First party property policies generally feature a post-loss duty related to the “proof of loss.” Any policy provision that conditions recovery on compliance and carries the potential of a forfeiture must be recognized as quite important. Because the proof of loss form has been frequently misunderstood, sometimes misused, it deserves far more attention from insurers and policyholders alike. So, today’s version of the HKR Blog shines a light on the Proof of Loss requirement.
Which Form? Multiple forms and variations of the “Proof of Loss” are available via the internet, via any search engine, available to any insurer for use. Some forms seek substantially more detail than others. Certain forms are “sworn,” while others are not. Careful consideration of the form allows an insurer to identify specific, relevant detail when requesting the Proof. If the insurer wishes to have a “sworn” proof of loss, the Proof should expressly state that.
Any Proof of Loss Form Will Demand Details. An important feature of any Proof of Loss form will be the demand for loss-related details. Specific information will be requested regarding the loss — such as date/time, location, origin – while additional details are sought as well, such as title & interest, the amount claimed, etc. A policyholder’s carelessness or inattention when completing the Proof may trigger questions from the insurer, slowing the claims process and even potentially jeopardizing coverage.
State Laws Vary. States treat the Proof requirement differently. Outcomes may vary when: no Proof is submitted; incorrect information appears on a Proof; and/or an insurer fails to reject a Proof. Many state courts may forgive a policyholder’s technical failure to submit a Proof when there’s been no prejudice to the insurer. Certain states will assess post-loss compliance via consideration of whether there’s been substantial compliance by the policyholder with all post-loss duties, not just a demand for a Proof.
Federal Flood Claims Demand Careful Compliance. Claims submitted to the federal government for coverage under the National Flood Insurance Program (NFIP) are subject to strict, technical guidelines established by FEMA. Most, but not all, flood insurance policies are written under the NFIP and administered by the Federal Emergency Management Agency (FEMA). The Standard Flood Insurance Policy, for example, requires a Sworn Statement in Proof of Loss within 60 days and in a certain form, accessed at https://www.fema.gov/flood-insurance/find-form/policyholders which is signed under penalty of perjury.
So long as insurers continue to issue property policies with clear post-loss duties, the Proof of Loss will remain an important part of the property claims environment. Be sure to know that environment and the related state/federal law.