The last two weeks I have discussed some of the basic aspects of an insurer’s ability to expressly or impliedly waive its right to a Proof of Loss. While it is important to note that an insured’s post loss obligations can be waived, it is equally important to know and understand who has the authority to bind the insurer with their words and/or actions. Therefore, I will finish up my discussion of waiver by discussing some of the individuals who may have the ability to waive the Proof requirement. Please note that in this post when I refer to an insurer’s “agent” I am not necessarily referring to an “insurance agent.” Instead I am referring to anyone who is acting on behalf of the insurer in dealing with the claim.
As I’m sure you are aware (After all I do say it every week!), each situation and every jurisdiction and policy are different. In some circumstances a policy may specifically state which agents of the insurer have the ability to waive the Proof requirement. With the National Flood Insurance Program, for instance, neither the “Write Your Own” carrier nor the adjuster has the authority to waive post loss obligations. As the policy states, only FEMA may waive the requirement that an insured submit a Proof of Loss. When a policy is this explicit, relying on a verbal or written waiver by someone other than the individuals listed in the policy may provide the insurer with a reason to deny the claim entirely. In the case of the National Flood Insurance Policies, you can almost be guaranteed of it. See Sanz v. United States Security Insurance Co., 328 F.3d 1314 (11th Cir.2003)(holding the Proof of Loss requirements may be waived, but to be effective the waiver must be made by the Federal Insurance Administrator and must be in writing).
In many instances, however, things are not so clear cut. The policy may be silent as to which individuals may waive post loss obligations, at which time it is important to analyze the actual and apparent authority of the insurer’s agent. Actual authority is fairly straight forward. If the individual has had the authority to waive post loss obligations conferred upon him/her by an agreement with the insurer then they obviously have the authority to bind the insurer by their actions. For instance, an individual has been entrusted to conduct all of the business of an insurer in a particular area likely has actual authority to waive a Proof of Loss requirement.
Where the situation gets more complicated, however, is when the individual does not indeed have authority to waive a post loss requirement. Arguing that an individual has apparent authority is extremely fact intensive and must be analyzed very carefully. Most importantly, the insured must reasonably believe that the individual has the authority to bind the insurer and thus waive the Proof of Loss requirement. This involves looking at the interplay between the insured, insurer, and the insurer’s individual agent.
If the individual purporting to have the authority to waive the Proof of Loss requirement specifically tells the insured that he/she has the ability to do so, it is more likely that a court would find that it was reasonable for the insured to rely upon this assertion. Similarly, if the insurer knows that its agent is claiming to have the authority to waive post loss obligations or has incorrectly done so, the insurer’s failure to act to correct the mistake may also be enough for a court to find that the individual has apparent authority and the waiver is effective.
Also, an individual’s position with the insurer may play a role in whether or not there is apparent authority. For instance, a court may find that an adjuster or executive of the insurer had apparent authority to waive the Proof of Loss requirement and that the insured was reasonable in relying on this authority. A court is not likely, however, to buy an argument that the night watchman at the insurer’s offices had such authority or that the policyholder was reasonable in relying on his waiving the policy provisions
There are numerous circumstances which may play a role in whether an individual has apparent authority to waive a Proof of Loss requirement, however the important thing is that the insured actually believes that the authority is legitimate. An insured has no duty to investigate to determine whether or not the person claiming to waive a post loss obligation indeed has authority to do so. As the court said, “[t]he public has a right to rely upon an agent’s apparent authority and are not required to inquire as to his special powers unless the circumstances are such as to put them on inquiry”. Guarantee Mutual Fire Ins. Co. v. Jacobson, 57 so.2d 845, 848 (Fla. 1952). If the insured however has knowledge that the individual purporting to waive the Proof of Loss requirement does not have the authority to do so on behalf of the insurer, or such a belief is not reasonable, the court may find that no apparent authority exists and the claim may be denied if a Proof of Loss is not timely submitted.
Proving waiver of the Proof of Loss requirement and other post loss obligations is possible, but it can be very contentious and difficult. This can be avoided in many situations, however, by simply filing the Proof when possible. If it is not possible or not filed, just be aware that there may be an argument for waiver.