Property owners who suffered a covered loss must provide the insurance company with “prompt notice.” Several appellate opinions issued in recent months–after Florida’s change to the “new” summary judgment standard–have driven home the point that this condition precedent (aka “post-loss obligation”)–which is in every insurance contract–will, indeed, be enforced. Several year ago (from 2017 through about 2022), before Florida changed to the so-called “new” summary judgment standard, my law firm successfully survived many motions for summary judgment filed against our clients in which our clients had reported claims many months or even years (even nearly three years) after the date of loss. We did that using aggressive and creative lawyering at a time when less appellate guidance for trial judges existed and Florida’s “old” standard for granting summary judgment was more stringent. It is increasingly difficult, nowadays, to survive the “prompt notice” requirement that insurance companies make in nearly every case. If your home suffers a loss caused by a windstorm or water leak, it is critical that you promptly (essentially this means immediately) report your claim to preserve your rights.

In Arce v. Citizens Property Ins. Corp., ___ So. 3d ___, 2024 WL 24945 (Fla. 3d DCA 2024), the Third District considered a case in which the trial judge entered summary judgment in favor of Citizens. The trial court granted summary judgment for Citizens after concluding that Insureds materially breached their insurance policy by failing to timely notify Citizens of a loss allegedly caused by Hurricane Irma, thereby relieving Citizens of its duty to provide coverage under the policy.

On appeal, the Third District affirmed the judgment, because the trial court: (1) properly concluded, based on the summary judgment evidence, that Insureds breached the policy’s prompt notice provision; and (2) correctly applied the presumption of prejudice that the Third District has consistently held arises when an insured fails to timely notify the insurer of a loss to covered property. In doing so, the court certified conflict with the Fourth District’s decision in Perez v. Citizens Property Insurance Corporation, 345 So. 3d 893 (Fla. 4th DCA 2022), which held that the language contained in the Duties after Loss provision of the Citizens policy upends the presumption and places the initial burden on Citizens to prove that it was prejudiced.

The facts were these. On September 10, 2017, the roof of Insureds’ home was allegedly damaged by Hurricane Irma. Insureds reported the loss to Citizens nearly three years later, on August 26, 2020.

Citizens sent its field adjuster to inspect the insured property on September 10, 2020, and requested that Insureds provide it with a recorded statement, a sworn proof of loss, and additional information and documentation with respect to the loss. On September 11, 2020, Mario Arce gave a recorded statement to Citizens, and on September 22, 2020, Insureds’ public adjuster provided Citizens with a sworn proof of loss, photos of the claimed damage taken on August 31, 2020, and a repair estimate.

On October 1, 2020, Citizens sent Insureds a denial letter stating that “Citizens is respectfully denying this claim since our ability to evaluate this claim has been prejudiced due to failure to report this loss in a timely manner.” Citizens’ denial letter cited to the “Conditions” set forth in the policy, which included the following:

CONDITIONS

. . . .

D. Duties after Loss

In case of a loss to covered property, we have no duty to provide coverage under this Policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an insured seeking coverage, or a representative of either:

1. Give prompt notice to us or your insurance agent.

In February 2021, Insureds filed this lawsuit in the Miami-Dade County Circuit Court, alleging that Citizens had breached the policy by failing to make a loss payment for Insureds’ Hurricane Irma claim. Citizens filed an answer and affirmative defenses, alleging throughout that Insureds breached the policy’s Duties after Loss provision by failing to promptly notify Citizens of Insureds’ claim. Citizens alleged further that Insureds’ failure to comply with the policy’s prompt notice provision had prejudiced Citizens’ investigation of the loss, thus authorizing Citizens to deny coverage for the claim.

In November 2021, Citizens moved for summary judgment relying, in part, upon Mr. Arce’s recorded statement, wherein Mr. Arce said that he had discovered, and made temporary repairs to, the damaged roof soon after Hurricane Irma had passed. Asserting that it was entitled to a rebuttable presumption of prejudice because of Insureds’ untimely notice, and claiming there was no record evidence to rebut the presumption, Citizens argued that it was entitled to summary judgment because Insureds could not prevail on their breach of contract claim.

Insureds filed a response to Citizens’ summary judgment motion arguing that: (1) Citizens was not entitled to the presumption of prejudice because there was an issue of material fact as to whether Insureds had promptly reported the loss (i.e., when Insureds first knew or should have known that their home’s roof was damaged); and (2) even if Insureds’ notice of the loss was not prompt, Insureds had presented sufficient record evidence — in the form of an expert affidavit — to create a triable issue of fact as to whether Insureds had rebutted the presumption.

