Sworn Proof Of Loss

Providing an insurance company with a “Sworn Proof Of Loss” is a requirement under most insurance policies.  This is illustrated in the 2020, Amarillo Court of Appeals opinion styled, City of Spearman, Texas v. Texas Municipal League Intergovernmental Risk Pool.

This case is an appeal from a summary judgment granted in favor or Texas Municipal League (TML).

TML insures Spearman with property insurance and on September 16, 2016, Spearman submitted a “Claims Notice” reporting “hail damage to buildings” from a hailstorm occurring on May 16, 2016.  TML sent an adjuster who inspected five building and estimated the damage at $5,437.66.

On November 30, 2016, TML sent Spearman a “Sworn Proof Of Loss” to sign, reflecting the adjuster’s estimate of the loss.  Spearman did not return the sworn proof of loss, nor did it file any other sworn proof of loss.

Later, Spearman submitted additional estimates to TML and TML sent an engineering firm to conduct a second investigation.  TML notified Spearman on February 13, 2017, that the engineering firm did not find any further damage.

In May of 2017, Spearman sued TML for damages for improperly denying coverage and underpaying the claim.  TML answered and filed its motion for summary judgment.

TML alleges the motion should be granted because Spearman failed to timely submit a sworn proof of loss.

TML asserts that Spearman’s failure to submit a sworn proof of loss is a condition precedent to recover because the policy clearly states under “General Conditions” and subparagraph D:

It shall be necessary for the Member to render a signed and sworn proof of loss to [TML] or its appointed representative, within 60 days, stating the place, time, and cause of the loss, damage, or expense, the interest of the Member and of all others, the value of the property involved in the loss, and the amount of loss, damage, or expense.

According to the Texas Supreme Court, a proof of loss is a condition precedent to recovery on the policy.  Having failed to tender a proof of loss as required by the policy, Spearman also failed to satisfy a condition to recovering on the policy.

The policy states that “In the Case of Loss,” the insured has the obligation to report the loss “as soon as practicable after any loss or damage,” according to subsection A.  Next, subsection D specifies the time for tendering a sworn proof of loss.  If the parties cannot agree upon the “amount of loss,” then they may invoke the procedural remedy encompassed in subsection E, that is, appraisal; the time to invoke it is 60 days from when the insurer receives the proof of loss.

The fore going subsections and the manner in which they appear are informative.  They reveal that section IV of the policy establishes a procedure.  It begins with an insured suffering a loss.  Suffering such a loss triggers the insured’s contractual duty to initially report it “as soon as practicable.”  That leads to the insured proffering evidence of the claim’s extent through the proof of loss.  What then follows is adjustment and payment of the loss, all of which implicate the proof of loss.  But, most importantly, all of these steps begin at the point an insured suffers a loss.  Simply put, suffering a loss is the first toppling domino that leads to the toppling of the others.  Given this context, reason compels to deduce that the parties to the policy intended the contractual 60-day period within which to submit a sworn proof of loss to begin with the tippling of the first domino, i.e., the point an insured suffers a loss.

This Court is duty bound to follow the precedent of the Texas Supreme Court and not to act to abrogate or modify established precedent.

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