Legal Definitions - proof of loss

Proof of Loss

Proof of loss refers to a formal document or statement that an insured person or entity must submit to their insurance company after experiencing an event that might be covered by their policy. This statement provides the necessary details and evidence about the damage, injury, or financial loss incurred, allowing the insurer to evaluate the claim and determine its validity and the extent of coverage.

Here are a few examples:

• Homeowner's Insurance Claim: Imagine a homeowner whose roof is severely damaged during a hailstorm. To file a claim, the homeowner completes a specific form provided by their insurance company, detailing the date of the storm, describing the damage to the roof, and attaching photographs, contractor estimates for repairs, and potentially a copy of the weather report.
  • This formal submission, including all the supporting documentation, serves as the proof of loss. It provides the insurance company with the essential information to assess the extent of the damage, verify that it occurred during the policy period, and decide whether to approve the claim and for what amount.
• Automobile Accident Claim: A driver is involved in a collision that totals their car and causes minor injuries. After notifying their insurer, they are asked to submit a proof of loss. This might include a completed accident report form, a copy of the police report, repair estimates for the vehicle (or a total loss valuation), and medical bills or reports related to their injuries.
  • These documents collectively constitute the proof of loss, enabling the auto insurer to understand the circumstances of the accident, quantify the damage to the vehicle, evaluate the medical expenses, and determine the appropriate payout under the driver's policy.
• Business Interruption Claim: A restaurant is forced to close for a month due to a burst water pipe that causes extensive damage, leading to significant lost revenue. To claim under their business interruption insurance, the owner submits a proof of loss. This would typically include financial statements showing revenue before and after the incident, records of ongoing operating expenses during the closure, and a detailed report from an accountant quantifying the lost profits.
  • This comprehensive financial submission acts as the proof of loss, allowing the business's insurer to verify the financial impact of the closure and calculate the compensation owed to the restaurant for its lost income and continuing expenses.