Why Wording Is Everything In Insurance Matters

Proof of loss is one of several key components to filing an insurance claim.
Proof of loss is one of several key components to filing an insurance claim.

From paying a bill by a certain deadline to a 3-pointer milliseconds before the buzzer, timing truly is everything. But does this axiom apply to an insurance claim? In other words, if your place of business is struck by a devastating storm or destroyed by fire, but you fail to file a proof of loss form by the established due date, can your claim be turned down? Or is your insurer still bound to fulfill its financial obligations?

It's not an easy answer, and the circumstances — as well as insurance laws — often dictate the outcome, but a Florida court was recently tasked with resolving such a dispute. Although the events in question relate to homeowners insurance, the details of the case and the court's ruling offers insight into insurers' ongoing commitment to their customers and keeping their promises. 

What happened?

As detailed in the matter of Arguello v. People's Trust Insurance Company, a policyholder submitted a claim to their homeowners insurance company after their property was damaged due to an appliance issue. This incident occurred in 2018.

Upon receipt, the insurer instructed the policyholder to sign and fill out a proof of loss form for documentation and corroboration purposes. The insured had 60 days from the time they received the letter to send it back completed.

But what would have likely been a straightforward claims process got complex when the insurer received the proof of loss form well after the 60 days had already gone by. It also came after the insurer issued a complaint with a trial court, seeking that the terms of the agreement be rendered null and void. It was the insurer's belief that since the proof of loss form did not arrive on time, the policyholder was in breach of contract, thereby absolving the insurer from having to honor the claim.

When the court concurred with the insurer's justification, the policyholder decided to challenge the decision through Florida's Fourth District Court of Appeals.

Appellate court finds in favor of insured

Citing precedent and language within the homeowners insurance plan itself, the appellate court reversed the trial court's decision. It did so for a few reasons, one of which related to the insurer's original complaint, which was that the policyholder failed to provide a proof of loss document. The appellate court ruled that the insured actually had fulfilled this request, just not in a timely fashion. Nothing within the terms of the initial coverage agreement stated anything about timelines relating to when a proof of loss had to be returned by and the insurer did not demonstrate that it could not fulfill the claim due to the insured's lack of punctuality. In other words, it was not as if the insurer was incapable of making the homeowner whole as a result of the form coming later than the prescribed period, or would be harmed by doing so.

Additionally, the appellate court cited several previous cases in which something similar had occurred, including Kramer v. State Farm. Quoting from that ruling, the appellate court found that "while insureds did not comply with the provision that the sworn proof of loss be submitted within 60 days of request, we have held that whether an insurer is prejudiced by an insured's untimely compliance is also a question of fact."

Bottom line: In both of these cases, there was wording within the terms and conditions of the policy that did not absolve the insurer from honoring a claim. 

So what?

What's the point in mentioning all this? Beyond explaining the importance of a proof of loss form, the verbiage found within an insurance policy is highly consequential. Every word is there for a reason; what it states — or leaves out — affects a claim's outcome. This is why you really need an advocate in the insurance claim process.

That advocate is Stone Claims Group. As leading commercial public adjusters, we work on behalf of the people who are filing the claim. So when you hire Stone Claims, you are getting a team of dedicated insurance professionals whose mission is attention to detail and obtaining the maximum settlement. There's no magic to our process. We just know what to look for and remain with you from the time you first file the claim to settlement and beyond. Whether you are unsure of your insurer's obligations, need assistance with filing or believe the amount you received was unfair, we want to hear from you. Contact us today to learn more.

Getting you what's FAIR.

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