Getting Back to the Basics: What is a Proof of Loss, and What Purpose Does it Serve?

(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the first of a twelve part series he is writing on proof of loss).

“You can’t do anything until you learn the basics!” Growing up, I remember countless teachers, coaches, and instructors pounding that phrase into my head. Whether it was a golf instructor desperately hoping that my next swing would send the ball into the fairway and not the neighboring house’s living room, or a wrestling coach wielding a plastic whiffleball bat as a constant reminder to stay in a good stance even when we were exhausted, this lesson has been engrained in me for as long as I can remember. I guess it should come as no surprise then, that when I expressed an interest in having some time on this blog, Chip Merlin, my current coach and mentor, wanted me to write about, what else, the basics! Therefore, for the next twelve weeks, we will be delving into one of the most basic, but important, post-loss obligations: “The Proof of Loss.”

An insurance policy is a contract, in which the insurer agrees to indemnify the insured policyholder for sudden and accidental covered losses in return for the policyholder’s agreement to pay a premium and comply with certain post-loss requirements. The filing of a proof of loss is one of these enumerated post-loss obligations, and it can be an essential condition for recovery, depending on how the policy is worded. It can be required under almost all types of insurance policies: property, life, health, and automobile to name a few and has been found in policies for hundreds of years.

While the insured must notify the insurance company of a loss in order to begin the investigation, a proof of loss goes far beyond a mere notice. A proof of loss requires a formal statement of the claim, usually sworn with the notarized signature of the insured, and is designed to facilitate the investigation of the claim and enable the insurer to protect its interests.

Specifically, the purpose of a proof of loss is to provide the insurer with specific information pertaining to the formal claim of damages. The policy will determine what must be in a proof of loss and most often includes:

• The amount of loss claimed;
• The documents that support the amount of loss claimed;
• The parties claiming the loss under the policy;
• The date and cause of the loss; and
• The people who have an interest in the claim.

In many instances, this information is the first documentation provided to the insurer which details the specifics of a claim. As such, it is in both the insurer and the policyholder’s, best interests to comply with the proof of loss requirements, so that the claims process can proceed as quickly and efficiently as possible.

After the proof of loss is submitted by the insured, the insurer must review it and reply. The insurer may accept or reject the proof. While this will be discussed in more detail in later additions of this series, an insurer should only reject a proof of loss for technical reasons, such as the proof is not properly filled out, is missing supporting documentation, is not signed, or is not notarized.

The insurer’s response should include what specific deficiencies exist, as well as what the insured must do to properly comply with the proof of loss requirements. An insurer’s disagreement as to the amount of damages, however, is typically NOT a valid reason for the insurer to reject the proof of loss.

While there are many more proof of loss requirements, in both the insurance policy and various state statutes, it is important at this juncture to note that there are important time requirements that apply to the filing of a proof of loss. Generally, the insured must comply with these time requirements or risk the possibility that the insurer may attempt to deny the claim.

What is the moral of this story, you may ask? Simple: an accurate proof of loss is critical to the claims process.

Although many more advanced topics relating to property insurance are discussed on this blog, the basic fundamentals remain a crucial and consistent requirement. Without a firm grip on these issues, it would be easy to find oneself up the proverbial creek and the subject of litigation.

That being said, I hope you will check back next week when we will dive deeper into the content of a proof of loss and what happens when the proof is not submitted, is inaccurate, or is incomplete.