July 04, 2010 BY Def Admin
Question: Does Sending A Demand For Proof Of Loss To An Insured's Attorney Satisfy Policy And/Or Statutory Requirements?
ANSWER: THE LAW VARIES. AS A RESULT, AN INSURER MUST SEND A DEMAND FOR PROOF OF LOSS BOTH DIRECTLY TO THE INSURED AND TO THE INSURED’S COUNSEL.
The requirement that an insured produce a sworn proof of loss prior to bringing suit for the recovery a claim is an invaluable defense tool as it timely provides an insurer with detailed information regarding the substance of the claim and prevents an insured from prematurely bringing a claim. While the basis for this requirement is in the terms of the insurance contract, state laws may also effect proof of loss procedures. In 2009, the New York Supreme Court Appellate Division decided Adamowicz v. North Country Insurance Co., 2009 N.Y. App. Div. LEXIS 8754 (N.Y. App. Div. 2009). The plaintiff and her insurance company were unable to settle her claim for additional living expenses following a fire at her home. As a result, the insurance company sent a letter to plaintiff’s counsel demanding a sworn proof of loss as to that claim within 60 days. The plaintiff alleged that her attorney did not forward the demand to her. When the proof of loss was not received within 60 days, the insurance company denied the claim. The issue before the court was whether sending the demand for a sworn proof of loss to an insured’s attorney complied with New York law. New York law provides that an insurer must give an insured written notice that it desires a proof of loss before it can deny a claim on that basis. New York Insurance Law § 3407(a). The written notice requirement was intended to protect the insured from “the consequences of . . . oversight or neglect . . . .” The court held that because the record did not establish that the insured received the demand for proof of loss, it did not comply with the requirements under New York law. Interestingly, failure to send written notice of the demand to the insured directly is not automatically fatal to an insurance company’s defense. The insured must raise the argument that service was insufficient. Esa v. Colonia Ins. Co., 89 A.D.2d 865 (N.Y. App. Div. 1982).
Unlike New York, Georgia statutory law is silent on the issue of who must receive a request for a sworn proof of loss. O.C.G.A. § 33-24-39 provides “An insurer shall furnish, upon written request of any person claiming to have a loss under an insurance contract issued by the insurer, forms for proof of loss for completion by the person . . . .” Georgia case law is also silent on the issue. While the Georgia courts have not addressed this issue directly, it would likely be considered an issue of fact for a jury to decide, meaning an insurance company would not be able to pursue summary judgment on the matter. Fremichael v. Doe & Sentry Ins. Co., 221 Ga. App. 698, 701 (1996)(holding that whether an insured was justified in failing to submit a sworn statement is an issue for a jury to determine and not a proper basis for granting summary judgment). As a result, if an insurer wants to preserve its proof of loss defense, a demand for proof of loss should always be sent to both an insured and the insured’s counsel.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley