Proof of Loss Issues in New Jersey

Thanks to Hurricane Sandy, many property owners in New Jersey are making their first ever claims on their homeowners’ or flood insurance policies. They are faced for the first time with preparing and submitting a Proof of Loss. In this post, I address the requirement for a Proof of Loss. In later posts, I will discuss other issues relating to this topic.

A Standard Flood Insurance Policy (SFIP) is governed by federal law and is generally administered by a Write Your Own (WYO) insurance carrier. “A SFIP requires an insured to submit a proof of loss to its WYO within sixty days of the alleged date of loss. 44 C.F.R. Pt. 61, App. A(1), Art. VIII(J))”1 Further, “[a] proof of loss statement must be signed and sworn by the insured and must contain various pieces of information such as a short explanation of how the loss occurred, specifications of buildings damaged, detailed estimates of repairs required, and an inventory of damaged property.”2

The U.S. District Court in New Jersey has held failure to strictly adhere to the Proof of Loss requirement under a flood policy bars payment.

Plaintiffs' failure to submit a proof of loss statement, late or otherwise, for an amount in excess of that already paid by Omaha, represents a complete failure to comply with the federal regulations and the terms of their SFIP and therefore the case law from this Circuit cited by Defendant controls and bars Plaintiffs' present claim for additional payment.3

When dealing with a NFIP flood claim, the timely filing of a Proof of Loss is imperative and failing to timely file will forfeit your rights under your policy.

In non-flood policies, Proofs of Loss may still be required, however the policy and not any particular law that dictates time requirements. Much like in the flood arena, courts have held a failure to abide by the Proof of Loss requirement will bar a claim, however, enforcement may not strictly applied as in the flood context. “Where the giving of notice of loss or the furnishing of proofs of loss is a condition precedent of liability under an insurance contract… non-compliance is fatal to recovery in the absence of a showing of waiver or at least of substantial compliance.”4

If a policyholder can prove the carrier waived the Proof of Loss requirement or that they substantially complied, the failure to file may not be an absolute bar to recovery. However, if your policy contains a requirement for a Proof of Loss, it is in your best interest to timely comply with the provision in order to avoid the time and expense incurred litigating the issue.

1 Miller v. Selective Ins. Co. of America, No. 08-2296, 2009 WL 5033952 (D. N.J. Dec. 15, 2009) (Note for Hurricane Sandy victims FEMA has extended this period to one year from the date of loss).
2 Id.
3 Messa v. Omaha Property & Cas. Ins. Co., 122 F.Supp.2d 523, 530 (D. N.J. 2000).
4 See Also Resolution Trust Corp. v. Moskowitz, 868 F.Supp. 634 (D. N.J. 1994).

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Comments (4) Read through and enter the discussion with the form at the end
SHIRLEY HEFLIN - February 22, 2013 12:28 PM

Dear Mr. Trautmann:

I had an amusing thought(s) while reading your blog entry regarding the "...Write Your Own (WYO) insurance carrier..." language.

Wouldn't it be great for the insured if we could "WYO" insurance policy??

Best regards,
(Tampa, FL)

Ulises - February 28, 2013 3:42 PM

Mr. Trautmann,

Thank you for the informative blog post. Regarding the subject, I have a quick question.

Once the proof of loss has been submitted to the insurance company, how long does an insurance company have to respond to the proof of loss?

Any information would be greatly appreciated.

Kind regards,

Andy LaPorte - July 10, 2013 8:55 AM

Will NFIP accept a Proof of Loss form other than the one which they put out??

Brent Cutler - August 27, 2013 7:08 AM

When a proof of loss is submitted and NFIP accepts that proof of loss and provides proceeds, is the homeowner allowed to use those proceeds for other items or must they be used strictly for the damages caused by the flood?

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