Late Filed Proof of Loss – Does Delay Result in Denial?

After having suffered a dish washer leak to their home, policyholders submitted a claim to their insurance company. The insurance company sent the policyholders a Reservation of Rights letter requesting a signed, sworn proof of loss within 60 days. The homeowners failed to meet this deadline and submitted their sworn proof of loss after the insurance company filed a complaint for declaratory judgment and material breach. The trial court entered a final summary judgment for the insurance company based upon the failure of the insureds to comply with their obligation to provide a sworn proof of loss, and the policyholders appealed.¹

Florida’s Fourth District Court of Appeal reversed noting that this case was more so focused on untimely compliance rather than the total failure to comply. The appellate court noted that in an earlier case, the court had held that:

‘[a] total failure to comply’ with a condition precedent can preclude the insured from recovering. Id. at 370 (quoting Haiman v. Fed. Ins. Co., 798 So. 2d 811, 812 (Fla. 4th DCA 2001)). However, ‘where an insured cooperates to some extent, a fact question remains as to whether the condition is breached to the extent of denying the insured any recovery under the policy.’²

The holding was reaffirmed by the appellate court in Kramer v. State Farm Florida, stating that:

While insureds did not comply with the provision that the sworn proof of loss be submitted within sixty days of request, we have held that whether an insurer is prejudiced by an insured’s untimely compliance is also a question of fact. We similarly conclude in this case that disputed issues of fact remain as to prejudice to insurer. The policy provisions state that ‘we [insurer] have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us.’ Thus, failure to comply with policy conditions requires prejudice to insurer in order for that failure to constitute a material breach and permit an insurer to deny coverage for a claim. Whether insurer is prejudiced is a question of fact …. the insurer offered no proof prejudice.

Florida law disfavors forfeiture of insurance coverage especially when the event that gives rise to the insurers liability has occurred. ….This is what the insurer has attempted to do in a precipitous manner by filing suit shortly after the sixty-day window for submitting the proof of loss closed. To justify such a drastic result, insurer, as plaintiff, must prove it has been prejudiced by the failure [to comply expeditiously] with the post-loss obligation.³

Judge Conner concurred in Arguello, observing that it was “difficult to perceive prejudice” as to the repairs the insurer proposed to make, particularly because the policy provided for appraisal if the parties were unable to agree on the scope of repairs. A complete forfeiture of coverage would not appear to be appropriate until the insureds refused to sign a written authorization for repairs.

Thought of the Day:

Not everything that is faced can be changed, but nothing can be changed until it is faced.
—James Baldwin
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¹ Arguello v. People’s Trust Ins. Co.,No. 4D19-69, — So.3d, —, 46 Fla. L. Weekly D715 (Fla. 4th DCA March 31, 2021).
² Solano v. State Farm Fla. Ins. Co., 155 So.3d 367 (Fla. 4th DCA 2014).
³ Kramer v. State Farm Fla. Ins. Co., 95 So.3d 303, 306 (Fla. 4th DCA 2012).