By David Levin & Mikhal Wright, Esqs.
David Levin, Esq. Courtesy, Baker Donelson
In Florida, providing late notice of a claim can result in a rebuttal presumption of prejudice against the policyholder, requiring an insured to establish that a carrier has not, in fact, been prejudiced by the late reporting. Prejudice exists when an investigation has been made more difficult; it does not mean that a claim determination is impossible. Notwithstanding, courts can be reluctant to grant summary judgment on untimely notice claims, often declaring that whether prejudice exists, or has been vitiated, presents a question for a jury.
Accordingly, the Third District Court of Appeal’s recent holding in Perez v. Citizens Property Insurance Company (3D20-1706) should be welcomed. In Perez, the Court affirmed judgment for Citizens on the issue of whether the insured could overcome the presumption of prejudice after a Hurricane Irma claim was reported over two years late, after repairs were made. In opposition, the insured produced an affidavit from her own investigator, claiming roof and interior damage based on “statements made by the insured and a review of historic NOAA weather data.” The trial court ruled for Citizens, finding the delayed reporting prejudiced its investigation. The 3rd DCA agreed, holding that the affidavit did not overcome the presumption of prejudice because it was based on an investigation conducted nearly three years after the storm, making it impossible for Citizens to determine which, if any, of the roof damage was caused by Hurricane Irma. The court explained that this time lapse and intervening repairs, rendered the expert’s opinion wholly conclusory as to whether the damages were caused by Irma or some other intervening event.
Mikhal Wright, Esq. Courtesy, Baker Donelson
Considering Perez, carriers should continue to be strategic in identifying and denying untimely claims. Property claims are often submitted many months after an alleged loss occurs, sometimes only after repairs have been made and after receipts and damaged property have been discarded. Carriers should be diligent and vigilant in requesting information, specifically proof of temporary or permanent repairs. A reservation of rights letter should accompany almost any acknowledgment of a claim that’s reported more than a few weeks after the alleged loss. If an investigation has been compromised or made more difficult, a carrier should not shy away from denying on this basis. Even if some conclusions can be drawn, and even if it appears that no coverage would exist, prejudice should still be raised.
Perez continues a consistent line of authority that insurers should rely on in adjusting claims and defending lawsuits. A duty to promptly report is not a mere technicality; it is a material obligation meant to ferret out potentially fraudulent claims. A carrier should not bear the burden of having to prove its investigation was actually compromised — the law makes it the insured’s burden to rebut the prejudice presumption. Giving insureds the benefit of the doubt is still an important facet of claims handling; however, this goodwill should not be confused with demanding strict compliance with all terms of the policy, especially the duty to promptly report notice of a claim.
This is adapted from an article originally published by the law firm of Baker Donelson, which is available here.
David Levin is a shareholder in Baker Donelson’s Fort Lauderdale office, and focuses his litigation practice in the areas of property and liability defense, representing carriers and their insureds in all phases of the claim process and resulting litigation. David recently obtained two defense verdicts following jury trials: one involving a hail claim in Brevard County, and the other defending two insured-installers in a negligence/personal injury suit in Gadsden County. David can be reached at [email protected] to discuss this article, these trials, or anything else related to insurance litigation in Florida.
Mikhal Wright is an associate attorney in Baker Donelson’s Orlando office where he assists clients in insurance defense matters, vigorously and cost-effectively defending claims. Mikhal has extensive experience defending insurance companies stemming from his time as an in-house attorney at one of the nation’s largest automobile insurance companies. Mikhal can be reached at [email protected] to discuss this article or anything else related to insurance litigation in Florida.
LMA Newsletter of 8-8-22
