WHAT IS A PROOF OF LOSS?
A proof of loss is a very important document. It is a definitive statement by an insured property owner that states the cause and amount of loss for a claim. An indication of its importance is that the property owner signs the proof of loss before a notary public. Wisconsin law endorses completion of proofs of loss, and indeed itemizes what information ought to be in it.
THE RATIONALE
Insurance companies need to know the exact amount the insured property owner is claiming. While most property claims are resolved without a proof of loss and just a repair estimate, sometimes such an estimate will not due. In that instance, Wisconsin law allows insurance companies to require an insured property owner to complete a proof of loss. It is a statement under oath, and intentional inaccuracies can lead to the argument an insured property owner is failing to cooperate or has committed fraud. As such, proofs of loss should be very carefully considered and completed.
I think proofs of loss are an opportunity. It is an opportunity for the insured property owner to sit down with a contractor and/or public adjuster and carefully consider the scope of repair. Careful consideration benefits everyone. At some point, insured property owners do need to issue a definitive statement on the knowable scope of loss. The formality of a scope of loss is a good occasion to do so.
Insured property owners can amend a proof of loss later in time for newly discovered damage. This can happen when repairs commence, and further damage is discovered. Yet the original proof of loss should be the definitive statement as to what is known or knowable at the time the proof of loss is signed.
Proofs of loss are an opportunity for insured property owners because an insurance company is required to respond within 60 days. Some insurance claims can drag on for a long time. They drag on, in part, because insurance companies have few deadlines for responding to property owner inquires or demands. Proofs of loss do trigger a duty for insurance companies to respond with a formal adjustment of the claim. That deadline is helpful to keep the claim moving.
DETAILS
Insurance companies have some discretion or what is required of a property owner when completing a proof of loss. Some insurance companies only want to know the cause and amount of loss. Other insurance companies require lots of information. Knowing what state law requires is helpful to understanding the proper scope of a proof of loss.
Per authorization by the Wisconsin Legislature, the Wisconsin Department of Insurance has created form policy language. That form policy language includes information required for a proof of loss. Insurance companies have a legal right to insist that such information be completed in a proof of loss. The required information is:
- Time and origin of the loss;
- Interest of the insured in the property (i.e., sole owner, tenant, etc.);
- Actual cash value of the lost or damaged property;
- An overview of the lost or damaged property;
- All liens and mortgages against the property;
- All other insurance on the property;
- Any change in title, use, occupancy, etc. the policy period began; and
- The use or purpose of the building at the time of the loss or damage.
This form policy language can be found at Wisconsin Administrative Code Wis. Adm. Code § Ins. 6.76. Property owners should be prepared to provide this information on a proof of loss form.
CAN INSURANCE COMPANIES INSIST ON MORE INFORMATION?
Insurance companies can insist on more information such as site inspections and documents, but not in connection to a proof of loss. In my view, a proof of loss attested to under oath is limited to the foregoing. The statute authorizing the forgoing form policy language is a consumer protection law. It is meant to govern a fair claims process. I do not think a proof of loss should require more, because if it did, the process becomes larger and more difficult than the Wisconsin Department of Insurance meant in the form policy language.
Please e-mail me if you have any questions about completing a Wisconsin proof of loss. I can be reached at ed@beckmannlawfirm.com