Failure to File a Proof of Loss is Fatal, and the Defense Does Not Require a Showing of Prejudice

On June 3, Connecticut’s intermediate level appellate court held that the failure of a policyholder to file a sworn statement in proof of loss was fatal to his claim.  Palkimas v. State Farm Fire & Casualty Co., 150 Conn.App. 655, 2014 Conn.App. LEXIS 244 (June 3, 2014) rejected the insured’s arguments that prejudice need be shown, holding that while the insurance company may well need to make a showing of prejudice in cases involving the belated submission of a proof, its burden to make such a showing never arises in cases in which the insured has never submitted such a document.

shutterstock_153125888Richard Palkimas was insured under a homeowner’s policy issued by State Farm Fire & Casualty Company, and he sustained two losses.  The first occurred in September 2006, “when workers negligently used a toilet that had been blocked off resulting in a buildup of sewage, and the breaking and rupturing of a sanitary pipe, as well as the spreading of sewage and fecal matter throughout the home.”  Then in January of the following year, the policyholder discovered that “freezing temperatures caused substantial damage to [his] home, including fracturing of the plaster walls and building structure.”

The insured made claim for both events, and he hired a public adjuster to negotiate with State Farm on his behalf.  It was undisputed, however, that he never filed a sworn statement in proof of loss in connection with either claim.  The insurer ultimately denied coverage for both, contending that the policyholder’s failure to submit a proof meant that he had failed to satisfy a condition precedent to coverage under the contract of insurance.

In January of 2009, Mr. Palkimas brought suit in Superior Court in Fairfield.  When the insurer moved for summary judgment in October of 2012, the policyholder argued that summary judgment was not warranted because there remained a genuine issue of material fact as to whether State Farm had been prejudiced by the failure to submit proofs of loss.  The Superior Court disagreed, and it granted summary judgment to the insurance company in January of 2013.  On appeal, a unanimous panel of the state’s Appellate Court agreed, and it affirmed.

As the opinion by retired Judge Thomas West explains, the decision turned “on the distinction between a delayed filing of a proof of loss and a failure to file a proof of loss”  (emphasis in original).  The court held that the policyholder’s failure to submit proofs was fatal to Mr. Palkimas’ claims on appeal, noting that there was no case law from any appellate court in Connecticut that required the insurer to prove prejudice following an insured’s failure to file proofs of loss under an insurance policy.  The decision also distinguished the insured’s cases – in which prejudice was required – because they arose in situations in which there was a delayed filing of a notice of claim or a proof rather than a wholesale failure to take one of those steps.

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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