What number of proofs of loss will be demanded was a query on the coronary heart of a federal court docket determination involving a Louisiana hurricane loss litigated in New York beneath New York legislation due to a forum-selection and choice-of-law clause buried within the coverage. 1 The ruling is an effective reminder that procedural traps insurers typically depend on don’t at all times spring the best way they hope. That is very true in the case of proofs of loss beneath New York legislation.
The case arose from hurricane harm in Louisiana, however the insurer efficiently enforced a coverage provision requiring the dispute to be litigated in New York and ruled by New York legislation. That alone ought to give each policyholder and public adjuster pause. The place a case is litigated, and which legislation applies, can dramatically change the principles of the sport. On this occasion, New York legislation managed the insurer’s argument that the declare must be barred as a result of the policyholder didn’t submit a “correct” proof of loss.
The insurer’s place was easy and aggressive. Sure, the policyholder submitted a sworn proof of loss, nevertheless it was labeled “partial,” didn’t state a remaining greenback quantity, and was tied to an advance cost. In response to the insurer, that was not ok. When the insured later sought extra cost and appraisal with out submitting one other sworn proof of loss stating a remaining quantity, the insurer argued your complete breach of contract declare must be dismissed.
The court docket rejected that argument. Underneath New York legislation, an insured is usually required to well timed submit a signed, sworn proof of loss. Failure to take action will be deadly. However the legislation doesn’t require a number of proofs of loss until the coverage expressly says so. The court docket famous that the coverage required a signed, sworn proof of loss within the singular. The insured supplied precisely that, utilizing the insurer’s pre-filled type, which the insurer required as a situation for issuing a partial cost, and the insurer accepted it with out objection.
The court docket relied on longstanding New York authority holding that after an insurer accepts a sworn proof of loss in reference to a cost, it can not later insist that the insured was required to submit extra proofs of loss just because the declare continued to develop or the insured disputed the quantity paid. A partial proof of loss continues to be a proof of loss. New York legislation favors substantial compliance, not forfeiture by technicality.
Equally necessary was what the insurer already knew. The report confirmed the insurer had adjuster estimates, contractor numbers, communications from public adjusters, and a transparent assertion from the policyholder that the loss exceeded the quantities paid and that coverage limits had been owed. The concept that the insurer was one way or the other prejudiced as a result of a second sworn type was not submitted merely didn’t maintain water.
The court docket additionally rejected the argument that invoking appraisal required a brand new proof of loss. The appraisal clause required a disagreement over the quantity of loss and never a sworn assertion on a selected type. The insured clearly communicated that disagreement. That was sufficient.
There have been different important points on this case, together with insurable curiosity and substitute price disputes, however this publish shouldn’t be about these points. The proof of loss ruling stands by itself and sends a message insurers shouldn’t ignore.
If an insurer calls for a proof of loss, provides the shape, requires it to be signed to launch cost, after which accepts it, the insurer can not later faux that the doc by no means counted, at the least beneath New York legislation. Labels like “partial” don’t magically erase compliance. Insurance policies say what they are saying, and courts, at the least this one making use of New York legislation, is not going to add further hurdles after the actual fact.
To be protected, I’m not suggesting that policyholders and public adjusters refuse to offer a number of proofs of loss. The draw back to refusing to take action, particularly in one other state or with details totally different than these, might end in a legitimate denial. Why would anyone say, “Hell no, we gained’t file one other proof of loss,” and probably jeopardize a legitimate declare? What do it’s important to lose? Ego?
The bigger lesson for insurers is one I’ve preached for years. Proof of loss necessities are supposed to facilitate claims dealing with, to not function gotcha clauses. When insurers attempt to flip them into forfeiture gadgets, courts typically push again.
For these involved in learning the principles about proofs of loss, I counsel studying a trio of posts by Merlin Legislation Group lawyer Corey Harris:
Getting Again to the Fundamentals: What’s a Proof of Loss, and What Function Does it Serve?
Getting Again to the Fundamentals: What Occurs if a Proof of Loss shouldn’t be Submitted
Thought For The Day
“The spirit of the legislation, not its letter, is what justice calls for.”
— Discovered Hand
1 Ram Krishana, Inc. v. Mt. Hawley Ins. Co., No. 1:22-cv-03803, 2025 WL 371016 (S.D. N.Y Feb. 3, 2025).