Post Loss Obligations

What a policyholder is required to do after a loss.
By J. Remington Huggins, Esq., Huggins Law Firm
During my legal career I have been fortunate enough to personally represent hundreds of policyholders throughout the state of Georgia. From my experience, I have learned that a large percentage of policyholders are unaware of the myriad of obligations and duties that the terms of their property insurance policies impose upon them. These policyholders are often operating under the mistaken assumption that their only obligation under their property insurance policy is paying their premiums on-time. However, that is far from the truth. In a sense, policyholders actually have more obligations under their insurance policies than the insurance carrier itself—this is especially true after a loss occurs. Accordingly, all property owners must be on notice of, and properly comply with, their post-loss obligations.  Failure to do so could result in the insurance carrier denying an otherwise covered loss because the policyholder did not comply with the specific terms of the policy. 
This article will highlight some key post-loss obligations that a policyholder, whether it be a residential loss or a large commercial loss, must comply with. While the post-loss obligations addressed in this article can be found in the majority of property insurance policies in the state of Georgia, property insurance policies are continually changing. Because of this, I strongly recommend that policyholders enlist the assistance of an experienced and licensed public adjuster at the outset of their insurance claim to ensure proper compliance with all post-loss obligations.
“Prompt Notice” of the Loss
The first obligation a policyholder must comply with after a loss is to provide the insurance carrier with “prompt notice” of the loss. Because most policies do not provide a definition for “prompt notice”, the best practice is to report the loss to the insurance carrier immediately after discovering damage to the insured property.  However, there is no bright-line rule for determining whether notice of the loss to the insurance carrier was “prompt.” Instead, the Georgia Court of Appeals implements a “reasonable person” analysis to determine if the policyholder “promptly” provided notice of the loss: “If an ordinarily prudent person acting reasonably would not conclude that an incident would give rise to a possible claim, a court can determine as a matter of law that the insured was justified in not notifying the insurer of the incident.” State Farm Fire & Cas. Co. v. Walnut Ave. Partners, 651 S.E.2d 534 (Ga. Ct. App. 2009). Rather than asking the Court to determine whether a policyholder complied with the “prompt notice” provision of the policy, the policyholder or their public adjuster should immediately provide notice of the loss to the insurance carrier to help prevent any “prompt notice” issue with the claim. [Note: If the loss is a theft the policyholder must “report any theft to the police immediately.” Although the above theft language is quoted from an Allstate policy, this language is represented in the majority of insurance policies.]
Mitigating Damages
Second, the policyholder must mitigate their damages. This is one of the most important duties for the policyholder post-loss. This language is not only expressed in the insurance policy but has also been expressed as a general rule by the Georgia Courts: “In other words, as a general rule, a party injured by a breach of contract has a duty to mitigate its damages. Boone v. Atlanta Indep. Sch. Sys., 619 S.E.2d 708, 712 (Ga. Ct. App. 2005). So, what does this mean exactly? The policyholder MUSTtake all practicable steps to protect the property from further damage, which is often accomplished by making reasonable and necessary temporary repairs to the damaged portions of the property.“[W]here by a breach of contract a party is injured, he is bound to lessen the damages as far as is practicable by the use of ordinary care and diligence.” Central Nat. Ins. Co. v. Dixon, 373 S.E.2d 849, 851 (Ga. Ct. App. 1988). Failure to properly mitigate damages can result in policyholders losing coverage for damages to their property that would have otherwise been covered under their property insurance policy. Policyholders should take photographs of all mitigation work performed on their property maintain copies of any and all receipts or other documentation showing money spent to mitigate further damages as such expenses are often covered under their insurance policy, up to a certain dollar amount specified therein.
Proof of Loss
Third, after a loss occurs the policyholder is typically required to submit a “proof of loss” (“POL”) to the insurance carrier. A POL is a formal sworn statement made by the policyholder to the insurance carrier regarding a claim, especially in property insurance, so that the insurance carrier may determine its liability under the policy. The tricky part is that most policyholders and public adjusters believe they only have to submit a POL when it is specifically requested by the insurer and the insurer provides a POL form.  However, this is not true. There are a handful of insurance policies in the state of Georgia, often found in State Farm policies, that automatically require policyholders to submit a POL after a loss regardless of whether a POL was requested by the insurance carrier.  Typically, in these situations the policy language states the sworn POL must be submitted within 60-days of the date of loss. If the POL is not received by the insurance carrier within the 60-day time period, the insurance carrier may deny the claim. See Lucian v. U.S. Security Ins. Corp., 143 Fed. App'x 152 (11th Cir. 2005) (barring recovery because the insured failed to provide a proof of loss form within 60 days of the date of loss). Play It SafeAlwayssubmit a “proof of loss” after a loss occurs. It seems minor, but too many claims have been denied due to non-compliance with this draconian policy provision.  
Cooperate with Insurance Carrier
Lastly, the policyholder (or the policyholder's representative, such as a licensed public adjuster) should always reasonably cooperate with the insurance carrier. In my experience, some of the more common requests an insurance carrier may make after a loss are: 1) provide access to the property; 2) conduct an Examination Under Oath (EUO); and 3) provide requested documents to the insurance carrier. Noncompliance with these additional provisions can result in your claim being denied.  SeeRoberts v. State Farm Fire and Cas. Co., 2011 WL 6215700 (M.D. Ga. 2011) (finding that an insured/policyholder who refused to submit to an examination under oath failed to comply with a condition precedent and cannot maintain a claim against their insurer). Therefore, in order to maintain a claim against their insurance carrier, policyholders must reasonably cooperate and comply with the insurance carrier's requests. 
While this article is not an exhaustive list of every single post-loss obligation of a policyholder, the post-loss obligations discussed in this article can be found in almost every property insurance policy in the state of Georgia. Policyholders should always comply with the above referenced post-loss obligations. Insurance carriers do everything they can to find a reason to deny your claim, including wrongfully denying completely valid claims. That being said, there is no reason to give the insurance carrier any additional and legitimate reason to deny the claim, especially in the context of post-loss obligations where the policyholder is in control of compliance therewith. While coverage for a claim cannot be guaranteed, following the recommendations in this article will place the policyholder in a better position to avoid denial of their claim. 
J. Remington Huggins is an attorney that focuses on handling first-party and third-party property damage claims from storms, water, and fire. Mr. Huggins has worked hundreds of cases throughout Georgia and Florida.He can be reached at Huggins Law Firm, 770-913-6229


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