The Late Proof of Loss and the Adjuster's Reassurance
On June 1, a flood damages a two-story single-family home. The adjuster inspects on June 10 and tells the insured, 'Don't worry about the 60-day proof-of-loss deadline; we'll work with you.' The insured submits a signed and sworn proof of loss on August 15, 75 days after the loss, along with receipts and photographs. The adjuster had not requested a written extension. The insurer's claim file shows no written extension. The insured's contractor had delayed the repair estimate, but the insured had most receipts by July 1. The policy is a standard SFIP Dwelling Form with a $1,000 deductible. The insured now argues that the adjuster's statement should excuse the late filing. The claim is otherwise covered and the damages are documented at $42,000 building and $8,000 contents, both before deductible.
1. Was the proof of loss timely under the SFIP? What is the effect of the adjuster's oral statement?
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The proof of loss was late. The SFIP requires the insured to submit a signed and sworn proof of loss within 60 days after the loss unless the insurer extends the time in writing. June 1 to August 15 is 75 days, so the submission missed the deadline by 15 days. The adjuster's oral statement does not amend the policy. The SFIP is a federal contract, and the insurer is not bound by an adjuster's unauthorized oral waiver. Only a written extension from the insurer would have preserved the claim. The late proof of loss can be a basis for denial, but the adjuster should not make the coverage decision alone. The adjuster should document the June 10 conversation, the absence of a written extension, and the date the proof of loss was received, then refer the file to the insurer for a written coverage determination. The insured's reliance on the statement may be a complaint issue, but it does not automatically create coverage.
2. What should the adjuster have done differently during the June 10 inspection?
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The adjuster should have explained the 60-day proof-of-loss requirement clearly and in writing, not reassured the insured that the deadline did not matter. If the insured needed more time-for example, because the contractor's estimate was delayed-the adjuster should have requested a written extension from the insurer before the 60 days expired. The adjuster should have documented the conversation, provided the proof-of-loss form, and followed up in writing. The adjuster should not have told the insured to ignore the deadline, and should not have accepted or implied acceptance of a late proof of loss without authority. Good practice includes a dated file note of every contact, a copy of the written deadline notice, and a request for the extension in the claim system. This protects both the insured and the adjuster.
3. If the insurer decides to accept the late proof of loss, how should the $42,000 building and $8,000 contents claim be paid?
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If the insurer accepts the late proof of loss in writing, the claim would be adjusted on its merits. The building payment would be the covered building damage of $42,000, subject to the building limit and loss-settlement clause, minus the $1,000 building deductible, for $41,000. The contents payment would be the covered contents damage of $8,000, subject to the contents limit and actual cash value, minus the $1,000 contents deductible, for $7,000. The total would be $48,000, assuming no other exclusions or limits. The adjuster should confirm whether the building is the principal residence and whether the 80% replacement-cost threshold is met, because that could change the building payment. The adjuster should also verify that the contents figure is ACV, not replacement cost. The acceptance of the late proof of loss should be documented in writing by the insurer, not by the adjuster alone.