Proof of Loss Requirement Waived

To Reject a Claim for Lack of a Proof of Loss the Insurer Must Continually Act to Enforce the Condition

Barry Zalma

Nov 04, 2024

Transcript

FACTS

A forensic engineer retained by Insurer inspected Wildwood’s n September 2021, Wildwood’s Adjuster provided Insurer with estimates for the replacement cost value and the actual cash value of the alleged hail damage. The estimates called for removing and replacing the roofs on all of Wildwood’s nine buildings. Submitted with these estimates were photographs of the hail damage and a weather report from the day of the hailstorm.

Wildwood’s Adjuster, Insurer’s Engineer, and Insurer’s Field Claims Representative jointly re-inspected Wildwood’s buildings on November 10, 2021. Insurer then made two additional payments to Wildwood: $19,780.08 on November 24, 2021, and $6,405.27 on January 7, 2022.

Two months after the third payment was made, Wildwood sued Insurer for breach of its insurance policy due to Insurer’s failure to pay for new roofs on Wildwood’s buildings.

The trial court granted partial summary judgment to Wildwood, ruling only that Insurer had waived its Coverage Defense.

DISCUSSION AND DECISION

Where a policy provides for notice and proof of loss within a stated period, the insured must comply with that provision as a condition precedent to recovery under the policy.

Viewed most favorably to Insurer, the undisputed designated evidence shows that Insurer’s pattern of conduct was inconsistent with an intent to enforce the Sworn Statement in Proof of Loss requirement.

The Insurer paid for some of the storm damage covered by the policy more than a month before the Sworn Statement in Proof of Loss was even due, notwithstanding language in the policy.

Insurer’s actions were inconsistent with strict enforcement of its policy provisions, despite Insurer’s statement in its June 23rd letter stating that partial payment of the claim was not a waiver of any policy conditions. By paying part of the claim before Wildwood’s submission of the Sworn Statement in Proof of Loss, Insurer essentially contradicted the policy provision providing for payment of the claim only after Wildwood’s submission of a proof of loss.

The only significant dispute was over the extent of the shingle damage and the quantity of shingles to be replaced. After both parties had invested nearly two years of effort into ascertaining and negotiating the scope of Wildwood’s claim.

The Insurer, more than a year after the time period expired, first notified Wildwood-through Insured’s answer to Wildwood’s complaint-that Insurer was denying coverage due to the lack of a Sworn Statement in Proof of Loss.

Insurer could have claimed the policy terms allowed it to reject coverage as soon as the August 2, 2020, deadline for the Sworn Statement in Proof of Loss expired. Instead, Insurer invested time and money into further investigation and partial payment of Wildwood’s claim.

CONCLUSION

Insurer’s conduct over the two years before Wildwood sued was inconsistent with an intention to rely on the policy requirements-that is, the timely submission of a signed, sworn statement of loss. Insurer’s conduct led Wildwood to believe that Insurer disputed the scope of the claim-not that Insurer disputed whether any coverage was available.

Insurer’s conduct sent a clear message to Wildwood that Insurer was not enforcing the proof of loss requirements of the policy. Wildwood was therefore entitled to partial summary judgment. Because Insurer’s waiver negated the Coverage Defense on which it sought summary judgment, Insurer was not entitled to judgment as a matter of law.

ZALMA OPINION

Insurance is a contract. The insurer, unlike the insurer in White v. Home Mutual, did not deny the claim for lack of a proof of loss on the 61st day after the loss. It acted as if the proof of loss was not a condition by making multiple payments both before and after the expiration of the 60 day limit to submit a proof of loss. The public adjuster could have avoided the problem by simply asking for a written extension of the time to file, but was lulled into not producing a proof of loss, by the actual partial payments of the claims. Apparently no one on either side thought about the time limit until a lawyer filed an answer to the complaint asserting the failure to timely submit a proof.