Carrier’s Proof of Loss Form May Be a Mandatory Post-Loss Obligation in Commercial Claims

July 9, 2024

Submitting a proof of loss using a carrier’s approved proof of loss form may be a mandatory post-loss obligation when invoking appraisal in commercial claims. The U.S. District Court for the Middle District of Florida addressed this issue in denying a plaintiff’s motion to compel a carrier to appraisal in Pleasant Hill Christian Church Ministries, Inc. v. Ohio Security Insurance Company, No. 2:24-cv-417-JLB-KCD, 2024 WL 3046247 (M.D. Fla. June 17, 2024).

The insured commercial property owner filed a Hurricane Ian property damage claim with its insurance carrier. The insured ultimately demanded appraisal under the terms of the commercial policy. The commercial policy contained specific obligations that an insured was obligated to comply with after a loss and before demanding appraisal. One such obligation was to send the carrier “a signed, sworn proof of loss containing the information [the carrier] requests to investigate the claim.” The policy stated that the carrier “will supply [the insured] with the necessary forms” to submit as its proof of loss. 

The carrier asked the insured to submit a proof of loss using the carrier’s approved form.  But, the insured did not comply. The carrier subsequently asked the insured to use the approved form twelve times, to no avail. The insured then submitted a proof of loss using its own form—not the approved form the carrier provided so many times before. The insured’s form was not as comprehensive as the carrier’s approved form.  For example, it did not include the amount that the insured would accept in full settlement or the status of occupancy at the time of the claimed loss—both included in the carrier’s approved Proof of Loss form.

The insured filed a motion to compel the carrier to an appraisal. The insured argued that its proof of loss “substantially complied with the terms of the policy” and that the policy “does not clearly state that use of [the carrier’s approved proof of loss form] is mandatory.” The insured asked the court to determine that the substance of the two forms – the insured’s proof of loss and the carrier’s proof of loss – were “substantially similar” in content.

The court denied the insured’s motion to compel appraisal. The court found that Florida’s Middle District case law “has been [clear] for nearly twenty years: the party seeking appraisal must comply with all post-loss obligations before the right to appraisal can be invoked under the contract.”  Specifically, the court cited Vintage Bar Condo. Ass’n. Inc. v. Lexington Ins. Co., No. 2:18-cv-729-FTM-99CM, 2019 WL 211433, at *3 (M.D. Fla. Jan. 16, 2019) in support of its decision.

The court determined that the use of the carrier’s approved proof of loss form was mandatory pursuant to the underlying commercial insurance policy’s language which stated that the carrier will “supply the necessary forms” to submit a proof of loss. The court noted that the policy did not define the word “necessary,” and that Florida law requires undefined insurance policy terms to be assigned their plain meaning. Based upon Webster’s Dictionary’s definition of “necessary”—meaning essential, absolutely needed, and compulsory—the court found the use of the carrier’s approved proof of loss form was a post-loss obligation with which the insured was required to comply before invoking appraisal.

The Pleasant Hill case also involved a second failure to comply with post-loss obligations: failure to submit requested documents in support of claimed damages. The court’s opinion also addressed this post-loss obligation in conjunction with the insured’s failure to use the carrier’s approved proof of loss form. It is worth noting that the opinion in this case turned on the specific language in the commercial property insurance policy.

Partner Hudson Jones of Butler Weihmuller Katz Craig LLP’s Tampa, Florida office represented the carrier in prevailing against the plaintiff’s motion to compel appraisal.

For any further questions regarding this blog, please contact Shaheen Nouri.