Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

A small theft claim, for instance, may not seem like something that must be reported to the police, however, it is always better to be safe than sorry. Sure, many times the items stolen may be worth less than the policy deductible, but what happens if more items come up missing later? Often, policyholders do not notice that some items are missing until long after a burglary or theft, and failing to notify the police could create issues with the insurance company covering the loss.

Policyholders should also make sure to understand that notifying the police of a loss does not relieve them of their duty to report the loss to the insurer. As discussed in previous posts, if the insurer is not given notice of the loss, coverage could be denied.

The best practice when dealing with a potential theft loss is to immediately notify the police and insurance company. Most insurers closely evaluate theft claims many with an eye towards fraud. If notice is not given to the police or is unreasonably late, the insurer will likely take a more skeptical view. This can cause substantial delays, even if coverage is ultimately not denied.

With that said, this will conclude my posts on Notice of Loss. I have received some great questions and comments both on this blog and by email. I really appreciate those of you who take time to read my posts. While I will be moving on to other post-loss duties, if anyone has any questions about notice or any other topic I cover, please do not hesitate to contact me.

To make an initial determination that notice is late in Florida, a court generally must look at whether the policy provisions for notice have been complied with and whether the timing of the notice was reasonable under the circumstances of the case. See Waldrep at 785.

If it is determined that notice is late, it does not always provide a valid reason for not paying the claim. In Florida, late notice must prejudice the insurer in order to deny coverage. If the insurer has not been prejudiced by the late notice, the claim should be paid.

While this requirement does provide some protection for policyholders, proving that there is no prejudice is not always as easy as it seems. In Florida, late notice creates a rebuttable presumption of prejudice to the insurer. Bankers Ins. Co. v. Macias, 475 So.2d 1216 (Fla.1985). This means that from the beginning, the insurer is presumed to have been prejudiced by the late notice and the burden is on the policyholder to prove otherwise.

The main prejudice that an insured must overcome occurs when the late notice substantially affects the insurer’s ability to investigate a claim. For instance, if a policyholder does not notify the insurance company of damage to a roof, passing time may worsen the condition and the insurer can argue that any repairs deprived the insurer of an opportunity to fully investigate the cause of the loss.

These arguments by the insurer do not always succeed, however, they will take time away from the general goal of getting the claim paid and will cause headaches that may have been avoided. Having to overcome a prejudice argument can be difficult, and the consequences of not proving this argument in Florida may unnecessarily void coverage.

While many of these arguments will likely fail because the insurer was timely notified of the loss after the storm and simply did not perform a full investigation to determine the correct extent of the damages, these situations highlight the importance of timely notification.

In one way or another, most policies state that the insured has a duty to give prompt notice of any loss to the insurer. Some policies may actually list out the exact time in which the notice must occur, and some states even have statutes which cover this exact topic. While this may prove helpful to the policyholder and help answer any questions as what constitutes “prompt” or “timely” notice, these instances are the exception and not the rule. Thus, there has been, and continues to be, an abundance of litigation over what these clauses actually mean.

So how quickly must notice of a loss be given? The general rule of thumb is that you should give notice as soon as possible. The occurrence of a loss usually triggers the policyholder’s duty to inform the insurer and doing so immediately can help reduce or eliminate any argument of noncompliance.

When an issue of whether notice was prompt or timely arises, courts must assess the cases individually. The individual facts surrounding each situation are very important and some jurisdictions may be very strict while others may be more lenient. Courts must determine if the time between the loss and the notice was reasonable under all of the facts and circumstances of the case. Employers Cas. Co. v. Vargas, 159 So. 2d 875, 877 (Fla. 2nd DCA 1964).

In Texas, one court held that without extenuating circumstances, a 54 day delay in reporting a claim was not reasonable and allowed an insurer to deny coverage. McPherson v. St. Paul Fire & Marine Ins. Co., 350 F.2d 563 (5th Cir. 1964).

At the opposite end of the spectrum, the United States District Court for the Southern District of Florida held that notice was not necessarily untimely when given much later than 54 days after the loss, when an insured did not discover the damages until many months after a hurricane. Vision I Homeowners Ass'n, Inc. v. Aspen Specialty Ins. Co., 2009 WL 4927162 (S.Dist. Fla. December 22, 2009). As the Court noted in that case, “the Aspen policy created the possibility of this inherent ambiguity regarding notice by using the term “prompt notice” rather than a finite term, such as requiring notice within sixty or ninety days from the date of the loss.”

These cases show that there is a diverse range of findings that deal with prompt or timely notice of a loss. Some states require that an insurer be prejudiced by the late notice in order to avoid coverage. This is the law in Florida, however, there is a presumption that late notice has prejudiced the insurer and it is up to the policyholder to prove otherwise. While some states take the opposite stance and put the burden of proving prejudice on the insurer, the best way to avoid having to deal with these issues is to give notice as soon as possible. If you are having an issue with whether the notice was prompt, you should have a good understanding of the laws of your particular jurisdiction to determine how best to move forward.

The consequences of a finding that the policyholder did not provide the insurer with prompt notice of a loss can be severe, possibly resulting in complete denial of a claim. Providing notice as soon as possible will help prevent litigation over what constitutes “prompt” or “timely” notice and will move the claim along more quickly. It will also reduce the chances that a claim is denied because of noncompliance with the post loss obligations.

