I recently defeated an insurance company's proposal for a summary judgment in Maryland regarding the insured's alleged failure to meet the insurance terms – specifically failure to provide accurate proof of loss.
During the damage process, proof of loss was requested and the insured provided the carrier with everything he had to substantiate the claim except the proof of loss. Although he had nothing but proof of loss, the carrier issued a letter of denial alleging failure to comply with the policy conditions due to failure to provide proof of loss.
Maryland is not a state of prejudice ( ie a state where the carrier does not have to show prejudice when arguing for alleged failure to comply with the policy conditions). The essential compliance with the provisions on proof of loss of the insured requires all law in Maryland. 1
Apart from the issue of substantial compliance, the carrier's Motion for Summary Judgment cited the following policy language:
3. Obligations in the event of loss or damage
a. You must see that the following is done in the event of loss or damage to covered property:
(7) Send a signed, answered proof of loss that contains the information we request to investigate the claim. You must do this within 60 days of our request. We will provide you with the necessary forms.
It was common ground that the adjuster for the carrier never sent proof of loss form when requesting proof of loss. The policy explicitly states that the carrier must provide the form. A typical insured will not know (1) where to get evidence of loss forms or (2) how to prepare one. Failure to provide the form to the insured hindered the insured's ability to provide the form and the carrier should not benefit from his own breach of the insurance terms.
Finally, although Maryland was not a prejudiced state, it was also important to warn the judge that the failure to provide proof of loss did not affect the insurer's coverage decision at all. In the same letter that the carrier sent and denied the loss due to the failure to prove loss, the carrier further denied the loss based on the conclusions of an engineer it hired. Even if the insured had provided proof of loss, it would not have made a difference in the position of the carrier. The carrier was simply looking to win on a technology.
The judge's decision was twofold, (1) the carrier failed to send proof of loss form in accordance with the requirements of the policy and (2) there was at least one issue as to whether the insured submitted all documents in support of the claim and substantially met the insurance terms.
1 US Fire Ins. Co. v. Merrick 171 Md. 465, 190 A. 335 (Md. 1937).