As we approach the one-year anniversary of Category 5 Hurricane Ian’s devastating landfall on Florida’s southwest coast, many policyholders and consumers are just discovering that they suffered damages directly related to the storm. Unusually dry weather from September 2022 through May 2023 likely contributed to some home and business owners failing to appreciate that their roofs and other property had suffered wind damage from Ian enough to create openings allowing water intrusion into their buildings. Policyholders who thought they had escaped the wrath of Ian in its northeast trajectory from across Florida are now reporting the damages to their carriers, only to be denied out of hand due to the insidious “late reporting” defense that insurers love to use for any reports of damages made outside of a couple of days of a loss. Recent case law, however, instructs and reminds us that all is not lost!
Most property insurance policies obligate the policyholder to report damages that result from a covered peril “promptly” or “immediately.” In thousands of policies reviewed and hundreds of insurance company representatives’ depositions taken, however, “promptly” and “immediately” are nowhere defined in the policy. Upon questioning, insurance company corporate representatives are uniformly taught to respond that although these terms are not defined in the all-important policy terms, they should be understood by their dictionary meaning (I sometimes ask which dictionary they mean and have never received a specific answer.) One wonders how hundreds and hundreds of corporate representatives give the same answer if there has not been a “coaching” of the witnesses as a general practice throughout the insurance defense industry. Nonetheless, the “dictionary” responses are wrong, as the case law points out below.
Insurers do not even themselves apply “prompt reporting” duties uniformly. The same insurer has been known to deny a claim as “late reported” when the report came within two weeks of a loss while opening coverage and paying a wholly different claim from another (maybe attorney-represented) claim where the report came in years after the loss. Despite insurers’ vague responses and incongruous application related to prompt reporting, Florida’s Sixth Judicial Circuit reiterated and clarified that the prompt reporting defense is for a jury to decide and gave guidance on the rules should an insurer try to dispose of the case on summary judgment (taking the case away from the jury). Brief facts are included because of the recurring nature of this fact pattern, and insurers continued attempt to exploit the uninitiated home or business owner. In Bensen v. Privilege Underwriters Reciprocal Exchange, — So. 3d. –, 2023 WL 3668085 (Fla. 6th DCA May 26, 2023), the court reviewed the facts:
Hurricane Irma hit Southwest Florida in September 2017. After the hurricane, Bensen did not immediately observe any windstorm damage to his home. Eighteen months later, in March of 2019, Bensen noticed a smell in one of his bedrooms and discovered unfamiliar stains on the interior wall and exterior wall, and one light brown stain on the room’s ceiling. Bensen called two roofing companies, Atlantis Roofing and Roman Roofing (‘Roman’), to inspect the damage and provide estimates. Bensen hired Roman to perform the needed repairs to the roof in May of 2019 for the price of $3,500. A month later, Bensen discovered that his roof was still leaking. Roman returned to the home, found another hole further up the roof line, repaired the hole, and did not charge Bensen for the repair. In August of 2019, Bensen smelled mold in the home’s front bedroom and hired a company called iMold to test and remediate the mold. Roman made additional repairs to the roof around that same time. On September 6, 2019, Bensen contacted Privilege about the roof leaks and interior damage to his home [. . .]. Four days later, on September 10, 2019, Privilege’s adjuster, Tina Taylor (‘Taylor’), inspected the property with a representative of iMold. Taylor’s inspection revealed a roof leak which Taylor determined was from wear and tear. Privilege issued payment to Bensen for the interior damages and mold remediation. Privilege denied coverage for repairs to the roof because the damages were the result of wear and tear, lack of maintenance, and design and construction defects that were not covered by the insurance policy.
