Present: All the Justices 

ALLSTATE INSURANCE COMPANY 

v. Record No. 970671 OPINION BY JUSTICE ELIZABETH B. LACY 

 January 9, 1998 

PATRICIA A. CHARITY, ET AL. 

 FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 

Alfred D. Swersky, Judge 

 In this appeal, we consider whether a proof of loss 

submitted by an insured substantially complied with the terms and 

conditions of a fire insurance policy. 

 Allstate Insurance Company (Allstate) issued a fire 

insurance policy covering property owned by Patricia A. Charity. 

 The property was totally destroyed by a fire. The policy 

required Charity to submit a proof of loss and required that, if 

Allstate chose to rebuild the property, it had to inform Charity 

of such decision within 30 days of receiving the proof of loss. 

 Charity notified Allstate of the loss and submitted a proof 

of loss on June 23, 1995.1 In completing the form, Charity wrote 

"To be determined" in the blanks designated as "Actual Cash Value 

of said property" and "The Amount Claimed under the . . . 

policy." On November 22, 1995, Charity submitted a second proof 

of loss containing a dollar amount for the cash value of the 

dwelling. On December 6, 1995, Allstate notified Charity that it 

intended to rebuild the property. When Charity refused to allow 

Allstate to rebuild the premises, Allstate filed a motion for 

declaratory judgment seeking a determination that it was entitled 

 

 1 Charity hired The Goodman-Gable-Gould Company, a public 

adjustment company, to assist her in the settlement of her 

claim. 
 2 

to rebuild the premises pursuant to the terms of the policy. 

 The parties stipulated the evidence and exhibits and 

submitted the case to the trial court on cross-motions for 

summary judgment. The trial court held that the June 23 proof of 

loss substantially complied with the policy conditions, and, 

therefore, under the policy, Allstate was required to notify 

Charity that it intended to exercise its option to rebuild within 

30 days of June 23. The trial court entered judgment in favor of 

Charity. 

 Allstate appeals the judgment of the trial court, asserting 

that substantial compliance requires that the proof of loss 

submitted by an insured contain the dollar amount of the loss 

and, therefore, Allstate's December 6, 1995 notification to 

Charity of its intent to rebuild was timely. Because we conclude 

that neither the conditions of the policy nor the purpose of a 

proof of loss require that the form contain the actual dollar 

amount of the loss, we will affirm the judgment of the trial 

court. 

 We have held that the terms and conditions of a fire 

insurance policy are satisfied by a showing of reasonable and 

substantial compliance, in the absence of bad faith. Aetna Cas. 

Co. v. Harris, 218 Va. 571, 578, 239 S.E.2d 84, 88 (1977). In 

addition, we have determined that providing the insurer with only 

the fact of loss does not constitute substantial or reasonable 

compliance. Id. at 578-80, 239 S.E.2d at 88-89. Whether 
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substantial and reasonable compliance requires the insured to 

furnish the dollar amount of the actual cash value of the loss in 

this case depends on the requirements of the policy and the 

purpose of the proof of loss. 

 The policy conditions relevant to the proof of loss are 

found in Part 4, Section 1, Paragraph 3 of the policy. That 

paragraph provides that, in the event of a loss, the insured 

"must" do a number of things, one of which is to provide the 

company with a sworn proof of loss. The paragraph also lists a 

number of items that "should" be included in the proof of loss, 

including the actual cash value and the amount of the loss of the 

items damaged or destroyed. Allstate's deliberate use of the 

words "must" and "should" in separate parts of the same paragraph 

compels the conclusion that the words have different 

connotations. In this context, "should" is permissive, and 

therefore, the dollar amount of the loss is not a required part 

of the proof of loss. Even if the insurer's choice of words 

created some doubt as to whether the listed items were required 

to be included in the proof of loss form, such doubt must be 

resolved against the party drafting the policy. Fidelity & Cas. 

Co. of New York v. Fratarcangelo, 201 Va. 672, 677, 112 S.E.2d 

892, 895 (1960). Based on the language used, we conclude that 

the policy conditions do not require that the actual dollar 

amount of the loss be stated on the proof of loss form.2

 

 

 2 Code § 38.2-2105's requirement that a fire insurance 

policy "shall" contain certain provisions, including one 
 4 

 Even though the policy does not require the actual dollar 

amount in the proof of loss, the insured retains the burden to 

show that the information actually provided constitutes 

reasonable and substantial compliance with the requirement that a 

proof of loss be submitted to the insurer. Harris, 218 Va. at 

578, 239 S.E.2d at 88. The parties do not dispute that the 

purpose of a proof of loss is to enable the insurer to 

investigate the insured's losses, to estimate its rights and 

liabilities, and to prevent assertion of fraudulent or unjust 

claims. Walker v. American Bankers Ins. Group, 836 P.2d 59, 62 

(Nev. 1992); Sutton v. Fire Ins. Exch., 509 P.2d 418, 419 (Or. 

