Delayed Discovery of Damage to Insured Property: Impact on Prompt Notice of Loss Requirement [Part 1]

All homeowner’s insurance policies contain a provision requiring an insurer to give “prompt notice,” “immediate notice,” or a similar requirement to preserve a valid claim.  When a homeowner’s roof begins to leak following a strong tropical storm, the insured typically will notice the leak and notify the insurer the same day or the next day.  However, the question of timely notice can be much more problematic when the home is an occupied rental property, or the damage is not apparent until a considerable time has passed.  The Third District Florida Court of Appeals recently interpreted such a notice provision under such circumstances. This two-part blog explores the factual background of this recent decision in Part 1 of this two-installment blog.  Part 2 of this blog analyzes and compares the decision to a decision by the 3rd District and other subtle differences in potential factual situations.

Factual Background

In Laquer v. Citizens Property Ins. Corp., the insured’s condominium unit was damaged by Hurricane Wilma on October 24, 2005.  Citizens denied a claim made by the policyholder based on the insured’s alleged failure to comply with the policy’s notice requirement.  When the hurricane hit, the fully furnished unit was occupied by a tenant in the middle of a six year lease term.  Prior to the storm, the insured had the unit fitted with hurricane shutters while the adjacent unit that shared a common wall did not have such protection.  The insured did not file a claim or provide notice in another form until May 19, 2009, approximately three years after the hurricane.  The notice, which was initially provided approximately a month after the tenant vacated the condo, reported damage to furnishings, fixtures, carpets, linens and draperies.  A sworn proof of loss also was submitted within sixty days of Citizen’s request as required by the policy after notice was given of the claim.  Based on the lapse in time between the hurricane and notice, the trial court granted summary judgment in favor of Citizen’s ruling that notice was late as a matter of law.

The insured appealed the trial court ruling arguing that legitimate questions of fact existed for a jury regarding whether notice was late under the circumstances.  The insured argued that notice was timely because it was based on when the insured first “knew or should reasonably have known” the covered property had suffered damage.  The documents relied on by the insured on appeal included her affidavit, the deposition of the manager of the condominium building who conducted inspections and an affidavit from an environmental contractor who repaired damage to the insured unit.  The policyholder contended that she could not have known about the damage until three years after the loss.

The insured provided a range of facts supporting the contention that she could not have been expected to learn of the damage to the unit at an earlier time.  The unit was occupied by a tenant between the time of the storm and a month prior to notice being provided to Citizens.  The tenant never reported any damage.  An inspection by the insured after the tenant vacated the unit revealed severe mold growth between the floor-to-ceiling mirror and the mirror’s supporting wall.  When the moldy drywall was removed from the wall shared with the adjoining property, the contractor discovered water stains on the interior wall that were higher on the neighbor’s side.  The contractor also found rusted metal in the inner wall area.

The expert report indicated,”[insured’s] unit was damaged after wind-driven rain entered [the adjacent unit” and “such wind-driven rain protruded into [insured’s] unit from [the adjacent unit], through the demising wall, causing the aforementioned loss and damage to [insured’s] personal property . . .  evident, for example, from the higher watermark on the unit adjacent to [insured’s] unit.”  The report also indicated that the insured was advised to remove all furnishings from the condo and place the items in storage.

After the report was prepared for the policyholder, the insured contacted the manager of the condominium building to determine how the damage occurred and whether reports were made of damage to other units in the building.  The manager indicated that the cause of the damage was probably Hurricane Wilma.  The insured had received regular reports about the condition of the unit from a housekeeper, but no indications were ever provided that damage occurred to the unit following Hurricane Wilma from the cleaning person, condominium building manager, or the tenant.

If you have questions about timely notice under complex circumstances such as these, we encourage you to read Part 2 of this blog post.  If your investment property or home has been damaged, you should seek legal advice and notify your insurer of the loss as soon as possible.  My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM. 

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