Insurance Duties After Loss for Storm Claims


Insurance Issues Related To Storm Claims

With Hurricane Season now upon us, it is important to be aware of some of the basic issues which can arise from the insurance coverage applicable to storm damages. Look for the duties after loss requirements in the insurance policy.

Duties After Loss:

Most insurance policies have a section which requires an insured to comply with certain requirements if there is any loss or damage to property which is covered by the insurance policy. These requirements are usually identified as “Duties After Loss.” While each insurance policy may contain a different list of “Duties After Loss”, the requirement for an insured to comply with these “Duties” is usually the same. Most insurance policies will contain language which states that a legal action cannot be brought against the insurance company unless there has been full compliance with all of the “Duties After Loss”.

Typical Duties After Loss:

The following is a list of some of the “Duties After Loss” which may create problems for an insured claiming storm damage:

1. Prompt Notice of the Loss. This duty requires an insured to give notice to the insurance company within a reasonable time after the insured is aware of damage to the property insured by the insurance policy. The reason for this duty is so that the insurance company can inspect the loss and take the necessary action to repair the damages and prevent additional damage to the insured property. For example, if a windstorm causes damage to the roof of a house, prompt notice will allow the insurance company to make temporary or final repairs to the roof which will prevent or limit any interior damage from water leaking into the interior of the building due to the roof damage. If the insured fails to give prompt notice of the loss, then the insurance company may deny a claim for some or all of the interior water damage.

2. Sworn Proof of Loss. This duty requires the insured to submit a sworn document (“Proof of Loss”) containing the information requested by the insurance company. Normally the insurance policy will give a time limit for the insured to submit the sworn proof of loss, such as 60 days. This means that the insured will have 60 days after the insurance company request that a POL be produced to submit a signed and sworn document. The insurance company will normally provide the insured with the forms which need to be filled out, signed and sworn to.

3. Examination Under Oath. An Examination Under Oath (EUO) requires the insured to appear before a representative of the insurance company (usually the insurance company’s attorney) to answer questions under oath about any matter related to the loss or claim, including any records or documents related to the loss or claim. A court reporter will normally be present to record each question and answer during the EUO. After the EUO is completed and transcribed by the court reporter, then the insured will have the opportunity to review the transcript and make any corrections which are necessary to make the transcript true and correct.

Failure To Comply With Duties After Loss:

Most insurance policies contain a provision which states no one may bring a legal action against the insurance company unless there has been full compliance with all of the policy’s Duties After Loss. For example, this requirement means that if an insured is requested to submit a Sworn Proof of Loss and fails to do so, or is requested to submit to an Examination Under Oath and fails to do so, then the insured will probably not be allowed to file a lawsuit against the insurance company until these duties are satisfied. Another issue which may arise from an insured’s failure to comply with the Duties After Loss, is whether the insurance company was prejudiced by the insured’s failure to timely perform the Duties After Loss. For example, if the insurance company can show that the insured’s delay in performing its Duties After Loss resulted in the insurance company being unable to determine the type and amount of damage caused by the storm and the cost of repairing those damages, then the insured may be prevent from filing a lawsuit to collect the damages caused by the storm. Consequently, the insured should be diligent in complying with the Duties After Loss. Contact Max Factor for more information.

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