waivers to fill out a Flood Proof of Loss are not valid. Please read my prior posts regarding the National Flood Insurance Proof of Loss issues (here and here).
Improperly and untimely filled out flood proofs of loss will be a matter of malpractice and litigation.
The insurance company generally does not have to pay within a time period after a proof is submitted. Most property insurance policies merely require the insurer to state whether it will pay or alternatively repair the property or take salvage. However, if demanded by an insurer, payment may be withheld until a proof of loss is submitted. So, the general rule is to file a proof of loss with estimates of damage and inventories as soon as possible.
If there is any question about a proof of loss, seek counsel for specific questions. Most attorneys in this field will provide such initial advice for a free consultation.