Proof Of Loss Requirement In Insurance Policy

Many times a person comes to an Experienced Insurance Law Attorney complaining that their insurance company has not paid anything on their claim.  While most insurance companies take the claims call then go out and evaluate / adjust the claim and then make payment, they are not required to do so.

Almost all policies make it clear that the insured has to file a sworn proof of loss as a condition precedent to enforcement of the policy.  This was recognized in the 1926, Texas Supreme Court opinion, Commercial Union Assur. Co. v. Preston.  It was was restated in the 1954, Fort Worth Court of Appeals opinion, Whitehead v. National Cas. Co.  A “proof of loss” is a statement to the company, stating, among other things, the cash value of each item of property lost or damaged by fire, and the amount of loss.  The insurance company may require that the insured swear to the accuracy of the proof of loss.

The 1960, Fort Worth Court of Appeals opinion, International Service Insurance Co. v. Brodie, says policy provisions requiring a proof of loss are for the insurance company’s benefit and may be waived by the company.  A requirement was waived where the insurance company would only accept proof asking for amount its adjusters agreed to, although the insured wanted more.

In the Whitehead opinion, the court stated that compliance with the proof of loss requirement may be excused, for example when the failure to file a proof of loss does not affect the insurer’s exposure, or when the lack of a proof of loss is due to the beneficiary’s non-negligent ignorance of the requirement.

As stated in the 1990, Texas Supreme Court opinion, Viles v. Security National Insurance Co., if the insurer denies the claim before the time by which the insured must file a proof of loss, the insured is relieved of that requirement.

Pursuant to 28 Tex. Admin. Code, Section 21.203(7), it is an unfair claim settlement practice to fail to provide promptly to an insured any forms the insurer requires as a prerequisite for claim settlement.