Submission of Proof of Loss is not Agreement on Amount of Loss
Barry Zalma, Esq., CFE
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.
Payment Only due After Insured and Insurer Reach Agreement on Amount of Loss
Read this and more than 2950 posts at my blog, Zalma on Insurance, at https://zalma.com/blog. Posted on January 20, 2020 by Barry Zalma
To collect on a first party property policy of insurance it is required that the insured submit a proof of loss and the insurer agrees that the proof of loss properly states the cause was a covered cause of loss and agrees to the amount of loss stated on the proof is what should be recovered under the policy.
In Rigby Enterprises LLC v. Westchester Surplus Lines Insurance Company, Case No.: 2:19-cv-228-FtM-38NPM, United States District Court Middle District of Florida, Fort Myers Division (January 15, 2020) the insured submitted a proof of loss but failed to obtain agreement from the insurer as to the amount of loss. Regardless, the insured claimed that the insurer was obligated to pay the amount on the insured’s proof of loss if thirty days passed after its submission, even if the insurer did not agree on the amount.
BACKGROUND
Plaintiff’s luxury tennis academy and boarding school in Naples, Florida was damaged by Hurricane Irma. Plaintiff-insured Rigby Enterprises LLC alleges that Westchester Surplus Lines Insurance Company breached its coverage obligations to Rigby under a commercial insurance policy for Defendant’s failure to compensate Rigby in the full amount of its damages and loss resulting from Hurricane Irma.
Plaintiff moved for partial summary judgment in its favor, raising one argument – that the undisputed evidence shows that Defendant undisputedly breached the contract by making a payment 46 days late under the Policy. Westchester countered by stating that the parties never agreed as to the amount of loss.
In support of summary judgment, Rigby relies on the purportedly unambiguous Loss Payment clause of the Policy, which provides a 30-day deadline that Westchester did not meet. The “Loss of Payment” provision provides: “4. Loss Payment … a. In the event of loss or damage covered by this Coverage Form, at our option, we will… pay for covered loss or damage within 30 days after we receive the sworn proof of loss, if you have complied with all of the terms of this Coverage Part, and: (1) we have reached agreement with you on the amount of loss . . . .” (emphasis added)
On October 24, 2018, Rigby provided Westchester six Sworn Statements in Proof of Loss (POLs) totaling $8,594,168.78. On November 2, 2018, Westchester sent a letter to Rigby rejecting the POLs, disagreeing with the sums claimed, and requesting more information. Even so, Rigby argues that Westchester had all of the information it needed and has continually delayed paying the claim. Rigby asserts that Westchester’s payment was due on November 23, 2018 – 30 days after it provided Westchester the POLs. But instead Westchester paid Rigby $703,038.12 on January 8, 2019 – forty-six days late in breach of the contract.
DISCUSSION
Viewing the evidence and all reasonable inferences in favor of Westchester, the Court found that after receipt of the POLs Westchester disputed the extent of damages that Rigby claimed it was owed under the terms of the Policy as outlined in the POLs.
Because an agreement as to the “amount of loss” is required to trigger the insurer’s obligation to pay within 30-days under the Loss Payment provision, and because there was no evidence that the parties reached an agreement as to the amount of loss, the payment obligation under the Loss Payment provision was not triggered.
Plaintiff’s Motion for Partial Summary Judgment, therefore, was denied.
ZALMA OPINION
This case is another failure by the insured – or its counsel – to read the full policy. The language of the policy is clear and unambiguous. The insurer will pay after receipt of the proof of loss and agreement by the insurer with the claim. Since the insurer did not agree with the insured’s proof and paid an undisputed amount there was no event that triggered the obligation to pay. The court believed in, and actually, read the full policy. RTFP is important.
? 2020 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at https://www.zalma.com and [email protected].
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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Public Adjuster
4 年Ahh! The enigma that is the Proof of Loss. A document with many uses. It can be used to establish an agreement or even a disagreement. More often then not it's just used to comply with the policy once it has been requested by the carrier. Sometimes I will send an unsolicited proof of loss to force a response from an unresponsive carrier to get some type of movement on the claim. What I do know is that if it is requested you better make sure the insured submits it within 60 days of that request or risk having the claim denied. Amount on the Proof of Loss is only payable if it has been agreed to. I wish it was that easy.....submit a proof of loss settle claim, and insured gets paid. Unfortunately it is not. Agree with Barry Zalma's conclusion
Indemnity Canada Inc.
4 年Our Stat Conditions read differently. The loss is payable within 60 days after the Proof of Loss is completed in accordance with Statutory Condition 6 and delivered to the insurer.