After conducting a hearing on Citizens’ summary judgment motion, the trial court entered the challenged February 24, 2022 final summary judgment in favor of Citizens. Insureds timely appealed the judgment.

Concluding that Insureds materially breached the subject policy’s prompt notice provision by failing to timely notify Citizens of their loss, and that Insureds failed to present any competent evidence to rebut the presumption that Citizens was prejudiced by the untimely notice, the trial court held that Citizens had no duty to provide coverage for Insureds’ Hurricane Irma claim and, therefore, entered summary judgment for Citizens. Insureds raised two main issues on appeal: (1) whether, under Florida’s “new” summary judgment standard, the trial court erred in concluding that Insureds had materially breached the policy’s prompt notice provision by notifying Citizens of the loss nearly three years after the storm; and (2) whether the trial court erred by determining that Citizens was entitled to a rebuttable presumption that it suffered prejudice as a result of Insureds’ material breach of the policy’s prompt notice provision.

Insureds’ arguments aligned, said the Third District, with the two-step analysis Florida courts employ in determining whether an insured’s alleged untimely reporting of a loss is sufficient to warrant an insurer’s denial of coverage for an otherwise covered claim. See Navarro v. Citizens Prop. Ins. Corp., 353 So. 3d 1276, 1279 (Fla. 3d DCA 2023). First, the court determines whether the notice was timely given. Id. Second, if the notice was untimely, the court looks to whether the insured has rebutted the presumption of prejudice that arises from the untimely notice of the claim.

Insureds first argued that the trial court erred in granting summary judgment for Citizens because the summary judgment record revealed a genuine issue of material fact as to whether Insureds breached the policy’s prompt notice provision. In support of its summary judgment motion, Citizens filed the transcript of Mr. Arce’s September 11, 2020 recorded statement. In this recorded statement, the following exchange occurred:

Q. [R]egarding the hurricane damages to the home there, can you tell me first who it was that discovered the damages?

A. I discovered after a hurricane — after a hurricane passed, yes.

Q. Okay.

A. It was me.

Q. Okay. And — so do you recall when that was? Was it immediately after the hurricane or days or weeks or months after?

A. Was after the hurricane. Actually, I lose a couple more things, like the top of the garage that I have in from of the house, something, and then I found out that.

Q. Okay. So it was pretty much right after the hurricane in 2017 that you noticed it?

A. Yeah. It was after hurricane.

Q. All right. And then is there any — any specific reasons for the delay in reporting the claim to the insurance company?

A. I tried to get it fixed. I thought that’s the best and quick way to do it. But, definitely I need to get a really good repair on my roof.

Q. Okay. All right. And then when you did this — let me see here. What damages did you notice to the home?

A. I was missing some tiles, some of them were losing [sic] completely.

Q. Did you notice any other outside or inside damages?

A. Yeah. I got a damage, like I said, I lost — I had a two-carport garage in front of the house, and that was completely — they completely fly, and I lost them and everything. Then inside the house I had like a leak also.

In opposition to Citizens’ summary judgment motion, and in an attempt to explain Mr. Arce’s recorded statement, Insureds filed a declaration of Mr. Arce. In sum, this declaration simply stated there was a “misunderstanding” because English is Mr. Arce’s second language and Mr. Arce “was not aware that [his] home had sustained Hurricane Irma damages until July 2020 or August of 2020.” As for the damaged carport referenced in his recorded statement, Arce claimed that the carport “was blown away by a hurricane years before Hurricane Irma.”

