Failure to Submit Proof of Loss Within Two Years of Accident Bars Claim

Ignore Requests from Insurer & Lose

State Farm Mutual Automobile Insurance Company (State Farm), sued Maricela Leon seeking declaratory judgment that there was no uninsured motorist (UM) coverage available to Leon. The circuit court entered a judgment in favor of State Farm because Leon did not appear for a recorded statement or produce documents required within two years of the accident, and Leon appealed.

In State Farm Mutual Automobile Insurance Company v. Maricela Leon, No. 1-18-0655, 2019 IL App (1st) 180655, Appellate Court of Illinois Sixth Division (August 2, 2019) the Illinois Appellate Court was asked to allow Leon to receive UM benefits from State Farm.


Leon had an uninsured motorist policy through State Farm (the policy). The policy allowed Leon to seek coverage for any bodily injuries she suffered which were caused by another driver who did not have insurance. The policy provided, in part: “The insured must cooperate with us (State Farm) and, when asked, assist us in *** securing and giving evidence. *** Any person or organization making claim under this policy must, when we require, give us proof of loss on forms we furnish.”

The “Legal Action Against Us” section of the policy provided that Leon must make any demands for arbitration within two years following the date of the accident. The policy provided that the limitation period “is tolled from the date proof of loss is filed for the specific coverage involved until the date claim for that coverage is denied in whole or in part.” The policy did not explain what a “proof of loss” was.

On July 9, 2011, Leon was involved in an automobile accident in which she sustained bodily injuries (the accident). After an accident her counsel reported the loss to State Farm and it began an investigation into Leon’s claim. Leon’s counsel submitted the police report from the accident, as well as a letter from her employer’s insurer, Progressive Insurance Company (the Progressive letter). The Progressive letter, which was addressed to her employer explained that its policy did not cover bodily injuries sustained by its employees.

State Farm sent multiple letters to Leon’s counsel reserving rights and seeking documents and the recorded statement of Leon. Receiving no response State Farm advised that “If we do not hear from you within 30 days, we will assume you are no longer interested in pursuing a claim for your client *** and we will close our file.”

State Farm did not receive a response from Leon or her counsel. On May 7, 2012, State Farm sent a letter to Leon’s counsel stating that it was closing the file because it had not received a response to its prior letter. The two-year limitation period in which to demand arbitration expired on July 9, 2013 without a response from Leon or her counsel.

State Farm advised Leon’s counsel that the two-year limitation period to demand arbitration had expired. Minutes later, Leon’s counsel realizing his error faxed a letter back to State Farm making a demand for arbitration. State Farm then sued seeking declaratory judgment against Leon.

A bench trial commenced. State Farm’s Mr. Kang explained that the policy did not explicitly define “proof of loss” but explained that, in the context of an uninsured motorist claim, “proof of loss” means proof that there is “no applicable liability coverage available to whoever the at-fault driver is or any source of liability coverage.” This also includes workers’ compensation or any other “avenue for collection for the injured” party.

The trial court stated: “Based upon my review of the policy as a whole, the limited information that was provided simply does not constitute proof of loss. I believe that my conclusion is not only supported by my interpretation of the entire policy … as well as the correspondence that was generated by State Farm indicating that there was insufficient information to go forward with the claim…”


Leon claimed her demand for arbitration was timely. Leon alternatively argued that State Farm waived the proof of loss requirement because State Farm never furnished a proof of loss form to Leon and the policy does not otherwise define “proof of loss.

The thrust of Leon’s argument is that she filed a sufficient proof of loss that tolled the limitation period for her to demand arbitration. The Progressive letter and the police report were inadequate as a proof of loss.  The policy required Leon to cooperate with State Farm and assist in “securing and giving evidence.” It was undisputed that Leon did not submit any other documents or a recorded statement to State Farm. The appellate court concluded, therefore, that Leon did not file a sufficient proof of loss to toll the limitation period.

The record demonstrates that State Farm repeatedly requested the necessary information from Leon during the two years following the accident. State Farm continually notified Leon’s counsel that more information was needed in order to move forward with her claim. Yet, nothing was provided.

The policy made clear that Leon must bring any legal action against State Farm within two years following the date of an accident. It necessarily follows that any requested information must be submitted within that same time frame. Nothing in any of State Farm’s letters signified that the two-year limitation period had changed or that it intended to waive the condition.

The trial court did not abuse its discretion in entering a declaratory judgment declaring that there was no uninsured motorist coverage available to Leon because her demand for arbitration was untimely.


Ms. Leon is not without a remedy. She can sue her lawyer who ignored all of the reasonable investigation requests made by State Farm so it could investigate the claim. Failure to cooperate in the investigation and doing nothing for two years is not reasonable and State Farm properly denied the claim.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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