Proof of Loss / Time for Payment of Claims Provisions

Proof of Loss: Written proof of loss must be furnished to the insurance company at its office within ninety (90) days after the date of the loss. Failure to furnish proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within that time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.”

Similar to the requirements for providing notice of claim, the proof of loss provision requires the insured to act in a timely manner. The requirement of timeliness is to enable the insurance company to fully investigate the claim and not be prejudiced by a lengthy delay. This, of course, also benefits you because it may result in a prompt payment of your claim.

The following is an example of why it is important for you to timely file a notice of claim and proof of loss. This is a summary of a 1997 lawsuit in Minnesota (Schoffman v. Blue Cross and Blue Shield of Minnesota):

A young girl suffered injuries in a school bus accident. She and her father, shortly thereafter, settled a claim against the wrongdoer. They did not, however, notify their health insurance company until 15 months later. The insurance company took the position that benefits were not payable because of late notice of the claim. The court agreed that the delay had prejudiced the insurance company. It explained that if the insurance company had known of the action against the wrongdoer, it could have filed a subrogation claim against the wrongdoer and possibly obtained reimbursement for some of its costs. Because of the late notice, the insurance company was unable to file a subrogation claim. Therefore, the court concluded that because of the prejudice caused by the late notice of claim and proof of loss, the insurance company owed no medical benefits. In other words, the court concluded that it was reasonably possible for the insured to have filed notice of claim at a much earlier date.

Time of Payment of Claims: Indemnities payable under this policy for any loss will be paid immediately upon receipt of due written proof of loss.”

The other claim-related provisionspreviously discussed basically put the burden on you to act promptly on your claim. This provision puts the burden squarely on the insurance company to pay claims as soon as it has adequate proof of loss. What is deemed to be adequate proof of loss may be up for discussion on occasion, but the insurance company is required to pay promptly as soon as it has the information it needs.

All of these provisions are designed to provide clarity, reasonableness and fairness in the claims paying process, giving due consideration to the fact that you, as an individual, are at a distinct disadvantage vis a vis the large staff of the insurance company.

*Wording may vary from contract to contract and from state to state.

Related articles:

Overview of Health Insurance

Time Limit on Certain Defenses Provision or the Incontestable Provision

Renewal and Reinstatement Provisions in a Health Insurance Policy