The sworn proof of loss: what it is, when it's due and how to prepare it

A sworn proof of loss is a signed, notarized statement, made under oath, of the amount you are claiming and the facts behind the loss. Under the ISO commercial property coverage form (CP 00 10 10 12) you must send it within 60 days after the insurer asks for it, and the insurer must supply the form. It is the document the insurer's payment clock runs from, and the one place where an inflated or careless number can hurt you.

Most owners meet the request in a cover letter a few weeks into a claim, sometimes with a blank form and a deadline. Treat it as a legal document, not paperwork.

What the standard form says

The duties-after-loss condition in CP 00 10 lists, among other things, that you must "send us a signed, sworn proof of loss containing the information we request to investigate the claim." The form says you must do this within 60 days after the insurer's request and that the insurer will supply the necessary forms. Note where the clock starts: the request, not the date of the loss. If no one ever requests one, the deadline never begins, although some carriers send the form with the first acknowledgment letter, so read what arrives.

Three related provisions in the same form matter:

• Payment timing. The insurer will give notice of its intentions within 30 days after it receives the sworn proof of loss, and will pay covered loss within 30 days after receiving it if you have complied with the policy and either the amount is agreed or an appraisal award has been made.
• Examination under oath. The insurer may examine any insured under oath, separately from any other insured, about any matter relating to the insurance or the claim, including books and records, and the answers must be signed.
• Fraud. The Commercial Property Conditions form (CP 00 90) voids the coverage part for fraud by the named insured and for intentional concealment or misrepresentation of a material fact, before or after a loss, as summarized by PropertyCasualty360's FC&S commentary. A sworn statement with a knowingly inflated figure is the classic way to trigger it; see commercial insurance fraud: premium fraud and staged claims.

Policy language varies. Some carriers shorten or lengthen the period, require a proof of loss without a request, or attach their own form. Check your declarations page and endorsements.

What goes in it

Carrier forms differ, but they cover the same ground. FEMA's Standard Flood Insurance Policy General Property Form (the edition on FEMA's site is dated October 2015) is a published example of the content the National Flood Insurance Program requires:

A commercial property form will usually add the policy number, the cause of loss, the amount of the loss claimed under each coverage (building, business personal property, business income, extra expense), the deductible, and what you have already been paid. Attach your supporting schedules: contractor estimates, inventory lists, invoices, and for income claims the accountant's worksheet described in documenting a business interruption claim, from day one to final payment.

Your number, not the insurer's

The NFIP form tells the insured to "use your own judgment concerning the amount of loss and justify that amount." The principle applies beyond flood. The proof of loss is your statement of what you claim. If the adjuster's estimate omits damage you can document, do not sign a form with the insurer's lower figure just to meet the deadline. Some carriers send forms pre-filled with their own estimate; signing without change can be argued later as agreement to that number. Strike or change the figure, add your itemized estimate as an attachment, and state that you reserve the right to supplement.

If the numbers are genuinely not final (repairs are not bid, the inventory is incomplete), submit a partial proof of loss on time that states the amount known to date and says it will be supplemented. Many carriers accept this; confirm in writing. Flood claims (see Commercial flood insurance: NFIP limits and private options) are stricter: the SFIP lets you file an amended proof of loss only within 60 days of the date of loss, which is why FEMA tells policyholders to file on time even if they disagree with the adjuster, and add missed items later by supplemental claim.

What happens if you miss the deadline

It depends on the state and the facts. Some courts read the deadline as a strict condition. Others treat it as a covenant, so that substantial compliance saves the claim. In Hartford Fire Insurance Co. v. Himelfarb (Maryland Court of Appeals, Aug. 30, 1999), the court construed the 60-day requirement in a Hartford property policy, using wording matching the ISO language above, as a covenant rather than a condition precedent, and held that the insured had to substantially perform: provide the information reasonably requested as far as reasonably possible, and promise the remainder when possible. The opinion is on FindLaw. That is one state's approach, not a national rule.

Two practical consequences follow:

• If you need more time, ask for a written extension before the deadline and keep the reply. Do not rely on a phone call.
• A late proof of loss submitted with a good reason, and with proof that the insurer was not harmed, is much easier to defend than silence.

What the insurer must do with it

The NAIC Unfair Property/Casualty Claims Settlement Practices Model Regulation (Model 902) says the claimant must be told of acceptance or denial within 21 days of receiving properly executed proofs of loss, or be given written reasons that more time is needed, with status letters at 45-day intervals after that. The NAIC's Model 900 lists, as an unfair claims practice, unreasonably delaying a claim by requiring both a formal proof of loss form and subsequent verification that would duplicate the information in the form. States adopt these in different forms; California's regulation, for example, uses a 40-calendar-day acceptance or denial window, and Texas uses 15 business days after the insurer receives all requested items. See how to file a business insurance claim, step by step for the comparison.

A hypothetical timeline

Say a manufacturer in Texas has a fire. The adjuster's request letter, with the proof of loss form, is dated March 3. Counting 60 days gives May 2. The owner's controller and the broker review the form, and the owner attaches an inventory spreadsheet and the contractor's estimate. The contractor's estimate is $18,000 higher than the adjuster's (see working with an insurance adjuster on a business claim), so the owner signs the form at the owner's own figure, notes the difference, and delivers it by a trackable method on April 20 with a notary stamp. The insurer then has its own deadlines to respond. This example is illustrative; the dates and amounts are made up.

Steps to take

1. Log the date the request was received and calendar the deadline with a week's margin.
2. Get the policy's exact language and any endorsement that changes the period.
3. Collect the supporting documents before touching the form.
4. Have the broker and, on larger losses, a coverage lawyer or accountant review the numbers; consider a public adjuster if the claim is complex (see public adjusters: when to hire one for a business property claim).
5. Use your own figures; attach the differences from the insurer's estimate.
6. Sign before a notary. Whoever signs is swearing to the contents.
7. Deliver by a method that records receipt, and keep a complete copy.
8. Supplement in writing if new damage or costs appear.

Key takeaways

• Under CP 00 10, the 60 days run from the insurer's request, and the insurer must supply the forms; the NFIP flood form runs 60 days from the date of loss.
• The proof of loss is sworn. Every figure should be documented, and exaggeration risks voiding the claim under the fraud condition.
• Put your own number on it, attach support, and reserve the right to supplement; do not sign the adjuster's lower figure by default.
• Courts differ on late filings. Ask for any extension in writing and do not count on a lenient reading.
• The insurer's payment and response clocks, in the form and in state law, run from the sworn proof of loss.