(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the sixth of a twelve part series he is writing on proof of loss).

As was discussed in my last post, Proof of Loss: Waiver, Part I, if possible you should file a Proof of Loss in the applicable timeframe. Not doing so can cause a myriad of problems and under some policies, National Flood Insurance, for example, can provide the insurer an excuse for denying the claim all together. As previously discussed, however, there are some circumstances in which an insurer may waive the requirement of filing a Proof of Loss. Last week we discussed that express waiver occurs when an insurer explicitly states, either orally or in writing, that the filing of a Proof will not be required. This week we will focus on implied waiver, or waiver which occurs as a result of the actions and/or conduct of the insurer.

Generally, waiver may be implied from any act or pattern of conduct by the insurer or its authorized agents which reasonably tends to create a belief in the mind of the claimant under the policy that notice need not be given or that proofs of loss will be unnecessary. There is a wide range of acts and conduct which may be used to argue that an insurer has waived its right to have a Proof of Loss filed.

For instance, an insurer may waive its right to a Proof of Loss if its actions or conduct lead the insured to believe that no Proof will be required. As one court held:

Where the insurer or its agents have formed a relationship with the insured or acted towards him in such a way as to cause the insured to reasonably believe written notice and formal proofs of loss will not be required, the insurer will not be permitted to raise such matters as a defense.

Integrity Ins. Co. v. Lindsey, 444 N.E.2d 345, 347 ( Ind. Ct. App. 1st Dist. 1983).

Similarly, an insurer’s failure to demand a Proof of Loss may result in the insurer waiving its right to do so. The laws of some states, and the terms of some policies, only require a Proof be filed if demanded by the insurer. Thus, if a Proof is not demanded and the proper forms are not provided, the insurer may be found to have impliedly waived its right to do so. In King’s Gym Complex, Inc. v. Philadelphia Indem. Ins. Co., 433 F. Supp. 2d 256 (N.D. N.Y. 2006), for instance, the court stated:

New York Insurance Law § 3407 provides that the failure to produce proof of loss will not invalidate the claim unless the insurer gives a written notice and a blank form. The purpose of Insurance Law § 3407 is the protection of the insured from the consequences of oversight in failing to timely file a proof of loss which is a condition precedent to recovery.

While this case and others like it may provide an argument for waiver if an insurer does not demand a Proof of Loss or provide the necessary forms, it is important to note that this can occur in very limited circumstances. Unless required by statute or by the terms of the Policy, an Insurer may be under no duty to demand compliance. Therefore, without knowing the policy provisions and the relevant local laws, failing to file a Proof of Loss may give the Insurer an opportunity to deny coverage.

Finally, an insurer’s denial of the claim may waive its right to a Proof of Loss, depending on the law of the jurisdiction and the language of the policy. For example, some courts have held that when an insurer has denied coverage for a loss on grounds other than failure to comply with a proof of loss requirement, the insurer has certified that it has investigated the claim thoroughly enough to make a proper decision as to coverage under the policy. Thus once coverage has been denied, filing a Proof of Loss is pointless and might not be required, as one court pointed out in the following:

It is the law generally that the unconditional denial of liability within the period allowed by the policy for the filing of proof of loss constitutes a waiver of the requirement. The rationale behind such holdings is that the denial of liability on other grounds before the time to file the proof of loss has expired, indicates that the insurer has already made up its mind to refuse payment for any loss and therefore filing of proofs of loss would be a vain and futile act.

Balogh v. Jewelers Mut. Ins. Co., 167 F. Supp. 763 (S.D. Fla. 1958).

It is important to note that there is one major exception that courts have found when addressing waiver of the Proof of Loss requirements when the claim has been denied. When an insurer denies a claim before the Proof is required to be filed but reserves its right to other defenses which are not stated or have not arisen, some courts find that an insured’s failure to submit a Proof may be used as an additional reason for denying coverage.

While an insurer will assume the risk that its denial of coverage and reservation of rights will be allowed by a particular jurisdiction, an insured must be careful to protect his or her interests as well. In many circumstances, filing a Proof of Loss even after denial may be the best way to prevent any future claims of non-compliance with the insured’s post-loss obligations.

Other circumstances exist when an insurer may waive the right to have a Proof of Loss submitted due to the insurer’s actions or course of conduct. Each case is fact specific and should be analyzed extensively and thoroughly documented. As I have discussed previously, an accurate and detailed timeline of events can be critical in framing and supporting any waiver argument, and I recommend that one be created in most instances.

The lesson to take away from this week, as well as my post last week, is that if possible a Proof of Loss should usually be filed. Doing so can cut down on the variety of headaches that can come from having to argue that a waiver has occurred. If filing a Proof is not possible or has not occurred, however, there may be circumstances which may excuse the insured, depending on the individual situation.

Check back next week when we will finish up this three part mini-series on waiver by discussing who has the authority to waive the Proof of Loss requirements.