Two weeks ago, I addressed the notice provision in a property insurance policy, specifically timeliness of notice and what happens if the policyholder is accused of delayed notice. Generally, under Florida law, there is a two step process to determine if delayed notice of a claim precludes payment under an insurance policy: (1) the trier of fact must determine that the notice of loss was too late, and (2) the insurance company must be prejudiced from the delay. If the court answers the first question in the affirmative, the insurance company is entitled to a rebuttable presumption of prejudice. If this presumption is not rebutted, the policyholder may be denied benefits under the policy.

Recently in Banta Properties, Inc. v. Arch Specialty Ins. Co., 10–61485–CIV, 2011 WL 5928578 (S.D. Fla. Nov. 23, 2011), the United States District Court for the Southern District of Florida pointed out two ways that a policyholder can rebut the presumption of prejudice based on delayed notice. While these are not the only two ways, the Court pointed out that the presumption could be rebutted with a showing that competent individuals made a complete investigation of the claim or that the insurer had substantial information regarding the claim.

This Court will address two ways that an insured may rebut the presumption of prejudice to survive a motion for summary judgment. First, an insured may rebut the presumption by showing that another insurer using competent individuals made a complete investigation of the claim. Hartford Accident and Indemnity Co. v. Mills, 171 So. 2d 190, 195 (Fla. 1st DCA 1965). Second, an insured may show that the insurer had access to “substantial information” regarding the claim, creating an issue of fact of whether the delay prejudiced the insurer. Robinson v. Auto Owners Ins. Co., 718 So. 2d 1283, 1284-85 (Fla. 2d DCA 1998) (reversing summary judgment in favor of an insurer on late notice when insurer was notified of accident four years after it occurred).

In Mills, a livestock auction market’s claim was denied after it failed to notify its insurance company of an accident involving a customer until after the customer filed suit against the market. The court turned to the case of Am. Fire and Cas. Co. v. Collura, 163 So. 2d 784 (Fla. 2d DCA 1964), which in turn cited a popular and authoritative treatise for logic and reasoning:

[W]hen the issue of prejudice is injected into ‘delayed notice’ cases, most courts follow the rule that the insurer is not required to show that it was prejudiced by the breach of the notice clauses [emphasis ours]. There is considerable authority to the contrary; and even among those who purport to follow the majority rule there are differing views on its application. Appleman delineates and explains the views as follows:

Many courts have adopted the rule that it is unnecessary for the company to show that it was prejudiced by the neglect of the insured in order to assert this policy defense [breach of the ‘notice’ clauses], it being frequently stated that prejudice is presumed under these circumstances. This does not mean that upon a showing of delay, alone, the insurer walks out of court free of potential claims. It means, rather, that prejudice being a difficult matter affirmatively to prove, it is not required to make such proof. Prejudice may be presumed, with the burden upon the one seeking to impose did, in fact, occur- for example, that a complete investigations was made by another insurer or by competent persons who turned over the results to the ‘late notice’ insurer.

A few courts, however, have adopted a so called rule of ‘substantial prejudice’ which requires that the insurer, in order to be relieved of liability, demonstrate that it was materially and substantially hampered in the making of its defense or in the discovery of facts by the lack of timely notice.’ (Emphasis added.)
8 Appleman, Insurance Law and Practice, § 4732, pp. 15-17.

In Robinson, the policyholder waited almost five years after an accident to sue her insurance company for benefits. The trial court granted summary judgment for the insurance company, but the appellate court reversed, finding that the information provided to the insurance company at least created a question of fact for the jury:

The record reflects that Robinson had furnished Auto Owners substantial information. The accident report, interrogatories, and depositions of Robinson and the tortfeasor confirm that the drivers were the only witnesses to the accident. The insurer was given photographs of the damaged vehicles, and the repair shops were identified. Hammond Electronics, the owner of the vehicle Robinson was driving, was still in business in December 1996, and Robinson provided its address.

Robinson gave Auto Owners substantial post-accident medical information, including the name, address, and telephone number of her worker’s compensation carrier, along with the name of the adjuster who handled her claim and that of her worker’s compensation attorney. Finally, Robinson furnished an exhaustive pre-accident medical history, including the names, addresses, and telephone numbers of fifteen health care providers that have treated her in the past fifteen years.

In light of all the information that was given or is available to Auto Owners regarding the accident and Robinson’s alleged injuries, it cannot be said that the record on motion for summary judgment conclusively foreclosed Robinson’s ability to overcome the presumption that Auto Owners’s investigation was prejudiced by the late notice. Therefore, Auto Owners was not entitled to summary judgment on this ground.

Both of these cases identify and demonstrate that the more information you give an insurance company regarding a loss, the better off that you are in rebutting a presumption of prejudice. For more information on this and other topics, subscribe to this blog through the form on the right of this page.

  • scott

    I would like to see a blog or case law on whether the insurance company has the right to make someone reconfigure their structure because it’s the CHEAPEST form of repair.

  • Jeremy Tyler