The Third District agreed with the trial court that the exchange contained in Mr. Arce’s recorded statement plainly and unequivocally revealed that Mr. Arce was aware of the alleged damage to Insureds’ home right after the 2017 hurricane, and that, under Florida’s new summary judgment standard, Mr. Arce’s declaration was insufficient to create a genuine issue of material fact that would excuse or explain Insureds’ failure to timely notify Citizens of the damage allegedly caused by the hurricane. See Fla. R. Civ. P. 1.510(c)(4) (providing that “[a]n affidavit or declaration used to . . . oppose a [summary judgment] motion must . . . set out facts that would be admissible in evidence”); In re Amendments to Fla. Rule of Civil Procedure 1.510, 309 So. 3d 192, 193 (Fla. 2020) (“If the evidence [presented by the nonmovant] is merely colorable, or is not significantly probative, summary judgment may be granted.” (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986))); Rich v. Narog, 366 So. 3d 1111, 1120 (Fla. 3d DCA 2022) (determining that conclusory allegations in an affidavit without specific supporting facts lack the probative value necessary to defeat summary judgment). Specifically, Mr. Arce’s declaration was legally insufficient because it failed to provide any explanation as to why, for nearly three years, he purportedly was unaware that his home had been damaged by Hurricane Irma. See Guzman v. S. Fid. Ins. Co., 332 So. 3d 67, 70-71 (Fla. 2d DCA 2021) (“Notice is said to be prompt when it is provided `with reasonable dispatch and within a reasonable time in view of all of the facts and circumstances of the particular case.’” (quoting Rodriguez v. Avatar Prop. & Cas. Ins. Co., 290 So. 3d 560, 564 (Fla. 2d DCA 2020))); Laquer v. Citizens Prop. Ins. Corp., 167 So. 3d 470, 474 (Fla. 3d DCA 2015) (“Notice is necessary when there has been an occurrence that should lead a reasonable and prudent [person] to believe that a claim for damages would arise.” (quoting Ideal Mut. Ins. Co. v. Waldrep, 400 So. 2d 782, 785 (Fla. 3d DCA 1981))); see also Castro v. Citizens Prop. Ins. Corp., 365 So. 3d 1203, 1206-07 (Fla. 3d DCA 2023) (“Whether notice was provided in a prompt manner is ordinarily a question for the factfinder, but `if the undisputed evidence will not support a finding that the insured gave notice to the insurer as soon as practicable, then a finding that notice was timely given is unsupportable.’” (quoting Lobello v. State Farm Fla. Ins. Co., 152 So. 3d 595, 600 (Fla. 2d DCA 2014) (citations omitted))).

The Third District agreed with the trial court that the summary judgment evidence plainly established that Insureds’ notice to Citizens — some three years after Hurricane Irma — was not prompt, and, therefore, that Insureds breached the prompt notice provision of the subject policy.

That left the second prong of the inquiry: prejudice. Insureds next argued that the trial court misapplied the presumption of prejudice that arises when an insured fails to give prompt notice of a claim to an insurer. Insureds argue that, notwithstanding this Court’s unbroken line of recent cases stating that the presumption of prejudice applies in situations involving identical policy language, the presumption should not apply when, as here, the policy language expressly conditions the insurer’s contractual right to deny coverage upon a breach resulting in prejudice. To this end, Insureds urged the Court to recede from its prior precedent and adopt the rationale employed by the Fourth District in Perez v. Citizens Property Insurance Corp., 345 So. 3d 893 (Fla. 4th DCA 2022).

In Perez, the insureds notified Citizens of their Hurricane Irma claim on November 27, 2018, over a year after the September 10, 2017 storm. Id. at 894. Citizens denied the claim, citing the insureds’ failure to promptly notify Citizens of the loss as required by the same prompt notice provision implicated in this case. Id. The insureds sued Citizens and the trial court found that the insureds had breached the prompt notice provision and, after applying the presumption of prejudice, granted Citizens’ motion for summary judgment. Id. at 895.

The Perez court, construing the same policy language at issue here, reversed the trial court’s summary judgment, concluding that the presumption was rendered inapplicable by the language of the policy provision:

The trial court . . . found no genuine dispute as to any material fact that Citizens was prejudiced, because insureds failed to rebut the presumption of prejudice to Citizens caused by the late notice. However, the policy language places the burden on the insurer to prove prejudice. The policy language here provides that as a condition of the policy, Citizens has “no duty to provide coverage under this Policy, if the failure to comply with the following duties is prejudicial to us.”

Id. at 896.

The Third District noted that the Fourth District decided Perez on August 10, 2022, several months after Insureds filed their notice of appeal in this case. Because the trial court did not have the benefit of Perez when it adjudicated Citizens’ summary judgment motion, Perez had no bearing on the trial court’s legal analysis. The Third District, though, did have the benefit of Perez when it decided Navarro (opinion filed on January 18, 2023), a first-party insurance case involving the exact same prompt notice provision. While it did not address Perez, Navarro impliedly rejected the Perez holding by affirming the trial court’s application of the prejudice presumption that arose in that case. In Navarro, the Third District affirmed a trial court’s summary judgment for Citizens, concluding that the insured — who waited two years and seven months to notify Citizens of a Hurricane Irma-related loss despite noticing leaks throughout the insured home within days of the storm — had failed to rebut the presumption that Citizens was prejudiced by the late notice. 353 So. 3d at 1280.

Now, squarely presented with the issue adjudicated in Perez, the Third District declined to adopt what it characterized as Perez‘s “policy language exception” to the presumption of prejudice that arises when an insured fails to promptly notify the insurer of a claim. The Third District explained its reasoning:

First, we believe the policy language exception to the presumption recognized by Perez frustrates the very purpose of a prompt notice provision. Prompt notice of a claim “afford[s] the insurer an adequate opportunity to investigate, to prevent fraud and imposition upon it, and to form an intelligent estimate of its rights and liabilities before it is obliged to pay.” Navarro, 353 So. 3d at 1279 (quoting 13 Couch on Ins., § 186:14 (3d ed. 2022)). “The notice requirement enables the insurer to conduct a timely and adequate investigation of all circumstances surrounding an accident.” Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1217 (Fla. 1985). The prompt notice provision recognizes the reality that in most, if not all, cases, the insured is in a far better position than the insurer to know when a loss has occurred. This is important because the insurer is obligated both to timely adjust a covered claim and make an appropriate, prompt payment to or on behalf of its insured for a covered claim. Hence, an insurer must know when a loss has arisen so that it may expeditiously determine whether some or all of a claimed loss was caused by a covered peril.

Prejudice to the insurer from a breach of the prompt notice provision is manifest, thus justifying the presumption. Indeed, said the Third District, the presumption is well established in Florida jurisprudence. See id. at 1218; Nat’l Gypsum Co. v. Travelers Indem. Co., 417 So. 2d 254, 256 (Fla. 1982); Tiedtke v. Fid. & Cas. Co. of N.Y., 222 So. 2d 206, 209 (Fla. 1969). Balancing the rationale for the presumption against the potential harsh effects of its application, the presumption is rebuttable, allowing the insured to demonstrate that the insurer was not prejudiced by the insured’s noncompliance with the notice provision. See Macias, 475 So. 2d at 1218. In the Third District’s view, Perez “upends the commonsense notice/presumption framework that has evolved from years of practical application.”

The Third District continued:

Second, it seems counterintuitive that Citizens should somehow lose the otherwise applicable presumption simply because Citizens has chosen to incorporate into its policy the common law requirement that, to deny coverage, Citizens must be prejudiced. The policy language employed by Citizens does nothing more than recognize that, for Citizens to deny coverage, the insured must breach the policy and the breach must result in prejudice to Citizens. We view this policy language as entirely congruent with the established law of this District and the longstanding common law explicated by the Florida Supreme Court. The provision is silent as to the parties’ respective burdens, and we are loath to read into the provision the burden-shifting that the Perez holding infuses into the policy language. Similarly, we are concerned that adopting the Perez holding would result in a judicial rewrite of the parties’ contract, which we are unable to do.

Finally, reasoned the Third District, other panels of the Third District have very recently declined to adopt the rationale expressed in Perez. Indeed, “in the last year, in no less than three written opinions, this Court has either unqualifiedly applied or favorably referenced the presumption of prejudice in cases involving policy language identical to the language in this case.” Against the backdrop of these very recent cases, the Third District adopting Perez’s “policy language exception” in the case at bar “would be akin to taking a U-turn while driving at full speed, without so much as tapping on the brakes. Even if we were to agree with the rationale expressed in Perez, adopting it could justifiably be perceived as an assault on stability and predictability in the law, a value that this Court has sought to uphold.”

Accordingly, the Third District concluded, “while we are cognizant that Florida law disfavors forfeiture of insurance coverage, especially for otherwise covered claims, we decline to adopt Perez‘s policy language exception to the presumption of prejudice and we certify conflict with Perez in this regard.”  

The Third District held that the trial court did not err in applying the presumption of prejudice that arose because of Insureds’ breach of the policy’s prompt notice provision.

The lesson is this: if your property suffers damages caused by a covered peril, such as a windstorm or water leak, you had better “promptly” report the claim. That means immediately. You cannot report it more than two years later (or maybe not even a few weeks later) without putting yourself in danger of losing on summary judgment. If you know you have damages, you have to report it.