Yesterday Chip Merlin hosted a webinar on proof of loss issues specific to flood claims. An important takeaway from the webinar was that you have to be absolutely meticulous in completing the proof of loss form. One mistake on a flood proof of loss can jeopardize the claim. For non-flood claims, the standard in California is different.
In California, although the standard is not strict compliance, but rather "substantial compliance," being as thorough as possible when completing a proof of loss is good practice.1 Depending on the omission, a proof of loss that is incomplete may be deemed a material breach of a condition precedent to coverage and excuse the insurer’s duty to perform.2 If you give the insurer a reason to deny coverage, chances are it will be seized upon.
From time to time, notwithstanding the good faith efforts of the policyholder to comply with the insurer’s request for a proof of loss and other documentation, the insurer may reject a proof of loss. What are the grounds for rejection of a proof of loss? Generally, An insurer may reject a proof of loss only for omissions and insufficient descriptions.3 If an insurer is rejecting a proof of loss as incomplete, after giving prompt notice, it must give the policyholder a reasonable amount of time to submit a supplemental proof of loss. The policyholder can take the opportunity to correct any mistakes or errors in the proof of loss or provide additional information.4 If the proof of loss is complete,the insurer cannot reject the proof of loss. Under those circumstances, the insurer must specify the basis for the rejection. A disagreement over the damage amounts of the claim does not give the insurer the right to reject the claim. If the insurer rejects a proof of loss for any reason other than incompleteness, it would be prudent to seek the advice of an insurance professional.
1 McCormick v. Sentinel Life Ins. Co. (1984) 153 Cal. App. 3d 1030.
2 Abdelhamid v. Fire Ins. Exchange (2010) 182 Cal. App. 4th 990.
3 Cal. Prac. Guide: Insurance Litigation (The Rutter Group 2013) 6:49.
4 Id. at 6:50.