It has always been the law in Florida that an insured must provide “prompt notice” of a claim against her insurance company. Rather, if the insurance contract provides this requirement, it will be enforced, and I’ve never seen an insurance contract that lacked this requirement. For years, however, insureds sometimes got away with reporting claims as much as nearly three years after the date of loss. I personally helped hundreds of clients recover money from their insurance company in such circumstances, because Florida has a two-part test.
Not only must the insurance company prove there was a lack of “prompt notice,” but also that the lack of prompt notice materially prejudiced the insurance company. This latter prong is a fact issue and courts ordinarily were willing to send the issue to a jury, even when insureds reported claims as much as 35 months after the date of loss. If a policyholder’s expert avers that he was able to inspect the property and reach a substantive determination concerning whether any damages were caused by the alleged cause of loss–so the insurance company could have done that too–Florida courts, historically, were willing to rule that there was a fact issue for the jury.
In recent years, however, the cases in which summary judgments in favor of insurers on the prompt notice issue have been granted and affirmed have been piling up. In the past two years, more than eight reported appellate decisions have ruled that the insurance company was entitled to summary judgment when the insured waited months or years to report their claim. At least three such decisions have been issued this year. See, e.g., Arce v. Citizens Prop. Ins. Corp., 388 So. 3d 205 (Fla. 3d DCA 2024).
You must report your claim promptly! You cannot wait because you feel the damages might be under the deductible. When you report the claim two years later, that will not be held to be a valid excuse. If a hurricane has visited your town, you need to hire an experienced lawyer to represent you in your case against your insurance company, just like you would in an auto accident injury case. And you need to do so immediately.
Just as an example, a federal district court judge recently entered summary judgment in favor of an insurance company based on lack of prompt notice. In Lopez v. Great Lakes Ins. SE, 22-CV-22385, 2024 WL 3466121, at *4 (S.D. Fla. July 19, 2024), report and recommendation adopted, 22-CV-22385, 2024 WL 3672181 (S.D. Fla. Aug. 6, 2024), the Magistrate Judge set forth in detail the law regarding the prompt notice requirement.
In Lopez, Plaintiff Migdalia Lopez sued Defendant Great Lakes Insurance SE (“Great Lakes”) for breach of contract based on a denied Hurricane Irma claim. Great Lakes moved for summary judgment under Federal Rule of Civil Procedure 56 and Local Rule 56.1, based on Ms. Lopez’s failure to give prompt notice. The Magistrate Judge recommended that Defendant’s motion for summary judgment be granted, and the district court judge adopted this recommendation.
The court began its analysis by noting that the legal standard for summary judgment is well-settled:
A party may obtain summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The parties may support their positions by citation to the record, including inter alia, depositions, documents, affidavits, or declarations. Fed. R. Civ. P. 56(c). An issue is genuine if “a reasonable trier of fact could return judgment for the non-moving party.” A fact is material if it “might affect the outcome of the suit under the governing law.” The Court views the facts in the light most favorable to the non-moving party and draws all reasonable inferences in its favor.
The court discussed the purpose of policy provisions requiring prompt notice:
Under Florida law, the purpose of policy provisions requiring prompt notice “is to enable the insurer to evaluate its rights and liabilities, to afford it an opportunity to make a timely investigation, and to prevent fraud and imposition upon it.” Laster v. United States Fidelity & Guaranty Co., 293 So.2d 83, 86 (Fla. 3rd DCA 1974) (quotation omitted). Policy provisions that require “timely notice” or “prompt notice” are interpreted identically and mean that notice must be given with “reasonable dispatch and within a reasonable time [i]n view of all the facts and circumstances of the particular case.” Yacht Club on the Intracoastal Condo. Ass’n. v. Lexington Ins., 599 F. App’x. 875, 879 (11th Cir. 2015). “[T]he duty to provide notice arises when a reasonable person, viewing all available facts and information, would conclude that an award implicating the policy is likely.” Cordero v. Fla. Ins. Guar. Ass’n, 354 So. 3d 1150, 1153 (Fla. 2nd DCA 2023) (quoting LoBello v. State Farm Fla. Ins., 152 So. 3d 595, 599 (Fla. 2nd DCA 2014)); see also Navarro v. Citizens Prop. Ins., 353 So. 3d 1276, 1279–80 (Fla. 3rd DCA 2023); Laquer v. Citizens Prop. Ins., 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. v. Waldrep, 400 So. 2d 782, 785 (Fla. 3rd DCA 1981) (internal quotations omitted))).
