I’ll ship a presentation on the Annual Assembly of the Nationwide Affiliation of Public Insurance coverage Adjusters (NAPIA) subsequent month, specializing in two cornerstones of property insurance coverage claims: proofs of loss and examinations underneath oath. It’s a subject I first addressed for NAPIA precisely forty years in the past. This yr’s session will probably be one thing of an encore efficiency. I’ll deliver the good thing about 4 a long time of authorized expertise targeted on property insurance coverage claims and evolving case regulation to bear earlier than I get too previous and neglect greater than what I’ve discovered on these points. But, the problems involving proofs of loss and examinations underneath oath stay as vital right this moment as they have been forty years in the past.
Whereas getting ready for this up to date presentation, I got here throughout a outstanding historic case, Phillips v. Safety Insurance coverage Firm, 1 determined by the Missouri Supreme Courtroom in 1851. The case reveals how enduring and complicated these coverage necessities have all the time been. This case was determined properly earlier than the institution of recent court docket reporting. The procedures for conducting examinations underneath oath have been far much less formal than right this moment’s transcribed periods with authorized counsel current. Nonetheless, the authorized ideas at stake stay related. The case gives beneficial classes for right this moment’s public adjusters and insurance coverage firm claims professionals.
The policyholder insured a inventory of army items and musical devices saved in St. Louis. His merchandise was largely destroyed within the catastrophic St. Louis hearth of Could 17, 1849. Phillips rapidly salvaged what he might and relocated the saved objects. By June 9, he submitted a package deal of paperwork to the insurer, together with a sworn stock of saved items, an announcement estimating the whole worth of his inventory at $16,500, and affidavits testifying to the loss. This submission, whereas complete, lacked some particular particulars, corresponding to gross sales data that may have documented the depletion of stock because the final inventory depend. Regardless of these deficiencies, the insurer obtained the paperwork with out formal objection, reviewed the supplies, and even mentioned potential settlement figures with the insured.
The turning level within the case got here when, on June 19, 1849, the insurance coverage firm demanded that Phillips seem for an examination underneath oath. The court docket famous that this was an ordinary requirement in lots of hearth insurance policies. That very same day, Phillips was getting ready to depart St. Louis as a consequence of a private emergency concerning his baby, who was gravely sick. The town was within the grip of a lethal cholera outbreak. He departed and remained away till September 12, when he returned and promptly supplied to look for the examination. The insurer, nevertheless, refused to proceed and denied the declare completely on the grounds that Phillips had didn’t undergo the examination when initially requested.
In reversing a nonsuit issued by the decrease court docket, the Missouri Supreme Courtroom present in favor of Phillips and delivered a nuanced opinion concerning the function and software of the examination underneath oath. The court docket held that whereas such an examination is a sound and enforceable situation in a hearth insurance coverage contract, its execution should contemplate the circumstances. The justices noticed that Phillips’ absence was not neglect or evasion however necessity. Moreover, the court docket emphasised that his supply to undergo examination upon returning, solely to be rebuffed by the insurer, demonstrated religion effort on his half to conform. The insurer’s refusal to proceed and its categorical denial of legal responsibility amounted to a waiver of the situation.
What makes the choice significantly notable is the way it handles not simply the examination difficulty but additionally different procedural necessities that insurers would possibly attempt to implement strictly. For instance, the coverage mandated that the insured procure a certificates of the loss from the “nearest Justice of the Peace or notary public.” Phillips complied by submitting certificates from two well-known metropolis justices. The insurer objected, noting {that a} notary named Coste was technically nearer to the loss location. Nonetheless, the court docket discovered this objection to be with out advantage, stressing that Coste was comparatively unknown and that Phillips had moderately turned to acknowledged and respected native officers. Furthermore, as soon as the insurer declined to simply accept any additional documentation and declared the declare forfeited, it successfully waived its proper to insist on strict adherence to such technicalities.
This side of the ruling reinforces the overarching theme of the case that procedural circumstances in insurance coverage contracts should be enforced contemplating equity, context, and the events’ conduct. An insurer can’t concurrently reject a declare in absolute phrases after which protect itself from legal responsibility by pointing to minor or technical failures in efficiency. In each the matter of the examination underneath oath and the Justice of the Peace’s certificates, the court docket took a sensible, cheap, and equitable method, recognizing the insured’s good religion efforts and the insurer’s unwillingness to interact constructively within the claims course of.
Procedures have modified considerably since 1851. But, this 174-year-old resolution stays a foundational case with modern-day classes. It illustrates that an insured’s literal duties are sometimes not absolute boundaries to restoration when carried out moderately and in good religion. Insurers who decline cooperation can’t later invoke procedural formalities as shields towards their refusal to honor claims and act moderately following a loss. Whereas it’s a lot safer to conform totally with all post-loss necessities, insurers shouldn’t be allowed to complain of technical deficiencies when the policyholder is performing moderately and absent prejudice to the insurer.
For these on this subject of examinations underneath oath, I might merely search the time period in our search perform above or learn “What Is an Examination Underneath Oath? What Occurs When Policyholders Do Not Take part?”
For public adjusters, spend money on your profession, data, and pathway to success. Community with and study from most of the finest public adjusters within the nation. Learn to higher serve policyholders in order that you’ll be their champions. You can’t discover extra skilled and extra profitable public adjusters in a single place and at one time than at this assembly subsequent month. I strongly recommend that public adjusters wanting to raised themselves, their groups, and their occupation attend NAPIA’s Annual Assembly. Register at this hyperlink: https://www.napia.com/occasions/2025-napia-annual-meeting-copy.
Thought For The Day
“The distinction between genius and stupidity is: genius has its limits.”
—Albert Einstein