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Appellate Court Rules that the Presumption of Prejudice Analysis Applies when Failing to Timely Submit a Sworn Proof of Loss

sworn proof of loss 001.jpgIn Allstate v. Farmer, the Fifth District Court of Appeal decided a case against Allstate Insurance Company. In that case, Allstate was able to prove that their insured, the Farmers, failed to comply with the “proof of loss” provision in the insurance policy. The Farmers home was struck by lightning causing damage to different areas of their home, and a little while later were also victims to a car theft in front of their home. Due to these incidents they filed claims for each separate occurrence with Allstate. However, Allstate suspected fraud and proceeded to investigate this claims.

During Allstate’s investigation, the Farmers cooperated by giving recorded statements, provided requested documentation, obtained appraisals, and submited to examinations under oath, all prior to the commencement of litigation. The only thing that the Farmers failed to do was give a signed and sworn proof of loss form to Allstate, which they claim they sent, but Allstate claims they never received.

At the initial trial the jury found that the Farmers breached the proof of loss provision in the policy, but this breach was not material and did not prejudice Allstate in anyway regarding the claims made. Allstate then filed an appeal.

On appeal, Allstate argued that the jury was not permitted to decide whether they were prejudiced by any breach of the proof of loss provision or whether the Farmers substantially complied with the proof of loss provision. Allstate claimed that the Farmers did not substantially comply with the proof of loss provision in the policy.

The Appeals court found that the trial court was correct and there was not material breach of the contract, because Allstate was not prejudiced in anyway. The Fifth District Court of Appeal agreed with the trial court and did not reverse the ruling on appeal.

The significance of this ruling is that it extends Florida’s presumption of prejudice rule to cases involving the failure to submit a timely sworn proof of loss prior to filing suit.
The reason neither the trial court, or appellate court, found Allstate to be prejudiced by the Farmers failure to submit a proof of loss provision, was because the Farmers cooperated with Allstate’s request regarding their claims. They submitted multiple itemized lists of losses, gave recorded statements, obtained appraisals, and took examinations under oath.

The Framers continued cooperation with Allstate, was deemed to be enough for Allstate to satisfy their duties under the contract in which they failed to do. Allstate also tried to claim that they had multiple itemized lists with the same items, to which they failed to provide evidence of fraud.

The Appeal’s court found that the prejudice presumption rule was properly applied in the trial court, and that Allstate was in no way prejudiced by the Farmers failure to comply with the proof of loss provision.

The Farmers relied on Bankers Ins. Co. v. Macias, 475 So. 2d 1216 (Fla. 1985) in support of their position that an insured’s claim is not barred for failing to submit a sworn proof of loss upon demonstrating that the insurer was not prejudiced by the breach. The 5th DCA agreed with that position, and concluded that Macias is applicable to breaches of proof of loss conditions.

To support that conclusion, the 5th DCA cited to several recent 4th DCA cases that applied the prejudice presumption rule where an insured failed to provide both notice and proof of loss. Soronson v. State Farm Fla. Ins. Co. 96 So.3d 949 Fla. 4th DCA 2012); Kramer v. State Farm Fla. Ins. Co., 95 So. 3d 303 (Fla. 4th DCA 2012).

In sum, the 5th DCA in Allstate v. Farmer extended Florida’s presumption of prejudice rule to cases involving the failure to submit a timely sworn proof of loss prior to filing suit.

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