In Arkansas Insurance Department Recognizes That Policyholders Do Not Normally Climb on Roofs To Inspect For Damage, Chip Merlin blogged about a May 4, 2020, bulletin issued by the Arkansas Department of Insurance, regarding Windstorm and Hail Claims.1

The May 4, 2020, bulletin stated, in part:

It has come to the attention of the Arkansas Insurance Department that Arkansas residents have been denied coverage under their homeowner’s policies for damages caused by the peril of windstorms or hail. Many of these denials are due to the insured’s failure to report damage within the time period required under their policy.

Due to the fact that it is often unreasonable to expect a homeowner to identify wind or hail damage within the time period specified in the policy, it is the position of this Department that a period of 365 days must be allowed from the date the insured discovers or should have discovered the damage from wind or hail.

Language in policies limiting the time frame to 365 days will be interpreted to mean claims will be filed within 365 days of when a reasonable person exercising ordinary due diligence would have discovered the damage.

The Department also recognizes that there should be some final limitation to liability for such claims, and will consider claims made outside a five year time frame to be an unreasonable amount of time for a policyholder to discover damage from windstorms or hail. Five years was determined by the Department to be a reasonable measure based on state law limitations on actions for breach of contract. Ark. Code Ann. § 16-56-111.

On September 1, 2020, the Arkansas Department of Insurance issued Bulletin No. 19a-2020, amending the May 4, 2020 bulletin.2 This new bulletin states, in part:

While a requirement in a policy to make a claim for wind or hail damage within 365 days of the date of the loss may be reasonable in most cases, there are situations in which the policyholder may not identify wind and hail damage within this timeframe through no fault of his or her own. It is the position of the Department that an insurer must recognize a good cause exception to a claims filing deadline in a policy for wind and hail claims.

Specifically, the Department’s position is that a wind and hail claim reported later than 365 days after the date of loss can be denied based on a policy provision that requires a claim be reported within such time, but that the policyholder must be provided the opportunity to rebut the denial by showing that there was good cause for the delay in reporting.

The Department also recognizes that there should be some final limitation for such claims, and will consider denials of claims reported more than 24 months after the date of loss to be reasonably denied pursuant to policy provisions. This amount of time will be deemed reasonable given the inherent difficulty in adjusting claims for losses occurring years before a claim is made.

[Emphasis added]

In Arkansas, a homeowner must still comply with his or her obligation under the insurance policy to report a loss in a timely manner. Nevertheless, this new bulletin provides guidance on determining what is reasonable in those instances where a delay in providing notice is not due to the fault of the insured.3 The question of whether a delay in discovering the damage was reasonable or due to negligence of the homeowner will remain a question of fact subject to the specifics of a given case.4
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1 Arkansas Department of Insurance, Bulletin No. 19-2020, issued May 4, 2020, Windstorm and Hail Claims. Available at, https://insurance.arkansas.gov/uploads/resource/documents/19-2020.pdf
2 Arkansas Department of Insurance, Bulletin No. 19A-2020, issued Sept. 1, 2020, Windstorm and Hail Claims (amending Bulletin 19-2020). Available at, https://insurance.arkansas.gov/uploads/resource/documents/19a-2020.pdf
3 Id.
4 Id.