What is a Notice of Loss for property damage?
UPDATED: March 11, 2020
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- Insurance companies need to be notified of a loss
- You can notify the company with a letter that tells them just a few particulars about what occurred
- There are timing requirements, so it's best to notify the company as soon as possible
- A notice of loss letter is the first step in recovering from homeowners or auto insurance
Something unpleasant just happened. Maybe you were in a car accident. Maybe a tree fell on your house. Maybe you were robbed. Whatever happened, it's going to cost a lot to fix, too. Well, there is good news and bad news.
The good news is that you have insurance, but the bad news is that you have to go through some steps before you can have insurance pay for the damage. The first thing you'll have to do to recover for the damages is to let the company know that there are damages it will need to pay for.
The way you inform an insurance company of damages is through a notice of loss letter.
What is a notice of loss letter?
Most insurance policies require you to provide a notice of loss to the insurance company in the event you suffer property damage or loss and want to file a claim. A notice of loss is typically a document detailing the losses and the circumstances surrounding how they occurred.
In most cases, you will be providing this notice to your own insurance provider, but if you were in a vehicle wreck in an at-fault state you may have to provide a notice of loss letter to the other driver's insurance company as well as your own.
In that case, you should know what property damage can be reported from a vehicle wreck. This can either be the cost of repairs or the value of the vehicle if the insurance company declares it a total loss.
Remember that in addition to property damage, there are other losses from a car accident that the at-fault driver's insurance should pay for. These include lost wages and the costs of treating personal injuries.
When do you need a notice of loss letter?
Any time you expect to be repaid for damages, you will need a notice of loss letter. This includes when you need to collect from homeowners or renters insurance or your auto collision policy. It also includes, most importantly, when another driver's insurance will have to pay you — typically when that driver is at fault.
It is particularly important in accident cases, because if you were at fault in any way, your insurer may need to defend you. If you don't immediately tell your insurer about the accident, your insurer may lose its ability to gather all the evidence it needs to make a strong defense.
This is why, when you are involved in an accident, most insurance policies require you to contact your insurance company right away. Should you fail to tell your insurance company about an accident promptly, the insurance company may try to deny coverage for the accident.
Whether you need to send a letter, fill out a form, or notify the company some other way may depend on the company itself. Be sure to get a confirmation of receipt in writing from the insurance company, though, since you can lose your ability to recover if the company isn't notified. Having confirmation will prevent them from claiming that no notice was given.
What if the responsible party doesn't have insurance?
We just saw how not notifying the insurance company within a certain time may prevent you from having your loss covered. But what happens when the person responsible for the injury or damage doesn't have insurance?
If the responsible person doesn't have insurance, you have a few different options.
- If it was an auto wreck, your damages and injuries may be covered by your own uninsured/under-insured motorist coverage or by your health insurance.
- Whether it was an auto wreck or something they did to damage your property and you know who the person is, you can sue for damages.
- If you don't know who caused the damage or loss — like a hit-and-run accident or someone breaking in and stealing from your home — your own insurance, uninsured/under-insured motorist or homeowners/renters insurance, respectively, should cover your losses.
If, however, the responsible party was a public employee, your need for a notice of loss letter could become even more important. Think about a firetruck hitting your car or the police mistakenly breaking down your door because they mixed up an address. If something like that happens, you would want to recover, right?
When a city, state, federal, or other public employee may be responsible for damages, a doctrine called sovereign immunity arises.
Basically, sovereign immunity is the idea that people are not allowed to sue the state. In practice, it means that you don't have the right to sue the government. It will be waived, however, if the government is responsible and you comply with some very specific requirements. These requirements vary depending on the public entity involved.
Usually, the requirements are to give notice, like what needs to be in a notice of loss letter, but when you need to provide notice can vary a lot from place to place. Austin, Texas allows you to sue the city only if you give notice within 45 days of the date of damage.
It's essential if you think a government entity was involved that you look into these rules as soon as possible.
What needs to be in a notice of loss letter?
The purpose of a notice of loss letter or a similar notice of injury letter is to provide notice to the proper party. There may be a specific form that the insurance company prefers, so you should reach out to the company and use their preferred method. If there is no direction from the company, however, your letter needs to include:
- The date and time of the damage or injury
- A brief description of the incident ("car accident" or "a tree branch fell on my house" for example)
- The date of the letter
- Your contact information
Note that you do not want to provide a lot of information nor do you want to speculate on the amount of damages in this letter. Not only do you want to avoid interfering with the investigation that the insurance company will perform, but you also do not want to make a guess at damages that might limit your ability to recover.
