VIII. Proof of Loss.
Within a day or so of the fire, an insurance adjustor will provide to the insured claims forms for what is called the “Proof of Loss.” The Proof of Loss itself is a one page document in which the insured summarizes the amount of the loss and then signs it and swears to it that it is accurate and does not contain any fraud, etc. The insured needs to be careful when sending in the Proof of Loss and must make sure that it is reasonably accurate. This does not mean, however, that the Proof of Loss can’t be amended; it can and should if new evidence indicates that the loss is greater than initially anticipated. Also along with the Proof of Loss will be a great many pages of forms provided by the insurance company in which the insured is obligated to identify the items of personal property that were lost in the course of the fire as well as the extent of the damage to the structure.
An insurance contract is broken down into four general categories. The first category is Coverage A, the dwelling; the second category Coverage B is other buildings; the third category is Coverage C, which is the personal property; and then Coverage D, which is additional living expense. There are additional coverages provided, such as debris removal, etc., which are also included in the contract.
With regard to Coverage A, the dwelling loss, unless the insured is an experienced contractor, they will have to obtain the services of a contractor or builder who will give them an estimate of the cost to rebuild the building, whether it be a home or commercial property. With regard to Coverage C, the personal property, the insured can undertake the effort to identify each and every item of personal property lost in the fire, which would include every cup, saucer, plate, piece of silverware, tooth picks and all the related items that are involved in only the kitchen. The remaining rooms likewise will require specific itemization as to not only what was there, but when they were purchased and how much they were purchased for, how many items of pants, shirts, coats, ties, skirts, blouses, sweaters, and an itemization of every piece of clothing that was lost. As is plainly obvious, this is an onerous, difficult, and virtually impossible task to perform. It involves a huge amount of time and effort on the part of the insured to fill out these forms and to obtain the information the insurance company asks for.
It is an ambitious homeowner or commercial establishment that seeks to do this task on its own. Serious consideration should be given to hiring the services of a public adjustor to assist in this effort. A public adjustor should have enough experience in order to not only establish the costs to rebuild the structures, but also to develop the information necessary for the personal property. To assist them in this effort, the public adjustor has developed computer printouts of virtually every item of personal property that is contained in a house which immensely simplifies the efforts of a homeowner to identify each item that they had in their possession. Establishing the cost and when it was purchased may also be virtually impossible. There is nothing wrong with approximating the date of purchase, or indeed saying unknown as to the date of purchase and the initial cost of the item. Personal property adjustors that have experience dealing with that include Fire & Property Adjusters, Inc. in Bloomington; Joe Hoffman, Hoffman Adjustment Co. in Highland, Indiana; and Jay Hatfield, Indiana Public Adjusting in Fort Wayne.
The Proof of Loss form also includes a column for depreciation, used by the insurance company in establishing the actual cash value of the property loss. Replacement cost and actual cash value will be discussed later. The imposition of a depreciation factor greatly affects the ultimate recovery of the insured and again, unless the insured has extensive experience, the assistance of a public adjustor is recommended. The insurance company, as you can imagine, will impose their own depreciation factors, and these are subject of debate. Hence the need for some expert assistance. The fee charged by the public adjustors is normally 10% of the recovery from the insurance company. This, however, can be and should be negotiated, depending on the size of the loss.
One item of caution in dealing with a public adjustor: the public adjustor often will try to require that any check payable by the insurance company to the insured include the name of the public adjustor on the check. The insured should not allow this to occur as the contract is with the insurance company and the insured, not with the public adjustor, and this practice reduces dramatically the leverage the insured may have in dealing with the public adjustor in the event of any disputes between them.
The information on the Proof of Loss will be compared against receipts and other evidences of purchases the insured may have. Unfortunately, in the case of a fire that is a total loss, records of the items of personal property purchased may very well have been destroyed in the fire and cannot be supplied. This should not impair the processing of the claim as best recollection of the purchase date and price will suffice inasmuch the Proof of Loss statement swears to the accuracy of the information in the multiple pages of lost items.
The items of lost property as contained in the Proof of Loss will also be the subject of the examination under oath which the insurance company can insist upon. As with any witness, there is absolutely nothing wrong with statements of “I don’t remember,” “I don’t have the documents,” and the like.
(Part 5 of 7. Part 6 will be posted on 6/10/10)
The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.