In December 2019, Bensen hired a painter to paint his living room. The painter noticed water damage at the seam of the drywall and notified Bensen. Bensen again called Roman, and Clint Nix (‘Nix’), the estimator who gave the original Roman estimate, came out to review the roof. Nix noticed lifted tiles from what he determined was wind damage from a hurricane and told Bensen that his whole roof would need to be replaced. The prior repairs Roman performed over the front bedroom did not impair Nix in viewing the remainder of the roof and observing wind damage. Nix provided Bensen with a repair estimate on January 3, 2020. On January 8, 2020, five days after receiving the repair estimate from Nix, Bensen reported the roof damage to Privilege [. . .]. On January 10, 2020, Privilege tasked Axiom Engineering, Inc. (‘Axiom’) to inspect Bensen’s property. Following its inspection, Axiom issued a report concluding, among other things, that there were worn and deteriorated valley flashings due to normal age-related wear and tear, the interior damages were the result of leakage through the worn and deteriorated flashings, and there were no damages to the roof attributable to Hurricane Irma. Privilege subsequently notified Bensen that it was denying coverage for [the] claim as it related to the roof. In its letter to Bensen denying coverage, Privilege noted the fact that Bensen first provided notice to Privilege of damages related to Hurricane Irma more than two years after the hurricane occurred and that repairs had been made to Bensen’s roof in the intervening time. Privilege asserted that the late notice of the claim and the prior repairs to the roof substantially prejudiced its ability to complete an inspection of Bensen’s property to evaluate the claim.
Following the denial, the plaintiff was forced to file suit to protect his rights. During litigation, the plaintiff retained an independent engineer who gave the professional opinion that the plaintiff’s roof damage was, in fact, Hurricane Irma created and not the tired and worn out excuse the insurance company gave that the roof damage was as a result of normal wear and tear (yes, pun intended). The insurer also moved to take the case away from the jury, arguing that over two years was “late reporting” and that it had suffered prejudice because of the repairs made by the insured. The trial court agreed, but the appellate court, applying the correct standard, reversed and stated:
‘Prompt’ is not defined in the policy issued by Privilege to Bensen. ‘It is well settled, however, that ‘prompt’ and other comparable phrases, like ‘immediate’ and ‘as soon as practicable,’ do not require instantaneous notice.’ Laquer v. Citizens Prop. Ins., 167 So. 3d 470, 474 (Fla. 3d DCA 2015) (quoting Cont’l Cas. Co. v. Shoffstall, 198 So. 2d 654, 656 (Fla. 2d DCA 1967)). “Instead, Florida courts have interpreted these phrases to mean that notice should be provided with reasonable dispatch and within a reasonable time in view of all of the facts and circumstances of the particular case.” Id. (quoting Yacht Club on the Intracoastal Condo. Ass’n. v. Lexington Ins., 599 F. App’x. 875, 879 (11th Cir. 2015) (internal quotations omitted)). ‘[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, 354 So. 3d at 1153 (quoting LoBello, 152 So. 3d at 599)
The court applied Florida’s two-tiered test for analysis of the untimely reported claim defense finding:
The Supreme Court of Florida has set forth 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 as a result 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. However, the insured may rebut the presumption of prejudice by showing that the insurer was not prejudiced by the lack of timely notice. Id. ‘If the insured is unable to overcome the presumption of prejudice, then the insurer will prevail on a defense of untimely notice.’ Id.
In this case, Bensen contends that the trial court erred by: (1) failing to follow the two-step process set forth above by skipping the first step and failing to make a determination as to whether the notice was timely; (2) granting summary judgment in favor of Privilege on the issue of whether Bensen provided prompt notice; and (3) granting summary judgment in favor of Privilege on the issue of whether Bensen overcame the presumption of prejudice that arose as a result of Bensen’s failure to provide the insurance company with prompt notice of the claim.
As an initial matter, we reject Bensen’s argument that the trial court failed to follow the two-step process required by the Florida Supreme Court’s precedent. The trial court’s order granting Privilege’s motion for summary judgment explicitly found that there was no genuine issue of material fact that Bensen did not provide prompt notice of his claim to Privilege. The trial court supported that conclusion of law with specific findings of fact. Therefore, the trial court properly followed the two-step process required by Florida Supreme Court precedent.
Note that the reviewing court did not find that there was untimely reporting, only that the trial court did attempt to apply the two-tiered test:
Whether the trial court’s conclusion can be squared with the record in this case is another matter. We find that it cannot. ‘[W]hether an insured has given ‘prompt’ notice is generally a question of fact for the jury.’ Guzman v. S. Fid. Ins., 332 So. 3d 67, 70-71 (Fla. 2d DCA 2021) (citing LoBello, 152 So. 3d at 599-600 (‘All of the Florida cases bearing upon the question of the requirement of notice being given to the insurer seem to be uniform in the proposition that what is a reasonable time depends upon the surrounding circumstances and is ordinarily a question of fact for the jury. . .The determination of whether the insured gave timely notice to the insurer is ordinarily a question to be resolved by the jury or the trial judge when acting as the trier of the facts.’)).
