Before you agree to settle your insurance claim, make sure that you have no additional or supplemental claims stemming from the original you want to collect on.

A federal court recently ruled in favor of the carrier on a motion for summary judgment on the issue of whether an insured could assert an additional claim based on an amended proof of loss after the insured had agreed to a settlement. The case, State Automobile Property & Casualty Company v. There is Hope Community Church,1 involved a church building damaged by fire.

The insured submitted a claim for damages sustained by the church however State Auto disputed the amount owed because they had settled the claim with the insured for the Actual Cash Value of the building in 2011. The court found that the insured had unequivocally agreed to a certain amount accepted by the insured as the “undisputed amounts” owed by State Auto.

The insured’s argument that the amount owed remained subject to adjustment because the policy allowed for an amended proof of loss was rejected by the court. The court concluded that the insured had to submit the amended proof of loss prior to agreeing to a settlement for an undisputed ACV amount and therefore granted summary judgment to the insurer. In addition, the court found against the insured on the issue of collecting Replacement Cost Value (RCV) for the building. The court decided that since the insured offered no evidence of an intent to rebuild within 180 days, as specified by the policy, they were not entitled to collect RCV.

This case is instructive because it highlights the need to comply with all conditions precedent to a policy and submit any and all claims for damages in proper order before agreeing to a settlement and before any time frames specified in the policy. This case is important for both policyholders and adjusters dealing with these types of claims because it provides clear guidance on when and how to submit amended proofs of loss and claims in both a timely and sequential manner to avoid preclusion.

1 State Auto. Prop. & Cas. Co. v. There is Hope Cmty. Church, No. 11-0149 (W.D. Ky. May 15, 2014).