In my last several posts, I wrote about proof of loss requirements specific to New York and have focused on several cases that were consolidated into one opinion from New York’s highest appellate court.1 In each of the cases involved in the appeal, an insurance carrier denied coverage because the policyholders allegedly failed to submit the proofs of loss timely.

Syd’s Decorators was one of the claims consolidated into the Igbara case. That claim involved a fire loss. The carrier demanded a proof of loss and that the policyholder appear for examination under oath. The president of the policyholder company appeared for examination under oath, but no proof of loss was submitted before the lawsuit was filed. The carrier filed a defense to the case based on the failure to file proof of loss and moved for summary judgment.

The policyholder pointed out that the carrier never mentioned the proof of loss following the examination under oath and argued it believed attendance at the examination was full compliance. The trial court denied the carrier’s motion and allowed the policyholder to serve the sworn proof of loss within 30 days after its decision. The middle appellate court reversed, concluding the carrier’s request for proof of loss was not misleading, submission to examination was neither a substitute for nor excused lack of compliance with the proof of loss requirement, and the policyholder never filed a proof , so it could not be deemed in substantial compliance. The policyholder appealed to New York’s highest court.

You may think answering questions under oath and providing essentially the information in proof of loss at examination under oath would be substantial compliance with the proof of loss requirement. But this does not appear to be true in New York. The New York Court of Appeals affirmed the middle appellate court’s decision granting judgment for the carrier.

There has been scholarly debate about the strict construction of the proof of loss requirement taken by the Court in the Igbara decision. Some of this debate involves a plea for a more broad interpretation of New York’s proof of loss law to protect consumers. The general purpose behind Section 3407 was to protect consumers from losing out on claim rights because of a technical detail. Commentators believe the Court focused on pre-Section 3407 case law requiring strict compliance. The consumer protection purpose of Section 3407 may be lost in the interpretation until another case presenting the issue makes its way to the Court.

Given the current interpretation, we strongly urge New York policyholders to submit their proofs of loss timely and not risk jeopardizing claim recovery rights. 

1 Igbara Realty Corp. et. al v. New York Prop. Ins. Underwriting Association, 63 N.Y 2d 301 (1984).