Insured’s Failure to Submit Sworn Proof of Loss Material Breach Precluding Recovery

Jun 1, 2021

Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.


Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.

Insured’s Failure to Submit Sworn Proof of Loss Material Breach Precluding Recovery 

Following a homeowner’s reported property loss, the insurer requested various documents, including a sworn proof of loss. The insurer ultimately issued payment for covered losses based on its field adjuster’s estimate and advised the insured she could submit a supplemental claim for additional damages discovered during the repair of the property. The insured’s PA later submitted an estimate and repair receipts and requested supplemental payment for the damages. However, the insured never provided a sworn proof of loss. The insurer did not respond to the request for supplemental payment and the insured filed suit for breach of contract. The insurer sought summary judgment based on the insured’s failure to provide a sworn proof of loss—a material breach rendering the policy ineffective regardless of prejudice. The insured argued she cooperated “to some degree” and the issue of prejudice to the insurer was a question of fact for the jury. The trial court granted summary judgment in the insurer’s favor. The appellate court upheld the summary judgment since there was a “total failure” by the insured to comply with the proof of loss requirement. Additionally, the court held an insurer need not show prejudice when the insured breaches a condition precedent to suit. Furthermore, the insurer does not waive the sworn proof of loss requirement by tendering payment for the loss. Edwards v. SafePoint Ins. Co. (4th DCA, May 12, 2021).

Tips and Lessons

  • The court held the issue was not whether the insured cooperated in a general sense with the investigation, but whether the insured cooperated with the specific proof of loss condition. 
  • Know which district you are in! The Third and Fifth Districts require an affirmative pleading of prejudice to the insurer and have certified conflict with the Fourth District’s holdings.

Policy’s Appraisal Provision Applies to Water Mitigation Services 

The homeowner suffered a water loss and assigned her insurance benefits to the company who performed water mitigation services. The mitigation company submitted its invoice and assignment of benefits to the insurer for reimbursement. The insurer found the invoice excessive, paid the amount it considered reasonable, and invoked appraisal to resolve the parties’ dispute. The mitigation company filed suit seeking a declaration that the appraisal provision only applied to existing property damage and did not apply to the value of services rendered to prevent further property damage. The appellate court held the appraisal provision, when read in context with the whole policy, applied to water mitigation services incurred to protect covered property against further damage. Express Damage Restoration, LLC v. Citizens Prop. Ins. Corp. (3d DCA, May 5, 2021).

Tips and Lessons

  • The mitigation company unsuccessfully argued the appraisal provision was ambiguous because it required an estimate of “damaged property”, the estimated amount “to repair or replace” each item and required the appraiser and umpire to inspect the “damaged property”. 

Insured Breached Post-Loss Repair Obligations Relieving Insurer of Duty to Pay for Covered Damages

The insured timely reported property damage, and the insurer timely adjusted the claim, acknowledged coverage, and invoked its right to repair. The insured disagreed with the value of the repairs and sued the insurer for breach of contract. The trial court ordered the parties to participate in appraisal, which resulted in an appraisal award of $25,204.70. The insurer was prepared to honor the appraisal award and repair the damages using its preferred contractor. The insured, however, hired his own contractor to do the repairs, sold the house, and demanded a cash reimbursement for the appraisal award claiming it was “impossible” for the insurer to invoke its option to repair. The trial court entered final judgment ordering the insurer to pay the appraisal award as “damages for breach of contract”, not an adjustment of the claim. The appellate court reversed and held the insured’s failure to fulfill his post-loss obligations constituted breach of the policy and the insurer was relieved of its duty to make payment. People’s Trust Ins. Co. v. Amaro (3d DCA, May 5, 2021). 

Tips and Lessons

  • Policy language is key–here the policy clearly stated that appraisal decided the scope of the repair to be performed by the insurer’s preferred contractor and that such repair was in lieu of issuing any loss payment otherwise due under the policy.
  • The appellate courts are not consistent with how they analyze post-loss obligations. The Third District refers to “presumed prejudice” to the insurer when an insured fails to comply with a post-loss obligation, which may be rebutted, whereas the Fourth District does not require the insurer to demonstrate prejudice.