For Colorado policyholders and public insurance helping them following a loss, Clementi v.Nationwide Mutual Fire Insurance Company, 16 P.3d 223 (Colo.2001), is a crucial case that has shaped the way late filing of a proof of loss is legally addressed in property insurance claims.

This landmark decision by the Colorado Supreme Court establishes the notice-prejudice rule, which balances the interests of both the insured and the insurer.The background of the case and the court’s decision provide a framework for the implications of a late filed proof for policyholders and public insurance adjusters in Colorado who are trying to timely provide valuation estimates of a loss.In Clementi, the insured, Clementi, suffered a fire loss in his home.

He failed to provide a timely notice of the loss and proof of loss to the insurance company, Nationwide Mutual Fire Insurance Company (Nationwide), as required by the policy’s provisions.As a result, Nationwide denied Clementi’s insurance claim, asserting that the late notice and proof of loss constituted a breach of the insurance contract.The Colorado Supreme Court held that an insurer must demonstrate actual prejudice resulting from the insured’s late notice and filing of a proof before it can deny a claim based on the late notice.

The court emphasized that the insurer’s obligation to pay a claim should not depend solely on the insured’s compliance with the notice requirement in the insurance policy but rather on whether the insurer has been prejudiced by the delay.The court reasoned that a strict enforcement of the notice requirement would result in a forfeiture for the insured, which is generally disfavored by the law.On the other hand, the notice-prejudice rule promotes fairness and substantial justice by ensuring that the insurer’s rights are protected without unfairly penalizing the insured for a technical breach of the contract.

The case has several important implications for public insurance adjusters in Colorado who are helping policyholders when the proof of loss cannot be properly presented on time.Public insurance adjusters should be aware of the notice-prejudice rule when handling late filing of a proof of loss in property insurance claims.The rule requires the insurer to demonstrate that it has been prejudiced by the late filing before it can deny a claim on that basis.

Public insurance adjusters can use the notice-prejudice rule to advocate for their clients when insurance companies attempt to deny claims based on late filing of a proof of loss.Adjusters should emphasize that the insurer’s obligation to pay a claim depends on whether it has been prejudiced by the delay, not merely the insured’s compliance with the notice requirement.Public insurance adjusters should also explore whether their clients have a reasonable explanation for the delay in filing a proof of loss.

A reasonable explanation may help persuade the insurer to forgive a late notice of loss or the late filing of a proof of loss.Good faith and fair dealing is recognized and required under Colorado law.Policyholders and public insurance adjusters can use the Clementi decision to encourage insurance companies to act in good faith and deal fairly with their clients rather than relying on technicalities to avoid paying out on legitimate claims.

I am not trying to turn public insurance adjusters into lawyers.Indeed, it is illegal for public adjusters to interpret the law and advocate as lawyers because that is the practice of law and forbidden.However, the Colorado Supreme Court’s decision in Clementi is a significant victory for insureds, and public insurance adjusters must be aware of it.

By adopting the notice-prejudice rule, the court ensured that insurers cannot unfairly deny claims based on late filing of a proof of loss without demonstrating actual prejudice.This ruling reinforces the importance of fairness and substantial justice in the insurance claims process, allowing public insurance adjusters to better advocate for their clients.When confronting issues of late notice and late filing of a proof of loss, policyholders should always consider retaining counsel to help investigate facts and advocate a good faith basis for recovery.

  Thought For The Day      It is never too late to be what you might have been.—George Eliot