What can happen if your proof of loss is late or delayed? Could your claim be denied due to a technicality like this? Different states have different positions on this and in Wisconsin there are two statues that govern this. Wisconsin Statute §§ 631.81 and 632.26 govern Wisconsin insurance notice provisions and set forth the rights and obligations of the insured and the insurer.
Wisconsin Statute § 631.81 is entitled “Notice and Proof of Loss.” Subsection (1) reads:
VACATION FOR NOTICE. Provided that notice or proof of loss is given as soon as reasonably practicable and within one year after the time required by the policy, failure to provide such notice or proof within the time required by the policy shall not invalidate or reduce a claim unless the insurer suffers of this and it was reasonably possible to meet the deadline.
If the termination comes as soon as reasonably possible and within one year from the end of the insurance period, the claim is not invalidated unless the insurer was affected by the delay and it was reasonably possible to meet the deadline.1 Wisconsin Statute 632.26 places the burden on the insured to show that notice was not reasonably practicable within the prescribed time, placing “the burden of non-persuasion . . . on the person who asserted that there was no prejudice.”2 This statute applies to all insurance policies, including non-life insurance and professional indemnity insurance.3
IN Ehlers v. Colonial Penn Insurance Companyit was a question of whether the delay was reasonably necessary.4 The court held that the insurer had waived their prejudice defense. The court based its decision on waiver, in part:
[T]in the facts and circumstances of this case, particularly the fact that the notice of accident sent by the plaintiff to the insured on March 7th was returned by the insurer on March 12th with a request for further information and the fact that the defendant denied liability no more than seven days after receipt of the supplemental information denied defendant coverage as a matter of law within the time plaintiff could have submitted its evidence.5
While it is good to know to be aware of the effect of delays in providing proof of loss regarding an insurance claim, the safest course of action for Wisconsin policyholders is to be on time and not provide a late proof of loss.6
1 Larson v. Heritage Mut., 132 Wis. 2d 479, 392 NW2d 848 (Wis. Ct. App. 1986).
4 Ehlers v. Colonial Penn Ins. Co., 81 Wis. 2d 64, 75, 259 NW2d 718, 724 (Wis. 1977).
5 Ehlers, on 81 Wis. 2d 64, 75, 259 NW2d 718, 724.