Proof of loss

A proof of loss is a formal document you must file with an insurance company that initiates the claim process after a property loss. It provides the insurer with specific information about an incident – its cause, resulting damage, and financial impact. Once the insurer has received the proof of loss, it can send you a check for repairing or replacing your damaged item if it is covered with your policy.

Insureds must file a proof of loss form to receive benefits under a commercial property insurance policy. All forms of insurance have a similar process for notifying insurers when a loss occurs. This includes:

• General liability insurance
• Business owner’s policy
• Workers’ compensation insurance
• Commercial auto insurance
• Business interruption insurance

And many other types of small business insurance.

Each carrier has a specific form or a preferred format for submitting a proof of loss. Generally, you must provide your insurer with a complete description of the loss, including:

• Date and time
• Incident precipitating the loss (storm, flood, theft, etc.)
• Property involved in the loss
• Nature and scope of damage incurred
• Evidence of the loss (photos, police report, purchase receipts)
• Current property replacement value
• The party (or parties) with a financial interest in the property

The insurer will then process the form and determine how much it will offer the insured as a claim settlement.

Under the proof of loss policy provision, you must file your form as soon as possible after the incident, but no later than the date specified in your policy (often 60 days).

Your insurer can refuse to process your proof of loss form in the following cases:

• You didn’t answer all the questions.
• You failed to include supporting documentation.
• You didn’t sign the form.
• You didn’t have your signature notarized.

In these instances, the company might return the form to you for revisions. However, it can’t reject your form just because it doesn’t like the amount of benefits you’re requesting.

Your insurance proof of loss form kicks off a formal claims process. It typically includes the following steps:

1. Your insurer reviews your proof of loss and attached documentation.

2. The insurance company determines whether your policy covers the claimed items. For example, if your policy covers named perils only and the loss isn’t named, there will be no coverage.

3. A financial value is assigned to each item, either based on a replacement cost or actual cash value.

4. The carrier totals the value of all items and offers to settle the claim for the bottom-line amount.

5. You will have a chance to review your insurer’s offer and decide whether or not to accept it.

6. If you don’t accept it, you can negotiate with the insurer for a larger settlement.

If you accept its settlement offer, the insurance company will now apply your deductible (your share of the loss) to that amount.

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