What number of proofs of loss might be demanded was a query on the coronary heart of a federal court docket choice involving a Louisiana hurricane loss litigated in New York underneath New York regulation due to a forum-selection and choice-of-law clause buried within the coverage. 1 The ruling is an efficient reminder that procedural traps insurers usually depend upon don’t at all times spring the best way they hope. That is very true with regards to proofs of loss underneath New York regulation.
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 regulation. That alone ought to give each policyholder and public adjuster pause. The place a case is litigated, and which regulation applies, can dramatically change the principles of the sport. On this occasion, New York regulation managed the insurer’s argument that the declare ought to 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, however it was labeled “partial,” didn’t state a remaining greenback quantity, and was tied to an advance fee. Based on the insurer, that was not adequate. When the insured later sought further fee and appraisal with out submitting one other sworn proof of loss stating a remaining quantity, the insurer argued your complete breach of contract declare ought to be dismissed.
The court docket rejected that argument. Below New York regulation, an insured is mostly required to well timed submit a signed, sworn proof of loss. Failure to take action might be deadly. However the regulation 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 fee, and the insurer accepted it with out objection.
The court docket relied on longstanding New York authority holding that when an insurer accepts a sworn proof of loss in reference to a fee, it can not later insist that the insured was required to submit further proofs of loss just because the declare continued to develop or the insured disputed the quantity paid. A partial proof of loss remains to be a proof of loss. New York regulation favors substantial compliance, not forfeiture by technicality.
Equally vital 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 have been owed. The concept the insurer was by some means 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 specific type. The insured clearly communicated that disagreement. That was sufficient.
There have been different vital points on this case, together with insurable curiosity and alternative value disputes, however this publish isn’t about these points. The proof of loss ruling stands by itself and sends a message insurers mustn’t ignore.
If an insurer calls for a proof of loss, provides the shape, requires it to be signed to launch fee, after which accepts it, the insurer can not later faux that the doc by no means counted, no less than underneath New York regulation. Labels like “partial” don’t magically erase compliance. Insurance policies say what they are saying, and courts, no less than this one making use of New York regulation, is not going to add additional hurdles after the actual fact.
To be secure, 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 information completely different than these, could end in a sound denial. Why would anyone say, “Hell no, we gained’t file one other proof of loss,” and probably jeopardize a sound 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 units, courts usually push again.
For these serious about finding out the principles about proofs of loss, I counsel studying a trio of posts by Merlin Regulation Group legal professional Corey Harris:
Getting Again to the Fundamentals: What’s a Proof of Loss, and What Objective Does it Serve?
Getting Again to the Fundamentals: What Occurs if a Proof of Loss isn’t Submitted
Thought For The Day
“The spirit of the regulation, 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).