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First Party Property Insurance Claims: Not Knowing What Your Insurance Policy Actually Says Can Hurt You.

Insurance policies are, first and foremost, contracts. Florida law can be very nuanced as it relates to interpretation and enforcement of contractual provisions, and in particular, insurance policies. What may seem to be clear and unambiguous language in a provision outlining what are and are not “covered losses” under an insurance contract can become “murky” when read in tandem with other contractual provisions. And certain provisions in a policy can limit the amount of time that an insured party has to provide their insurer with notice of a claim (or even a potential claim) after the occurrence of a loss event. Failure to comply with these provisions can sometimes prove to be the downfall of a claim which would otherwise be covered under the policy.

In the case of Yacht Club on the Intracoastal Condominium Association, Inc. v. Lexington Insurance Company, 599 Fed. Appx. 875 (11th Cir. 2015), the Court addressed the issue of timely (versus untimely) notice of damages which the Association claimed was caused by Hurricane Wilma. Despite knowing that the Association’s insured property sustained some measure of damage due to Hurricane Wilma, the Association waited more than four (4) years to provide notice to its insurance carrier of the claimed damages (asserting the position that the Association had been unsure as to whether or not the sustained damages would exceed the Association’s policy deductible). After the insurance company denied the claim based upon untimely notice, the Association sued seeking a declaration that coverage for the hurricane loss existed under the Association’s insurance policy.

At the trial level, the Court granted summary judgment in favor of Lexington Insurance Company, finding that the provision of notice to Lexington Insurance Company of damages claimed to have been caused by Hurricane Wilma, provided for the first time more than four and one-half years after the Association learned of the damages, constituted a breach of the provision of the underlying insurance policy which required the insured to “give prompt notice of the loss or damage.”  When tasked with ruling upon the propriety of the trial Court’s decision, the Eleventh Circuit Court specifically noted:

The failure to give timely notice is a “legal basis for the denial of recovery under the policy.” Ideal Mut. Ins. Co. v. Waldrep, 400 So.2d 782, 785 (Fla. 3d DCA 1981). Under Florida law, the “question of whether an insured’s untimely reporting of loss is sufficient to result in the denial of recovery under the policy implicates a two-step analysis.” LoBello v. State Farm Fla. Ins. Co., 152 So.3d 595 (Fla. 2d DCA 2014). The first step is to determine whether the insured provided timely notice. Id. Next, if notice was untimely, prejudice to the insurer is presumed, but that presumption may be rebutted. Bankers Ins. Co. v. Macias, 475 So.2d 1216, 1218 (Fla.1985).…

To be clear, there is no “bright-line” rule under Florida law setting forth a particular period of time beyond which notice cannot be considered “prompt.” See, e.g., Kings Bay Condo. Ass’n, Inc. v. Citizens Prop. Ins. Corp., 102 So.3d 732 (Fla. 4th DCA 2012). Rather, as would be expected given a standard that depends on facts and circumstances, Florida courts have found that notice several years after an occurrence is “prompt” in some cases, but not others. In LoBello, for example, new homeowners moved into property in 2002 and noticed cracking in 2004, but they attributed the problem to normal settling of the home. It was not until four years later when a friend recommended the homeowners consult with a public adjuster that they learned the cracking was caused by a sinkhole and filed a claim with their insurer. The court found that whether notice was “prompt” under these circumstances was a question for the jury. See 152 So.3d at 602.

Ultimately, the Court of Appeals determined that, as a matter of law, notice provided to Lexington Insurance Company more than four and one-half years after Hurricane Wilma’s passing, and where the Association knew that the hurricane had caused some measure of damage to the insured premises, was not in compliance with the requirements of the underlying insurance policy.  The Court’s exact ruling was:

We find as a matter of law that The Yacht Club’s notice to Lexington was untimely. Mr. Capodanno clearly testified that immediately after the fact, the Board knew the structures had sustained damage from Hurricane Wilma. The Board even set aside a $150,000 special assessment to address this damage. These facts alone are sufficient to “lead a reasonable and prudent man to believe that a claim for damages would arise.” Waldrep, 400 So.2d at 785.

This case is instructive in that it shows the need for timely action after the occurrence of a covered loss. When the unfortunate happens, make sure you consult with a knowledgeable Florida attorney regarding your rights (and responsibilities) under your insurance contract, as timely consultation, and proper action, can sometimes be the deciding factor between the approval or denial of your claim, and the success or failure of a lawsuit.