To make a claim for hurricane damage to property, you must first notify the insurance carrier of the damage. Most policies require the policyholder to provide this notice with some degree of expediency, usually “prompt” notice. Unfortunately, most policies do not define the term “prompt” and different circumstances could lead to varying interpretations of what “prompt” means. When disputes arise over whether notice was prompt, courts are often left to determine what the term means, again with varying results.

In a recent case out of Alabama, American Western Home Ins. Co. v. Reese, 10-516-CG-N, 2011 WL 5037382 (S.D. Ala. Oct. 20, 2011), the court explained how Alabama courts determine whether the notice given of property damage was prompt or not:

[U]nder Alabama law there are only two factors to be considered in determining the reasonableness of a delay in giving notice to an insurer: the length of the delay and the reasons for the delay. Haston v. Transamerica Ins. Services, 662 So.2d 1138, 1141 (Ala.1995) (quoting Southern Guar. Ins. Co. v. Thomas, 334 So.2d 879, 883 (Ala.1976)). If there are disputed facts, “the question of the reasonableness of a delay in giving notice is a question of fact for the jury.” Id. However, “if there is no reasonable excuse offered for a delay in giving notice, the issue may be decided as a matter of law.”

In Reese, the policyholder gave notice of Hurricane Katrina damage in 2005, for which the insurance company paid approximately $25,000. The policyholders apparently disagreed with this amount, but felt they had no other choice but to accept the amount the insurance company was willing to pay. The policyholders took the money. They completed repairs to the property in 2006 at a cost of approximately $275,000. About two and a half years later, the policyholders notified the insurance company of the additional damages and expenses that the insurance company’s adjuster missed in 2005.

The insurance company denied benefits for these additional expenses and litigation ensued. When the court questioned why it took the policyholders two and a half years to report the damage and extra expenses to the insurance company, the policyholders argued they did not discover the full extent of the damage until long after the storm. The court reasoned that even if that were true, the policyholder had discovered and repaired all damage in 2006 and “offered no excuse for the delay, reasonable or otherwise.” The court then held that this delay was unreasonable as a matter of law, and denied benefits to the policyholder based on late reporting and other reasons.

Had the policyholders contacted professionals for assistance with the claim in 2006 when they realized the damage and repairs were more extensive and costly than the insurance company was willing to pay, there may have been a different outcome to the case. If you have or know of a dispute over an amount of damage to property from a hurricane or other cause, please seek professional assistance before it is too late.