When Presenting a Claim to the Insurance Company, it’s Never Good to be Late

It’s never good to be late on your first date . . .

It’s never good to be late on your first day of class . . .

It’s never good to be late on your first day at work . . .

It’s never good to be late when presenting your claim to your insurance company.

In my blog post last week, I explained that an insurer’s duty to investigate a claim does not arise until the insured complies with the notice provisions in the policy, which usually requires both written notice of the claim and written proof of loss. But what happens if you are tardy with either the notice of the claim or the proof of loss?

In California, if the insured is late in giving the insurer notice of the claim, so long as the delay does not prejudice the insurer’s ability to investigate the claim, the insurer is not relieved from its duty to investigate. Moreover, an insurer cannot deny coverage based on the insured’s breach of the notice provision unless it can demonstrate substantial prejudice.¹

With respect to the proof of loss, does the “notice-prejudice” rule also apply? Yes, for the most part. In California, under notice provisions in most homeowner policies, an insured is required to submit a proof of loss within 60 days after the loss. If the proof of loss is delayed beyond the 60 days, California courts still look to see whether the insurer was substantially prejudiced by the delay; for instance, if the delay impaired the insurer’s ability to investigate a claim.

For fire insurance, there is an added wrinkle. In the case of fire insurance policies, the 60-day requirement for submitting a proof of loss is proscribed by the Insurance Code.² The Insurance Code separately states: “In case of loss upon an insurance against fire, an insurer is exonerated if notice thereof is not given…without unnecessary delay by an insured.”³ The effect of this statue remains unclear. It seems to do away with the “notice-prejudice” rule as it pertains to fire insurance. Applicability of the “notice-prejudice” rule is presently is under review by a California appellate court.⁴ Oral arguments were heard just this past week.

In sum, the importance of giving timely notice of a claim and timely submitting a proof of loss cannot be over-emphasized. Being late needlessly complicates the claims process and exposes the claim to potential attack in litigation.

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¹ Campbell v. Allstate Ins. Co. (1963) 60 Cal. 2d 303.
² Cal. Ins. Code §2071 (the insured must within 60 days of the loss, provide a sworn proof of loss stating the “time and origin of the loss, the interest of the insured and of the others in the property, the actual cash value of each item thereof and the amount of loss thereto …”).
³ Cal. Ins. Code §550.
⁴ Henderson, et al. v. Farmers Group, Inc. (Case No. B236259; Court of Appeal, Second District, Division 4, California).