1973). If the information Charity provided was sufficient to 

allow the proof of loss to be used for these purposes, Charity 

has met her burden of substantial compliance. 

 Allstate admits that the proof of loss submitted by Charity 

in June was sufficient to allow it to investigate the claim. 

Allstate asserts, however, that because the dollar amount of the 

loss was not on the form, it could not "determine the nature and 

extent of the loss or its liability." As explained in oral 

argument, what Allstate means is that without Charity's statement 

of the actual dollar value of the loss, Allstate could not 

determine whether it should exercise its option to rebuild. In 

 

calling for notification to the insurer of the "amount of loss 

claimed," does not require a different result. Section 38.2-

2107 provides that a company may use simplified alternative 

language which is no less favorable to the insured than that 

contained in § 38.2-2105. 
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essence, Allstate asserts that it needs to know the amount an 

insured is claiming so that it can compare that amount to what 

its investigation shows its liability may be. 

 Having an insured's estimate of its loss undoubtedly would 

assist the insurer in structuring its position in settlement of 

the claim.3

 But the extent of Allstate's liability is determined 

by the loss itself, the policy's coverage restrictions, and the 

limits of the policy, not by the dollar amount the insured places 

on the proof of loss form. Not knowing the dollar amount of the 

insured's claim does not affect the ability of the insurance 

company to determine the amount of its liability. As stated by 

the trial court, "[t]here was nothing once [Allstate] got the 

proof of loss statement from Ms. Charity to prevent [it] from 

going out and conducting [its] own investigation . . . ." 

 The information provided on the June 23 proof of loss 

allowed Allstate to investigate the loss, to determine its 

liability, and to prevent a fraudulent claim. Therefore, the 

June 23 proof of loss substantially and reasonably complied with 

the terms of the policy and the purposes of a proof of loss. 

 Part 4, Section 1, Paragraph 4 of the policy states that in 

order to exercise the option to rebuild the property, Allstate 

"must give you notice of our intention within 30 days after we

receive your signed, sworn proof of loss." When Allstate 

 3 Other provisions of the policy specifically provide 

procedures for resolving disparities between the amount claimed 

by the insured and the amount offered by the insurer. 
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received a proof of loss which reasonably and substantially 

complied with the conditions of the policy, the thirty-day period 

began to run. In this case, the thirty-day period began to run 

with the submission of the June 23 proof of loss. Allstate did 

not notify Charity of its intention to rebuild the destroyed 

property within the time required by the policy conditions and, 

therefore, waived its option to rebuild. 

 For these reasons, we will affirm the judgment of the trial 

court. 

Affirmed.

JUSTICE KOONTZ, with whom JUSTICE COMPTON and JUSTICE KEENAN 

join, dissenting. 

 I cannot join in the result reached by the majority and, 

accordingly, I respectfully dissent. 

 On brief, the insured stated that the "To be determined" 

answers she provided on June 23, 1995 in the blanks on the proof 

of loss form designated for the "Actual Cash Value" of the 

damaged property and the amount of her claim were "the equivalent 

of, 'I don't know now, but I'm working on it.'" Undoubtedly that 

is true, and it makes sense when considered in light of the 

provisions of the policy, noted by the majority, that 

specifically provide procedures for resolving disparities between 

the amount claimed by the insured and the amount offered by the 

insurer. 

 This is not a situation involving a denial of a claim by the 

insurer. The sole issue is when, under the express terms of the 
 7 

insurance contract, the completion of the proof of loss form 

triggers the thirty-day option of the insurer to pay the claim or 

to rebuild the property. 

 In Aetna Cas. Co. v. Harris, 218 Va. 571, 578-80, 239 S.E.2d 

84, 88-89 (1977), as noted by the majority, we have determined 

that providing the insurer with the mere fact of loss does not 

constitute substantial and reasonable compliance with the 

requirements of the insurance policy to provide a proof of loss. 

 In my view, for purposes of determining whether sufficient 

information was provided to trigger the thirty-day option period, 

the proof of loss here which provided no more information to the 

insurer regarding the amount of the claim than "I don't know now, 

but I'm working on it," is really no more than a notice of loss. 

 Clearly it falls short of a proof of loss that permits the 

insurer to determine intelligently how to exercise its 

contractual options in response. 

 For these reasons, I would hold that the thirty-day period 

within which the insurer had the right to exercise the option to 

rebuild or to pay the claim commenced on November 22, 1995, when 

the insured provided the second proof of loss statement 

containing the dollar amount for the value of the damaged 

dwelling, and I would reverse the judgment of the trial court.