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
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       Charity hired The Goodman-Gable-Gould Company, a public
adjustment company, to assist her in the settlement of her
claim.
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



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     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


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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.




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