Whether you are a homeowner, condominium association, or business owner, your property damage coverage will include a provision that requires you to provide prompt notice of a loss. While neither the policy nor Florida law typically will provide a concise definition for what constitutes timely notice, insurance carriers frequently rely on the failure to comply with this requirement as a basis to deny claims. In some circumstances, notice will be considered untimely with only the passage of weeks or months while notice might be considered timely even years later depending on the specific situation. The best practice is to provide notice of the claim as soon as you can safely do so after a loss to preempt a potential denial by the insurance company on this basis. A federal court case applying Florida law, The Yacht Club on the Intracoastal Condominium Association, Inc. v. Lexington Insurance, 599 Fed. Appx. 875 (11th Cir. 2015), provides guidance on how Florida courts analyze the timeliness of notice.
The insured’s condominium complex, comprised of 16 buildings and 380 units, was hit by Hurricane Wilma on October 24, 2005. The association determined that the buildings that comprised the insured’s property suffered some damage, but the value of the damage was not believed to exceed the $100,000 policy deductible, so no claim was made in the immediate aftermath of the storm. Testimony was introduced indicating that in the years after the storm a number of residents began complaining about a multitude of problems involving recurring roof problems, interior leaks, stuck cracks, water penetration around windows/doors, and other problems.
The association hired an engineering company to conduct an inspection in late 2006 because it was considering suing the developer for construction defects. After the developer filed bankruptcy, the association hired contractors to undertake significant roof repairs. The association then hired a public adjuster in 2009 who informed the association that a significant amount of damage was attributable to Hurricane Wilma and that the association should pursue an insurance claim.
In July 2010, the association sent formal notice of loss to its insurance carrier. When the claim was denied because of lack of timely notice, the association filed a lawsuit seeking $6,208.910 in damages. The trial court granted summary judgment in favor of the insurer based on the association’s failure to provide timely notice of the claim. The insured appealed, contending notice was timely and that the insurer suffered no prejudice from the delay even if notice was not timely.
The appellate court acknowledged that four years and seven months elapsed between the date of the hurricane and the date notice was provided to the insurer. However, the court also observed that a delay of years in providing notice did not necessarily make notice untimely. The court reaffirmed that the issue of timely notice under Florida law involves a two-step analysis: (1) was notice provided in a timely manner; and (2) whether the insured is able to overcome a presumption of prejudice when the notice is not timely. The association contended that notice was timely because it was brought within the five year limitation period set forth in the policy. After noting that the policy did not define “prompt notice,” the court indicated Florida courts have indicated this term means “as soon as practical,” “immediate” or a “reasonable time in view of all of the facts and circumstances.”
Although years had elapsed, the court concluded this alone did not necessarily make notice untimely because there is no “bright-line” rule under Florida law for determining when notice is “prompt.” The court reasoned that using the “facts and circumstances” part of the standard means that cases generally fall into two distinct categories in terms of whether the promptness of the notice is sufficient. The court cited a prior case where the insured purchased a house in 2002 and subsequently noticed cracking in 2005. The policyholder attributed the damage to normal setting. They provided notice of a claim related to sinkhole damage four years later based on the recommendation of a friend and an inspection of a public adjuster. Under these circumstances, the question of the timeliness of notice was up to the jury to determine. However, the court distinguished claims where the loss was caused by a known event like a hurricane, or situations where the insured was present on the premises when readily apparent issues arose.
In this specific case, the court reasoned that the association had knowledge of damage caused by Hurricane Wilma immediately after the storm and prepared necessary repairs. The association even implemented a $150,000 assessment to fund the repairs. Given the insurer’s knowledge of damage, the delay in providing notice for nearly five years was not reasonable. Further, the court noted that the belief that the value of the loss did not exceed the policy deductible did not excuse the delay under Florida law. The court indicated, “Prompt notice is not excused because an insured might not be aware of the full extent of the damage or that damage would exceed the deductible.” Further, the association received additional information about damage to the roof when the engineer inspected it in 2006. Finally, the roof was inspected again in 2009 where further information was provided regarding significant damage, but the association still waited until July 2010 to provide notice of loss. Based on these facts, no issue of fact existed for the jury to consider regarding the promptness of notice.
The court than turned to the question of whether the resulting presumption of prejudice to the insurance company had been rebutted. The insured argued no prejudice occurred because each side provided experts with competing opinions regarding causation. The court gave short shrift to this argument because the rationale for a notice provision goes beyond the issue of causation. The purpose of notice is to permit the insurance company to “evaluate its rights and liabilities, to afford it an opportunity to make a timely investigation, and to prevent fraud and imposition on it.” The court also pointed out that the association’s own expert admitted the buildings were further damaged because of a failure to perform repairs in the immediate aftermath of the hurricane. Further, the repairs performed by the insured prior to submitting a claim deprived the insurer of the opportunity to conduct an inspection prior to repairs or participate in the repair process. Based on this evidence, the insured failed to overcome the presumption of prejudice from delayed notice.
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