In Florida,
… an insured’s failure to provide “timely notice of loss in contravention of a policy provision is a legal basis for the denial of recovery under the policy.” Ideal Mut. Ins. Co., 400 So.2d at 785. The Supreme Court of Florida has set a two-step process to determine whether an insurance company may deny an insured’s claim on the ground that the insured failed to give the insurance company timely notice of the claim as required by an insurance policy. See Bankers Ins. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985). “The first step in the analysis is to determine whether or not the notice was timely given.” LoBello, 152 So. 3d at 599. If the notice was timely given, then the analysis concludes at the first step. Id. If the notice was not timely, then the second step is to determine whether the insurance company suffered prejudice because of the untimely notice. Id. At the second stage of the analysis, prejudice to the insurer is presumed. Id. If notice was not timely, the burden of overcoming the presumption of prejudice is on the insured. Id. The insured, however, may rebut the presumption of prejudice by showing that the insurer was not prejudiced by the lack of timely notice. Id. The factors to be considered include but are not limited to (1) whether better conclusions could have been drawn without delay, (2) whether those conclusions could have been drawn more easily, or (3) whether the repairs to the affected areas that took place in the interim would complicate an evaluation of the extent of the damage or the plaintiff’s efforts to mitigate his or her damages. PDQ Coolidge Formad, LLC v. Landmark Am. Ins. Co., 566 F. App’x 845, 849-850 (11th Cir. 2014), “If the insured is unable to overcome the presumption of prejudice, then the insurer will prevail on a defense of untimely notice.” Id.
In Lopez, the facts of the case were these:
Ms. Lopez owns a property located at 3042 SW 13th Place, Miami, Florida (“the Property”). Joint SOF ¶4. Great Lakes issued Ms. Lopez a commercial lines insurancepolicy for a coverage period of March 16, 2017, through March 16, 2018. Joint SOF ¶1-2. The policy includes a “prompt notice” provision. ECF No. 17, Ex. 1 at 49. I take judicial notice that Hurricane Irma hit South Florida on September 10, 2017. Fed. R. Evid. 201(b)(2), 201(c)(1). Three or four days later, Ms. Lopez noticed interior water stains on the property’s ceiling. Great Lakes SOF ¶5. Almost three years later, on June 8, 2020, Great Lakes received notice of the claim. Joint SOF ¶5; Great Lakes SOF ¶6. Between September 2017 and the time that she reported the claim, Ms. Lopez made repairs to “try and fix the damage cause by the Hurricane and [avoid] further damage” but the stains persisted, and water started dripping. Lopez SOF ¶15-17. Great Lakes inspected the property on June 25, 2020, and denied coverage in February 2021. Great Lakes SOF ¶10.
Great Lakes sought summary judgment on the grounds that Ms. Lopez failed to give prompt notice. Great Lakes argued that because Ms. Lopez failed to give prompt notice, prejudice to Great Lakes was presumed, and Ms. Lopez had failed to meet her burden to rebut it. Ms. Lopez argued Great Lakes waived its right to assert compliance and whether she complied with the notice provision was a question of fact.
1. Notice was not “prompt” as a matter of law.
First, the court held that under the two-step analysis in Macias, the parties agreed that Ms. Lopez noticed interior stains on her ceiling three or four days after the hurricane and that those stains continued to persist, and water started dripping over the span of about two years and nine months. Applying the reasonably prudent person standard, said the court, notice was necessary because there had been an occurrence that should have led Ms. Lopez to believe a claim for damages would arise. A hurricane had just made landfall over the property. Ms. Lopez was at the property during the hurricane and inspected it for damage. She immediately noticed her fence and tree down and a few days later, she noticed stains on her ceiling. She fixed the fence “pretty much right after,” and got “somebody to [check the roof] to see why the stains were showing up.” Ms. Lopez argued she did not “think anything happened due to the hurricane,” nor that it was necessary to submit an insurance claim when she first observed the damages. Ms. Lopez, concluded the court, misstated the applicable legal standard. The court applies an objective standard, not a subjective standard. Viewing all available facts and information, the court concluded a reasonable person would have concluded that “an award implicating the policy was likely. Cordero, 354 So. 3d at 1153. (emphasis added). So, concluded the court, her duty to notify arose in or about September 2017.
The court reasoned:
In cases involving notice provisions like the one in this case, Florida courts have held that a period of even six-months or less is not considered prompt notice as a matter of law. See e.g., Ideal Mut. Ins. Co., 400 So.2d at 785 (two-month delay in reporting after airplane accident); Deese v. Hartford Acc. & Indem. Co., 205 So.2d 328, 329 (Fla. 1st DCA 1967) (four-week delay); see also PDQ Coolidge Formad, LLC, 566 F. App’x at 849 (upholding district court’s finding that six-month delay in reporting property damage is late as a matter of law); Soronson v. State Farm Fla. Ins. Co., 96 So.3d 949 (Fla. 4th DCA 2012) (three-year delay in reporting damage caused by Hurricane Wilma).