Many people rarely, if ever, have to submit a major insurance claim dealing with their property. The extent of their knowledge and involvement is sending in the premium check when due. Is it any wonder that the typical homeowner might be confused about who their insurance agent is and where they should send a notice of loss?

Possibly contemplating such confusion, some policies specifically state where the notice of loss should be sent. The language varies; it may be the home office or it may be the individual agent who sold you the policy. No matter who or where the policy designates, the policyholder should do their best to comply.

The situation becomes more complicated when the policy is silent or states that the notice should be given to an “authorized agent” of the insurer. Individuals who are authorized agents of an insurer have actual authority to conduct the business of the insurer. Therefore, notice provided to an authorized agent would normally be sufficient if the policy language allows as much. The appropriate authorized agent of an insurer may be spelled out in the policy or in some cases in relevant statutes, so reading and understanding these is always a good idea.

The plot thickens when the individual accepting the notice of loss is not an authorized agent of the insurer. Many times, direct employees of the insurer are not authorized agents and service of notice of loss on them may be ineffective. While this is never a good situation, the courts have provided some leeway when dealing with this type of case.

First, if the person accepting the notice would be deemed to be an authorized agent by a reasonable person, the individual may be deemed to have apparent authority to transact business on behalf of the insurer and, thus, the notice was effective. This apparent authority might come from the actions and representations of the insurer or the individual; either has the potential to impose apparent authority and cause the notice to be effective.

If a policyholder finds himself in a situation where he must submit a claim, he should read the policy first. Many times, the policy states specifically where the notice of loss should be sent. If it is not listed in the policy or the policy is ambiguous, it is never a bad idea to pick up the phone and call the insurance company. Your local agent might be able to help, and, if not, try the home office. Get an answer and follow up in writing to avoid any confusion later, and then send the notice to the designated person or place. Following these simple steps could prevent problems with the claim and keep the file from ever crossing an attorney’s desk.

Much like the reasoning behind a proof of loss, the duty to provide the insurer with notice that a loss has occurred is intended to put the insurer on notice and enable it to investigate whether coverage exists. One of the most fundamental issues in dealing with notice is who will be able to provide notice of the loss to an insurer.

Most policy language contemplates that notice of a loss will be given by the insured. The language of a notice of loss provision may state that “you” (meaning the insured) must give prompt notice of any loss. Others may state that “you or your representative” must give prompt notice of any loss. Generally, courts have held that notice provided by an agent or representative of the insured is sufficient, even if the policy language reads as “you,” as long the agent/representative is authorized by the insured to give notice. See Johnson v. Westhoff Sand Co., Inc., 62 P. 3d 685 (Ka. App. 2003), KPFF, Inc. v. California Union Ins. Co., 66 Cal. Rptr. 2d 36 (Ca. 1st Dist. 1997),

Courts have found a variety of instances where an individual other than the insured may give notice for the policyholder. For example, a policyholder’s attorney may provide notice of the loss to the insurer. Thomas v. Atlanta Cas. Co., 558 S.E.2d 432 (Ga. App. 2001)(holding notice from the insured’s attorney was sufficient as long as the notice was promptly provided and sufficient to notify the insurer with actual knowledge of a claim or suit).

In some circumstances, notice from another insurer may be enough to satisfy the notice requirement. For instance, in the case of excess insurance polices, notice by the first layer carrier to the excess carrier may be considered enough to fulfill the policyholder’s obligations. The determinative issues are usually whether the notice was enough to provide actual knowledge of the claim and whether the notice is sufficient under both the language of the policy and any relevant statute.

Also, courts have found that notice provided by one insured may be enough to fulfill the notice requirement for other insureds. The most common example of this occurs when a property is mortgaged. In such a situation, the mortgagor and any mortgagee have the right to provide notice to the insurer of a loss. It is not hard to imagine an instance where the mortgage company might provide notice of a loss to the insurer before the homeowner, or vise versa. In these situations, some courts have held that as long as the notice was timely and sufficient to give the insurer actual notice of the claim, notice provided by the first or even second mortgagee will provide notice for the other insureds, even if they do not notify the insurer themselves. Goodman v. Quaker City Fire & Marine Ins. Co., 241 F.2d 432 (1st Cir. 1957).

Finally, some jurisdictions have held that a loss report from the policyholder’s insurance agent or claims adjuster is sufficient to fulfill the requirement for notice, even if the policy specifies that notice be provided in writing by the insured. Security Ins. Co. of New Haven v. Dazey, 78 F.2d 537 (7th Cir. 1935). Relying on the insurance agent or claims adjuster can be dangerous, however, because some courts have held that their failure to provide timely notification to the insurer may bar recovery even though the policyholder relied on them to do so. American Mut. Liability Ins. Co. v. Beatrice Companies, Inc., 924 F. Supp. 861 (N.D. Ill. 1996).

While there may be recourse for the insured in a suit for negligence, this is a headache that is easily avoided if the insured does not rely on a third party to provide notice of the loss. In the end, providing notice of a loss to an insurer is very important to having your claim quickly and fairly adjusted and paid. A policyholder should always notify the insurer as soon as possible of any loss and, if possible, in writing. Even if written notice is not required or not possible, any verbal notices should be followed up in writing so that there is no question later about whether the notice was timely, sufficient, or even occurred at all. Taking a little extra time to do things properly can help the claim move towards a more favorable resolution.