Is a Late Proof of Loss Fatal to A Claim in Wisconsin?

What can happen if your proof of loss is late or delayed? Can your claim be denied because of a technicality such as this? Different states have different stances on this and in Wisconsin two statues govern this. Wisconsin Statute §§ 631.81 and 632.26 govern notice provisions in Wisconsin insurance policies and set out the rights and duties of the insured and the insurer.

Wisconsin Statute § 631.81 is entitled “Notice and proof of loss.” Subsection (1) reads:

TIMELINESS OF NOTICE. Provided notice or proof of loss is furnished as soon as reasonably possible and within one year after the time it was required by the policy, failure to furnish such notice or proof within the time required by the policy does not invalidate or reduce a claim unless the insurer is prejudiced thereby and it was reasonably possible to meet the time limit.

If the notice comes as soon as reasonably possible and within a year of the policy deadline, the claim is not invalidated unless the insurer was prejudiced by the delay and it was reasonably possible to meet the time limit.1 Wisconsin Statute 632.26 places the burden on the insured to show it was not reasonably possible to give notice within the prescribed time, and places “the risk of nonpersuasion . . . upon the person claiming there was no prejudice.”2 This statute applies to all insurance policies, including claims-made policies and professional liability policies.3

In Ehlers v. Colonial Penn Insurance Company, there was a question of if the delay was reasonably necessary.4 The court held that the insurer had waived their prejudice defense. The court based its holding on waiver, in part:

[T]hat under the facts and circumstances of this case, particularly the fact that the notice of accident sent by the plaintiff to the insured on March 7 was returned by the insurer on March 12 with a request for additional information and the fact that the defendant denied liability no more than seven days after receiving the additional information, the defendant denied coverage as a matter of law within that time the plaintiff could have submitted her proofs.5

While it is good to know be aware about the effect of delays on providing proofs of loss regarding an insurance claim, the safest course of action for Wisconsin policyholders is to be timely and not provide a late proof of loss.6

1 Larson v. Heritage Mut., 132 Wis. 2d 479, 392 N.W.2d 848 (Wis. Ct. App. 1986).

2 Id.

3 Id.

4 Ehlers v. Colonial Penn Ins. Co., 81 Wis. 2d 64, 75, 259 N.W.2d 718, 724 (Wis. 1977).

5 Ehlers, at 81 Wis. 2d 64, 75, 259 N.W.2d 718, 724.

6 Id.