After a major loss to your home or business, the last thing you probably want to think about is paperwork. However, there is one important form that you may need to make time for, which is the “sworn statement in proof of loss” (or just “proof of loss”). A proof of loss is a one or two-page form that you may have to fill out, sign and have notarized. Typically, it requests the following information:
your name (and that of any other claimant);
policy and claim numbers;
cause, date and time of loss;
use of the damaged building;
ownership information for the property (including any liens);
amount of insurance;
amount of loss; and
Once the requested information is provided, the form must be signed by the claimant(s) and notarized. Often the insurance company will also require you fill out an inventory of personal property. Usually the inventory will ask for each damaged item’s description, quantity, age and replacement cost. People can lose hundreds or thousands of items in a fire or other disaster, so correctly filling out the inventory can be overwhelming. Because filling out these forms and navigating the claims process is complicated and important, it often makes sense to hire a public adjuster to help you. With respect to the proof of loss and other documents you should keep the following in mind:
1. Submit the Proof of Loss on Time
Disputes about whether an insured has complied with the duty to submit a timely, signed, sworn proof of loss give rise to many lawsuits. Sometimes the policyholder prevails, and sometimes the insurance company wins (and the insured loses their claim). When the insured loses, it is generally because they have not submitted a timely, signed, sworn proof of loss.
The timing requirements for submission of a proof of loss are generally set forth in the insurance policy. In my experience, the most common deadlines are within 60 days of the loss or of the insurance company’s request although some policies use other time-frames. However, after a loss your policy may be a pile of ashes, and even if it is available, a layperson may have a difficult time interpreting it.
I think it is generally a good idea to assume the worst. In other words, if you think that the proof of loss due date may be approaching but cannot determine this for certain, file one. Certainly, if you receive a letter demanding a proof of loss, move quickly. Ideally, speak with your public adjuster immediately, and in any event make sure a signed, sworn proof of loss is submitted within the time frame set by the company. Failing to do so could cost you your claim. If for some reason you cannot do this, you should get a written extension (do not rely on oral assurances).
2. Submit the Proof of Loss by a Reliable Method
The insurance company may tell you how to submit the proof of loss (in the policy, the letter demanding it, or the form itself). You should follow its instructions. However, it is good to use a backup - say, certified mail and email - which makes it more difficult for the insurer to claim it never received the proof of loss. Email is particularly good when you are up against the deadline, as it is very fast and it retains a copy of everything you have sent. Make sure you keep a copy of everything you send, and retain all certified mail documents.
3. Be Accurate
By signing the Proof of loss, with notarization, you are swearing that as far as you know it is correct. If it is not, the insurer may take the position that you have committed fraud. Guessing is generally undesirable. Everything on the form - the date of loss, its cause, the amount of loss - should be as accurate as possible.
The insurer may plug in numbers - typically low ones - before it sends you the form. If you sign the form with the insurance company's numbers, it may later claim you agreed to its calculation of the amount of loss. If it entered (for instance) $25,000 for a $150,000 building loss, that is a problem. You should have someone who understands your loss review the insurer's numbers to determine if they are accurate. If not, you may have to submit a proof of loss setting forth the correct numbers or take other action to deal with the incorrect calculation.
4. Be Thorough
Blank spots may result in the insurer rejecting the proof of loss or (less frequently) denying the claim. While sometimes unavoidable, answers like "to be determined" are not as good as an accurate number. Try to get an estimate for the building repairs sooner rather than later. If there are open items, indicate that on the form, but give the insurance company as much correct information as you can. If you are living in a hotel, list your living expenses to-date (while also stating that they continue to accrue, giving specific figures if possible).
Also, the insurer will often ask that supporting documentation be submitted as part of the proof of loss, such as estimates, personal property inventories, and copies of receipts. You should include all such documents you are able to obtain with the proof of loss submission, and supplement your initial documents if more information becomes available. Again, retain a copy of everything you submit.
Lastly, if more than one person is making a claim - for instance, a husband and wife - they both need to sign the form, and of course it needs to be notarized.
Dealing with the proof of loss requirement can be a headache, and is the last thing most policyholders want to deal with following a disaster. However, careful attention to this important condition early in the process can avoid worse problems down the road.
Disclaimer: The above passage sets forth the author's musings regarding certain general principles relating to insurance. It is not legal advice. If you are interested in retaining counsel for the purpose of seeking legal advice regarding your own loss or claim, feel free to contact us at 734-648-8030.