How often do insurance companies get it right the first time? If they don’t, whose responsibility is it to correct them and give them a second chance? As demonstrated through litigation on many hurricane claims, the insurance companies may tell you it is the policyholder’s responsibility to notify them of newfound damage after a claim has already been resolved. Recently, Judge Robert N. Scola, Jr., of the United States District Court for the Southern District of Florida, disagreed with that logic, holding that a policyholder did not have to give the insurance company a second chance before suing it.

In Ocean View Towers Ass’n, Inc. v. QBE Ins. Corp., 11-60447-CIV, 2011 WL 6754063, *9 (S.D. Fla. Dec. 22, 2011), a South Florida condominium association suffered substantial damage to its property in 2005 from Hurricane Wilma. Immediately after the storm, the association notified its insurance company, QBE, and QBE conducted an investigation of the loss. The association cooperated with all requests put upon it by QBE, including notice of the loss, a reasonable description of the damage, keeping an accurate record of all repair expenses, and disclosure of books and records QBE requested. QBE issued payment of $125,312.09 in 2006, which represented the damage QBE found less the policy deductible. In 2010, the association hired a public adjuster who found approximately $4-5 Million in damage to the property. Without notifying QBE of the newly found damage or submitting a supplemental claim, the association filed suit against QBE for breach of contract.

QBE alleged that the association had the responsibility to file a supplemental claim and comply with the “Duties In The Event Of Loss Or Damage” provision of the policy a second time for the newly discovered damage. QBE argued that the alleged failure to comply with the required duties a second time was a material breach of the policy by the association that precluded recovery. The association moved for summary judgment on this issue.

Here, QBE argues that Ocean View failed to notify it of the additional claimed damages prior to filing suit and that there is at least an issue of fact as to whether Ocean View provided prompt notice to the insurer of the claimed damages. The Court finds Ocean View did all that the policy demanded of it.

In short, the policy required Ocean View to provide prompt notice of the “loss or damage.” It did so by informing QBE of the Hurricane Wilma “loss.” The insurance contract required no more. QBE had a full and fair opportunity to investigate the damage from the windstorm loss and to request additional information from Ocean View, but failed to fully do so. [citation omitted] Absent such, Ocean View was under no obligation to give QBE notice of the additional claimed damages before filing suit. While it may not make sense to QBE that an insured can submit notice of a loss, receive payment for claimed damages, and then years later run into court claiming millions of dollars in additional damages, that is not this Court’s concern. [citation omitted]. This Court is obliged to enforce the plain policy language as written. [citation omitted]. Therefore, the Court must grant Ocean View’s motion of summary judgment as to QBE’s second affirmative defense. [emphasis added].

Judge Scola’s written opinion sends a strong message to insurance companies to get it right the first time. The opinion also addressed several other issues, such as matching and ACV/RCV payments, which will be addressed in upcoming articles. This is a federal trial court opinion, therefore not binding authority on other courts, and consultation with legal professionals is advised before pursing a similar course of action.

  • The Truth

    Yeah, and yesterday the jury told the association to get it right the first time when they present their claim. Zero dollar defense verdict!!!

  • John

    I think the jury sent an even stronger message to condo associations to “get it right the first time” by coming in with a zero dollar defense verdict!