Unfortunately, more often than not, this is a tactic. It is a very strategic move we've seen in representing policyholders against their insurance companies for years, but far more recently in our Hurricane Michael and Sally claims, and we want to make sure you are aware of it.
What is a Sworn Proof of Loss?
A sworn proof of loss (“SPOL”) is a really very simple. It is a one-page document that you fill out stating your amount of damages, that is, the amount you believe it will cost to fully repair and restore your property to the condition it was in before the storm, fire, or other peril, and you sign it under oath. But, think about that for a moment. This is a sworn commitment by you saying the cost to repair your property will not change, no matter what is discovered during the repair process or what additional projects or repairs may need to be undertaken that may cost more, you're committed to this number. You may feel it is too early in the repair process to commit to a number just yet. Construction costs often fluctuate and change throughout a project as hidden problems are discovered or issues occur with supplies or labor. But, that is precisely why the insurance companies like to ask that you submit a SPOL. They want to force you to commit to a number early in the process because this works to their advantage.
Why Do Insurance Companies Ask for Them?
In addition to working as a fixed cap on your repair costs, which are likely to fluctuate, insurance companies like to request SPOLs because they lay a trap. You probably do not know it, as most people do not read through their entire insurance policy, but every homeowners policy contains a “Your Duties After Loss” section that lists a number of obligations you must fulfill before the insurance company is obligated to pay you. Many of these are obvious and automatic, like giving your insurance company immediate notice of the claim, i.e., by telling them about the storm and damage your property sustained. When you call your insurance company and tell them about your storm damage, you are giving them notice and “filing” your claim as is your duty under the policy.
However, some of “your duties after loss” are much sneakier, like the requirement that you provide your insurance company with a SPOL within 60 days after their request for one. The penalty for failing to timely submit a SPOL is exceptionally harsh. If your insurance company asks you for a SPOL, know that a ticking clock has begun and you have a limited amount of time to fulfill that request and get it right. It would be in your absolute best interest to contact an experienced insurance attorney after receiving a request from your insurance company for a SPOL.
What Happens If You Fail to Submit a Timely SPOL?
If you fail to submit a SPOL within 60 days of your insurance company's request, they can claim you failed to fulfill one of your duties under the policy and then deny your claim. Basically, failure to send in a timely SPOL can result in a forfeiture of your coverage. Many policyholders are not aware of this tactic and they unknowingly miss the deadline, severely jeopardizing their rights under the policy. Don't let this happen to you!
If Your Insurance Company Has Requested a SPOL, Contact Us
We are always happy to offer a free, no-cost, no-obligation insurance claim review to answer any questions you may have, look at what the insurance company is doing or asking from you, and explain everything to you. We want to make sure you have the knowledge—like knowing the consequence of failing to submit a timely SPOL—so that you can make the best decisions to protect your claim. Don't think the insurance company is always looking out for you or acting in your best interest. It is in their best interest to find ways to pay less on your claim. You deserve a professional who is looking out for you. Never hesitate to contact us.