A Florida appellate court ruled that an insured's nearly three-year delay in reporting a claim was prejudicial to the insurer and precluded coverage for the claim. The case is Arce v. Citizens Prop. Ins. Corp., 388 So. 3d 205 (Fla. Dist. Ct. App. 2024).
What Happened
The Arce's home, including their roof, suffered damage from the winds and rains of Hurricane Irma in September 2017. Mr. Arce tried to repair some of the damages himself, but he could not complete them. The Arces finally reported the damages to their homeowners' carrier, Citizens Property Insurance, in August 2020. Citizens sent its adjuster to survey the damaged home and requested that the Arces submit "a recorded statement, a sworn proof of loss, and additional information and documentation with respect to the loss," all of which were quickly provided. In October 2020, Citizens denied the Arces' claim, stating Citizens' "ability to evaluate this claim ha[d] been prejudiced" because the Arces had waited nearly three years to report their Hurricane Irma claim.
The Arces sued Citizens for breach for not paying their alleged Hurricane Irma loss. Citizens argued that the Arces had actually breached the policy when they waited nearly three years to submit their claim, and that Florida law "entitled to a rebuttable presumption of prejudice" based on the Arces' breach of the timely notice policy condition. The Arces claimed there was a triable "issue of material fact as to whether [they] had promptly reported the loss." They also asserted that, even if their notice had not been timely, Citizens was not entitled to the rebuttable presumption of prejudice based on an earlier Florida appellate case, Perez v. Citizens Property Insurance Corp., 345 So. 3d 893 (Fla. Dist. Ct. App. 2022). The trial court sided with Citizens and awarded the carrier's motion for summary judgment. The Arces appealed.
Issue of Timely Notice
The district appellate court first examined evidence found in the recorded statement Mr. Arce had submitted to Citizens. In his statement, Mr. Arce revealed that he had noticed at least some internal and external property damages shortly after the hurricane had passed. When asked about the delayed notification to Citizens, Mr. Arce responded he had attempted to fix the damage on his own, but that he "need[ed] to get a really good repair on [his] roof." A declaration filed by the Arces explained that Mr. Arces had likely misunderstood some of the questions posed in his recorded statement because English was his second language, not his primary.
The appellate judges were not convinced. They noted that "Mr. Arce's recorded statement plainly and unequivocally reveals that Mr. Arce was aware of the alleged damage to [his] home right after the 2017 hurricane." The declaration he had filed did not rise to the level of creating a triable issue of material fact concerning the timeliness of the notice because it did not explain how or why Mr. Arce failed to realize the physical damage to his home for three years.
Based on this evidence, the appellate court stated that the Arces had indeed breached the prompt notice policy condition.
Presumption of Breach
The Arces argued that, under the rule of the Perez case, an insurer was not entitled to the rebuttable presumption of prejudice when "the policy language expressly conditions the insurer's contractual right to deny coverage upon a breach resulting in prejudice." In Perez, the appellate court also examined the effect of an insured's late reporting of a claim. The trial court had granted summary judgment to the insurer because the insureds "failed to rebut the presumption of prejudice to [the insurer] caused by the late notice." However, the appellate court said the burden of proof fell on the insurer, not the insured, and reversed the decision of the trial court.
The appellate court in the present case looked to Navarro v. Citizens Prop. Ins. Corp., 353 So. 3d 1276 (Fla. Dist. Ct. App. 2023), a case decided after Perez and before this case that faced similar issues regarding an insured's timely or untimely notification of a claim. Like Perez, the trial court in Navarro had awarded summary judgment to the insurer based on the insured's failure to send timely notice of a claim. Unlike Perez, however, the Navarro appellate court affirmed the trial court ruling because the insured was unable to rebut the presumption that the insurer had been prejudiced by the late notice.
In this case, the appellate court declined to follow the Perez ruling. Florida law required an insurer to be prejudiced before rejecting an insured's claim. The judges said "the policy language exception to the presumption recognized by Perez frustrates the very purpose of a prompt notice provision." (emphasis added). Furthermore, other Florida cases decided after Perez had explicitly disavowed the reasoning of the Perez court.
Summary judgment in favor of Citizens was affirmed. A certification of the conflict between Arce and Perez was submitted to the Supreme Court of Florida, but the justices declined to accept the case.
Editor's Note: An insured's late reporting of a claim can be prejudicial to the insurer because it interferes with the insurer's ability to evaluate the claim in light of the specific cause of damage. In this case, the Arces reported the claim almost three years after the purported damages to their home. Given how late the notice was provided, Citizens would have little to no chance of determining what damages resulted from Hurricane Irma and what damages had resulted from other causes, such as regular wear and tear or even another hurricane.
Every insurance policy has a Duties After a Loss section. There are specific duties an insured is required to perform in the event of a loss, and failure to perform the duties is prejudicial to the insurer. The fact that failure to perform the duties after a loss is prejudicial to the insurer is clearly stated in the policy. It is the responsibility of the insured to read the policy and to perform any required duties outlined therein in order to fulfill his contract obligation with the insurer.
Read More: