What is Proof of Loss?

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Proof of Loss

The insured's documentation of a loss (itemized bills, physician statements) that must be furnished to the insurer within a stated time, commonly 90 days, as a condition of payment.

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A disability policy requires the insured to pay premiums when due, give timely notice of claim, and submit proof of loss. Because the insurer's duty to pay depends on these steps, the policy is described as:

A conditional contract — An insurance policy is a conditional contract: the insurer's obligation to pay is conditioned on the insured's performance of specified requirements - paying premiums, giving notice of claim, and submitting proof of loss. If a condition is not met, the insurer may not be obligated to perform. This is distinct from an aleatory contract (unequal values exchanged on a chance event), a personal contract (attached to a specific person), and adhesion (drafted by one party).

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An insurance contract is described as unilateral because:

Only the insurer makes a legally enforceable promise; the insured's obligations are conditions, not promises — A unilateral contract has only one enforceable promisor — the insurer promises to pay covered benefits. The insured's duties (pay premiums, cooperate, provide proof of loss) are generally conditions that must be met to keep the promise alive, not themselves enforceable promises. If the insured stops paying premiums, the insurer is released; the insured, however, can generally sue to enforce the insurer's promise to pay benefits.

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Proof of Loss

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