In a previous post, I discussed the proof of loss requirements in New Jersey. While failure to abide by the Proof of Loss requirement will act as an absolute bar to claims under National Flood Insurance Program policies, substantial compliance may save the property owner’s rights with regards to other policies.1 The question then is what constitutes substantial compliance?

Again, full compliance with the Proof of Loss requirement is advised whenever possible. However, New Jersey courts have found that where the insurance company has been provided with sufficient information to evaluate the claim, failure to submit a Proof of Loss will not necessarily be fatal to the claim. In Tell v. Cambridge Mutual Fire Insurance Company,2 the Court stated:

Here, plaintiff reported the loss to defendant’s agent by letter dated November 26, 1974, and enclosed a list of all items stolen and the value of each. As indicated, there was correspondence and at least one telephone call between the parties extending over the next nine months, culminating in the submission by another agent of a “sworn statement in proof of loss” form which plaintiff found to be inaccurate and unacceptable, as stated in his response of September 3, 1975. In these circumstances there was substantial compliance with the policy requirement, as defendant was promptly and fully informed of all details of the loss.

Interestingly, the Court noted the insurer failed to demonstrate that it suffered prejudice from the technical breach. This places an affirmative burden on an insurer to demonstrate it was prejudiced by the insured’s failure to submit a Proof of Loss. The U.S. District Court for the District of New Jersey has likewise found that an insurer must establish it has been prejudiced before denying a claim based upon the failure to timely submit a Proof of Loss.3

While there are arguments available to those who fail to submit a Proof of Loss, it is still advisable to follow all requirements of your policy. If you need help interpreting the policy, contact an attorney with experience representing policyholders.

1 Resolution Trust Corp. v. Moskowitz, 868 F. Supp. 634 (D. N.J. 1994).
2 Tell v. Cambridge Mut. Fire Ins. Co., 150 N.J. Super. 246, 254 (N.J.Dist.Ct. 1977).
3 Moskowitz, 868 F. Supp. 634 (D. N.J. 1994).