In this case, there was disputed evidence regarding whether a reasonable person in Bensen’s position would have concluded that he had a claim under his insurance policy any time significantly earlier than when Bensen gave notice to Privilege of the claim. Bensen submitted an affidavit in which he testified that he did not learn that the damage to his roof was the result of Hurricane Irma until January 2020. Prior to January 2020, none of the multiple persons knowledgeable about roofs that inspected Bensen’s roof concluded that the damage to the roof resulted from Hurricane Irma. There is no evidence that, prior to January 2020, anyone told Bensen that the damage to his roof may have been caused by Hurricane Irma. Privilege’s own adjuster inspected Bensen’s roof in September 2019 and observed damages that she attributed to wear and tear. She did not cite any damage that she attributed to a hurricane, nor did any of the other persons that inspected the roof prior to January 2020.
The insurance company did what most insurance companies do to obfuscate and mislead policyholders. The true question is not whether the insureds knew there was damage to their property but rather something even more specific which insurance companies use to invite confusion and irrelevance into a trial court’s analysis:
Privilege places great emphasis on the fact that Bensen was aware of damage to his home as early as March 2019. Privilege points to the multiple repairs made to the home between March 2019 and January 2020 when Bensen ultimately gave notice to Privilege of the claim for damage resulting from Hurricane Irma. However, the fact that Bensen’s home was damaged does not speak to whether that damage was the result of some cause covered by his insurance policy, which like all insurance policies, did not cover wear and tear. The question is not whether Bensen was aware of damage to his home, but whether a reasonable person would have been aware that Bensen had a claim implicating his insurance policy. On that issue, the evidence was disputed. See Cordero, 354 So. 3d at 1154 (‘Absent any evidence that the supposed triggering event would cause a reasonable insured to believe a policy award was likely, [the insurance company] was not entitled to summary judgment on the issue of untimely notice.’).
(emphasis added).
Privilege relies on cases involving prompt notice provisions in which courts found that insureds did not give their insurance company timely notice after learning of damage to their property. However, in each of those cases, there was no dispute that the insured was aware that the cause of the damage was of a type covered by the insurance policy. See 1500 Coral Towers Condo. Ass’n. v. Citizens Prop. Ins., 112 So. 3d 541, 543 (Fla. 3d DCA 2013) (Insured had knowledge of damage covered by the insurance policy but waited to notify the insurer because the insured questioned whether the amount of damages would exceed the policy deductible); Kramer v. State Farm Fla. Ins., 95 So. 3d 303, 304 (Fla. 4th DCA 2012) (Insureds were aware of damage caused by a hurricane but did not give notice to the insurer because insureds believed that the amount of damages was below their deductible); Tamiami Condo. Warehouse Plaza Ass’n. v. Markel Am. Ins., 19-CV-21289, 2020 WL 1692177, at *2 (S.D. Fla. Feb. 24, 2020) (Insured ‘was aware of damage caused by Hurricane Irma in close proximity to the time of the occurrence of Hurricane Irma’ but waited seven months to notify the insurance company). While Bensen was indisputably aware of damage to his roof as early as March 2019, unlike in the cases relied upon by Privilege, Bensen denies being aware that the damage was the result of a cause covered by his insurance policy, as opposed to being caused by wear and tear, and there was conflicting evidence regarding whether his belief was reasonable. For this reason, the trial court erred by granting Privilege’s motion for summary judgment.
***
Because we determine that there is a genuine dispute of fact regarding whether Bensen gave timely notice to Privilege as required by the insurance policy, we do not reach the issue of whether the trial court erred by granting summary judgment on the issue of whether Privilege suffered prejudice as a result of the lack of timely notice.
Clearly, this case instructs one not to wait to assume the burden of showing that the insurance company did not suffer prejudice. The untimely reported claim defense can be attacked from the outset, questioning whether the report was untimely. This is especially helpful for the consumers and claims professionals in framing the claim, preparing for examinations under oath, preparing for depositions and discovery, and especially defending against the affirmative defense at a summary judgment hearing. Attack the defense from the get-go and do not even allow the insurance company to get a foothold on the defense. The dictionary definition of prompt is not the legal standard by which the defense must be proven, so do not let the insurers use this to cower the policyholder or to confuse the judge once in litigation.
