Those who handle first-party property insurance claims everyday understand the importance of the proof of loss. Imagine attempting to handle your own first-party property insurance claim and not realizing what potential pitfalls there can be in the claims process. One of these potential pitfalls is timely submitting a proof of loss according to the policy and state law. A proof of loss is a standardized form on which the insured gives information about a claim and the property insured. The general purpose of proof requirements is “to afford the insurer an adequate opportunity for investigation, to prevent fraud and imposition upon it, and to enable it to form an intelligent estimate of its rights and liabilities before it is obligated to pay.”1
New York has a statute, Insurance Law §3407, which addresses proofs of loss. The statute requires a policyholder to “furnish” the proof of loss to the insurer within sixty (60) days after the insurer requests it and provides the form. It is critical for a policyholder in New York to submit the proof of loss timely once it is requested and the form is supplied. In New York, a policyholder’s failure to file the proof of loss within the time period gives the insurer an absolute defense to the claim. New York is a strict compliance state with the proof of loss requirement.
The reason I placed quotation marks around the word ”furnish” in the last section of this article is because it is one of those legal buzz words. That means that a court has specifically discussed the meaning of that term in a case.
In Ball v. Allstate Insurance Company,2 a policyholder mailed the filled out proof of loss form on the sixtieth day after it was requested by the insurer. The insurer rejected it, argued the policyholder failed to comply with the proof of loss requirement, and sought to treat it as an absolute coverage defense to the claim. The insurer received the proof on the sixty-fourth day after its request. New York’s highest appellate court held the word “furnished” in the statute refers to the date the proof of loss is mailed by the policyholder to the insurer. So if the proof of loss is mailed on the sixtieth day following the insurer’s request, it is furnished timely according to the statute, even though it may not be received by the insurer until beyond the sixtieth day. The Court held:
[W]e conclude that the Legislature contemplated that proofs of loss would be “furnish[ed]” to the insurer when they were mailed. Allstate’s contrary interpretation of the statute would result in forfeiture even in those instances where the insured placed the proofs in the mail with the reasonable expectation that they would arrive at their destination before expiration of the 60–day period but were not received because of the inefficiency or mistake of the post office. The statute contains no explicit language requiring receipt within 60 days. For us to add that requirement would create a trap for unwary insureds who timely mail proofs of loss but forfeit their claims, nonetheless, because, for reasons beyond their control, the proofs were not received by the insurer until after expiration of the 60–day period. That result is not compatible with the modern commercial environment where the mails are extensively relied upon for communication between parties.
The proof of loss is a very important document in the property insurance claim process. It is very important to submit the proof of loss timely to the insurer to avoid jeopardizing the ability to recover benefits. While the New York statute and case law regarding proofs of loss allow policyholders to furnish proofs by mailing them on the sixtieth day following the insurer’s request, it is obviously better to submit it much earlier, if possible.
1 14 Couch on Insurance 2d (Rev. ed. 1982) § 49:390.
2 Ball v. Allstate Ins. Co., 595 N.Y.S.2d 711 (1993).