Ms. Lopez had submitted her claim approximately thirty-three months after the damage to the property. The undisputed record, said the court, showed that Ms. Lopez became aware of the water stains a few days after the hurricane struck and, instead of reporting it, she had someone check the roof and make repairs. Even assuming the loss at the time was not readily apparent, Ms. Lopez also admitted that the stains “persisted” and water started to drip from the ceiling sometime between 2017 and 2020 but she still failed to report it to Great Lakes.
Even viewing the facts in the light most favorable to Ms. Lopez, reasoned the court, the undisputed facts were sufficient to “lead a reasonable and prudent person to believe that a claim for damages would arise.” See Yacht Club, 599 Fed. App’x at 879. The court found as a matter of law, notice was untimely.
2. Great Lakes suffered prejudice because of Ms. Lopez’s late notice.
A breach of duty of notice, said the court, results in a rebuttable presumption of prejudice to the insurer. Macias, 475 So.2d at 1218. Ms. Lopez argued that, even if she failed to provide prompt notice, there was a genuine dispute of material fact as to whether she had rebutted the presumption of prejudice. Ms. Lopez argued “even if this Court [finds notice to be untimely], a question of fact remains as to whether [Great Lakes] suffered any prejudice as a result of any unreasonable delay in reporting the loss.” In the alternative, Ms. Lopez argued, even if prejudice was presumed, the record rebuts that prejudice because Great Lakes was able to reach a coverage determination and its denial letter “does not suggest that [Great Lakes] was materially prejudiced in its inspection or in reaching a coverage determination.” But, said the court, the Eleventh Circuit has emphasized, “[s]uch a requirement [ ] would flip the burden from the insured to the insurer, which is contrary to Florida law.” Yacht Club, 599 Fed. App’x at 881. See also See Sabran v. Rockhill Insurance Company, No. 2:20-cv-803-JLB-KCD, 2022 WL 4624972 (M.D. Fla. Sept. 30, 2022) (granting summary judgment in favor of insurer when insured failed to proffer any competent evidence rebutting the presumed prejudice caused by the insured’s late reporting). It was Ms. Lopez’s burden to rebut the presumption of prejudice, said the court, not the other way around.
The court decided Ms. Lopez had not presented sufficient evidence (1) whether better conclusions could have been drawn without delay, (2) whether those conclusions could have been drawn more easily, or (3) whether the repairs to the affected areas that took place in the interim would complicate an evaluation of the extent of the damage or Ms. Lopez’s efforts to mitigate her damages. PDQ Coolidge Formad, 566 Fed. App’x at 849-850.
Ms. Lopez proffered that both parties’ experts gave different opinions as to the causation of the damages sustained. But where the only evidence Plaintiff proffered was varying opinions from experts, this evidence was not enough to create a genuine issue of material fact. Yacht Club, 599 Fed. App’x at 881. Also, said the court, Ms. Lopez’s late notice frustrated the purpose of the notice requirement, which goes beyond mere causation and is meant to “enable the insurer to evaluate its rights and liabilities, to afford it an opportunity to make a timely investigation, and to prevent fraud and imposition upon it.” Laster, 293 So.2d at 86.
3. Great Lakes did not waive its ability to assert an affirmative defense based on lack of timely notice.
Ms. Lopez argued Great Lakes unequivocally denied coverage and, therefore, waived the argument relating to her compliance with the conditions precedent to filing suit. Great Lakes responded that it reserved its ability to assert this argument as an affirmative defense. The court agreed with the defendant. Under Florida law, it is settled that an insurer may provide a defense to its insured while reserving the right to challenge coverage if timely notice of such reservation is given to the insured. Gemini II Ltd. v. Mesa Underwriters Specialty Ins. Co., 592 F. App’x 803 (11th Cir. 2014) (citing Centennial Ins. Co. v. Tom Gustafson Indus., Inc., 401 So.2d 1143, 1144 (Fla. 4th DCA 1981)). And the failure to timely report a claim is a classic coverage defense that must be included in the reservation of rights letter. Mid–Continent Cas. Co. v. King, 552 F.Supp.2d 1309, 1317 (N.D. Fla. 2008).
Great Lakes’ denial letter said:
Great Lakes expressly reserve all of their rights under the terms and conditions of the policy or pursuant to applicable law, whether or not mentioned herein. The failure to raise other terms and conditions of the policy at this time should not be deemed a waiver of Great Lakes right to do so in the future should circumstances warrant. All rights and defenses remained reserved.
The denial letter also directed Ms. Lopez’s attention to particular policy provisions, including the “Duties in the Event of Loss or Damage” provision. Great Lakes’ denial letter, therefore, contained adequate “reservation of rights” language and, therefore, Great Lakes could properly assert an affirmative defense based on lack of timely notice.
In, short the court granted summary judgment in favor of the insurance company. Many similar decisions have been issued the past few years.
Donner Law Firm 