You should use the method that the insurance company prefers to provide notice whether that's a form, an email, or a letter. Below you'll see a sample notice of loss letter that you can adapt to your own needs. Notes are in [brackets].
Sample Notice of Loss Letter
January 1, 2020 [Date of the letter]
Miss Jane Rooftree [Your name and address]
123 Main Street
Windy City, AK 12345
[You can provide an email or phone number as well. Eventually, you will likely want to correspond with the company or adjuster in some other way but may want to wait to provide that information. If the settlement offer is satisfactory or you have to rely on an attorney, you may be better off not providing other contact information immediately.]
Dear Mr. Agent: [if your inquiry about how to provide notice gave you a name, address your letter to that person. Otherwise, "to whom it may concern" will be fine.]
[Consider starting with "As we discussed on DAY OF CALL" if addressing it to the same person you inquired with.] I am writing to inform you and Insurance Company about the events of [date of the damage].
[Describe what happened very generally here. For example:] That morning at 123 Main Street, a tree fell during a severe storm and damaged my house. My homeowner's insurance policy number is XXXXXXXXXXX.
Please confirm receipt of this letter and let me know if you require any further information.
[Signature in blue or black ink]
Jane Rooftree [typed name]
Considerations for your letter
Of course, you'll want to make sure your letter has no spelling or grammatical errors. Though some people hire an attorney to write these letters, it isn't necessary to go to the added expense for such a simple letter. If you opt to write it yourself, though, remember to keep it short and professional.
You may want to consider sending the letter from a post office with a return receipt requested. You could do this as a second option if the first letter isn't acknowledged. Make sure, however, that you have enough time to ensure providing notice within the time allowed.
Not only do insurance companies have time limits, but there may be state laws that affect how much time you have. Remember that you shouldn't begin to negotiate any settlements until you've had a chance to recover from any injuries and assess all the damages. This is not the case with a notice of loss letter, though. You should provide notice of loss as soon as possible.
What to do next
After you have notified your insurance company of an accident, the policy may require you to "Tender the Defense" of any claims arising out of the accident to the insurance company. This means that you are required to allow the insurance company to hire an attorney or otherwise participate in the settlement and litigation of claims against you by third parties.
Giving notice of loss does not require a lot of specifics, but to have your loss paid, you will have to provide some details. To do that it helps to know how insurance companies assess property damage. If you agree with the assessment, it should be fairly easy to reach a satisfactory settlement.
Once your insurance company compensates you, you must give up your right to pursue third parties for compensation for the loss the insurance company has paid. This is called subrogation — it enables the insurance company to be compensated for its payment to you by recovering from the negligent third party.
If you're dealing with your own or another insurance company and they are either not communicating or only making insufficient settlement offers, you may need to consider going to court. Before you hire an attorney or file suit, however, consider sending a demand letter. A carefully crafted demand letter only costs a little time and a stamp and may resolve your dispute without needing to go to the trouble of suing.
Should you be offered a settlement that you are inclined to accept, remember that signing a settlement agreement means you can't recover any more afterward. Therefore, you must know all of your damages, including costs of ongoing recovery from any injuries, before you accept a settlement offer.
Bringing it All Together
Insurance companies need to know that there's been damage or injuries that they need to pay for. They won't know that anything has happened without someone giving them notice, and that's why there are requirements to provide the companies with notice.
If you want to recover from an insurance company you should confirm the method of notice they require. If you have to write a letter, we've shown you what needs to be included and provided a sample you can adapt to your own needs.
We've also shown you what you can expect to happen after your notice of loss letter is received and what steps you might need to take to have your claim honored.
Have we covered all your questions about a notice of loss letter? Now you know when you might need to send one and what needs to be included.
If you're having issues recovering for damages to your personal property, for your injuries, or dealing with your insurance company, you should consider contacting an attorney.
If your issue stems from a claim on your homeowners insurance — for property damage or theft — contact an insurance attorney. If you need help recovering from a personal injury, a personal injury attorney should be able to help. You can put enter your zip code below to get personalized recommendations to get started.