FL Insurers Get Guidance on Untimely Notice Cases From District Appeals Court

In Sec. First Ins. Co. v. Visca, Florida’s Fourth District Court of Appeals (DCA) agreed with other Florida DCA rulings on when insurers can use untimely notice of claims as a defense. It held that insurers do not waive untimely notice defenses by failing to assert them in coverage letters, and that evidence of significant delay and knowledge of storm-related damage may prove, as a matter of law, that an insured failed to provide prompt notice of a claim as required. But questions remain on whether insurers must prove they were harmed by insureds’ untimely notice.

In Visca, the insurer appealed a final judgment in favor of the insureds on their claim for breach of their property insurance contract. On appeal, the main issues were:

• • Whether the insurer waived its untimely notice defense by failing to assert the defense in its coverage letter
  • Whether the insureds provided prompt notice of their loss, as required by their insurance policy

On appeal, the insureds first argued that the insurer waived its untimely notice defense by denying the claim under a policy exclusion without raising untimely notice or prejudice in the coverage letter. The court dismissed the insureds' argument. It reasoned that an insurer's claim denial on other grounds does not waive its contractual right to receive prompt notice of loss (which is needed to support an implied waiver). Rather, the court held that the insurer did not waive their untimely notice defense because they properly raised it as an affirmative defense early in the litigation.

The court then turned to the interpretation of “prompt notice” as a matter of law. Under Florida law, courts are permitted to determine, as a matter of law, whether an insured failed to provide “prompt notice” if the undisputed evidence will not support a finding that the insured gave notice as soon as practicable. The court noted that “prompt notice” is commonly interpreted under Florida jurisprudence to mean that notice should be given within a reasonable time under the circumstances.

In Visca, the court reviewed the timeline of events following Hurricane Irma, which made landfall in Florida in September 2017. The insureds first noticed damage in November 2017 when they noticed water stains in the dining room, which they patched themselves. The insureds did not report the claim as they did not believe there was enough damage to justify filing a claim. In late 2018, after the insureds noticed a second leak in the garage, they retained a public adjuster. However, for various reasons, the claim was not reported to the insurer until February 2020, nearly two and a half years after Hurricane Irma.

The court ruled that the insureds’ discovery of damage in late 2018 and retention of a public adjuster triggered the duty to notify under the policy. This made the insureds’ initial notice in February 2020 untimely as a matter of law.

The court looked to other Florida DCA rulings in its findings. Florida’s Sixth DCA last year held that an 18-month delay in reporting a claim was not untimely as the insured did not discover the storm damage until five days prior to reporting the claim. The state’s Third DCA ruled that an insured who did not visit their tenant-occupied property until three years after a hurricane timely reported the claim because the damage was reported immediately after discovery. In another case, the Third DCA held notice was not prompt where the insured first discovered damage one month after a hurricane but delayed reporting the claim because they believed the damage would not exceed the deductible.

The court reversed but remanded for a new trial on whether the untimely notice prejudiced the insurer. 

Florida’s Third and Fourth DCAs disagree on whether a rebuttable presumption of prejudice should apply when an insured did not provide timely notice of their claim as required. In January, the Third DCA held that a presumption of prejudice arises when an insured breaches a policy’s prompt notice provision. It placed the burden on the insured to prove the insurer was not prejudiced. In 2022, the Fourth DCA in Perez v. Citizens Property Insurance Company found that once the court found non-prompt notice as a matter of law, the policy’s language placed the burden of proving prejudice on the insurer.

In Perez, the Fourth DCA relied on the policy’s language. This language specified that the insurer was not required to provide coverage if the insured's non-compliance with the late notice condition “[was] prejudicial to [the insurer].” But the court held that this language “requires an express showing of prejudice by the insurer in order for the insured’s failure to comply with policy conditions to constitute a material breach and permit an insurer to deny coverage for a claim.” 

It remains to be seen whether the policy provisions in Visca are similar to those in Perez and whether the trial court will address the policy's specific language. If the trial court operates under the progeny of cases from the Fourth DCA on this issue, the insurers in Visca will likely have the burden to prove that they were prejudiced by the insureds’ untimely notice. 

Nonetheless, Florida DCAs continue to take on issues of whether an insured gave untimely notice and if so, whether an insurer was prejudiced by that untimely notice. These issues are potentially significant, and the Phelps Insurance team will provide updates as case law continues to develop.

Please contact Michael Rinaldi, Austin Weinkauf or any member of Phelps’ Insurance team if you have any questions or need advice or guidance.