Last week, I wrote about the importance of timely submitting the proof of loss in first-party property insurance cases. This is particularly true in the New York, which is known as a “strict compliance” state. That means proofs of loss must be submitted timely according to the terms of the policy. Failure to do so can be an absolute defense to the claim by the insurance carrier. Bright line rules are somewhat rare in the law, so I thought I would write about the topic again to expand the discussion.
The highest Court in New York issued an opinion several years back where four insurance cases were consolidated.1 In each of the cases involved in the appeal, an insurer denied coverage for a claim because the policyholders allegedly failed to submit the proofs of loss timely. The Court stated the general rule:
When an insurer gives its insured written notice of its desire that proof of loss under a policy of fire insurance be furnished and provides a suitable form for such proof, failure of the insured to file proof of loss within 60 days after receipt of such notice, or within any longer period specified in the notice, is an absolute defense to an action on the policy, absent waiver of the requirement by the insurer or conduct on its part estopping its assertion of the defense.
In Bonus Warehouse, one of the cases consolidated in the decision, the policyholder suffered a fire loss that destroyed its entire stock. The policyholder was insured under fire policies of $50,000 with Great Atlantic Insurance Company and $100,000 with North River Insurance Company. Written demands for proof of loss were made by each carrier by letters enclosing the necessary forms. The proofs were not received by the carriers for nearly five months and were rejected as untimely by each.
The policyholder filed separate lawsuits against the two insurance carriers. Each served an answer and moved for summary judgment on the basis of the policyholder’s failure to submit the proof of loss. The policyholder opposed the motions and argued it had met with the carriers’ adjusters within two or three days after the fire, supplied the requested data and records, agreed to submit to examination under oath, and had been misled by the demands. which were two sentences contained in two-page letters and did not state the proofs of loss had to be submitted within 60 days.
The trial court denied the carriers’ motions. They filed appeals, and the middle level appellate court affirmed, holding that under section 172 of the Insurance Law,2 the failure to submit timely proofs of loss is not an absolute defense and may be excused if the failure was not willful and the delay was, under all of the circumstances, a technical and unimportant omission. The carriers appealed that decision to New York’s highest Court of Appeals, which reversed the lower courts. The Court held the case should be dismissed because the policyholders failed to submit the proof of loss within the 60 days required under the terms of the policies.
This decision reveals how important it is to timely submit the proof of loss form in New York first-party property insurance cases. In the forthcoming weeks, I will write about the other cases consolidated in this decision.
1 Igbara Realty Corp. et. al v. New York Prop. Ins. Underwriting Association, 63 N.Y 2d 301 (1984).
2 Section 3407 is the successor statute to § 172 of the Insurance Law, which was renumbered as a result of the recodification of the Insurance Law in 1984. See Ch. 805, § 170,  N.Y. Laws 3267 (McKinney).