In Late Notice Of The Claim Part 1 — Contrary to The Popular Belief of Insurance Carriers in Florida, Late Notice Is Not Necessarily An Absolute Coverage Defense, I wrote that the late notice defense is not an absolute coverage defense. In that post, I discussed the test the Florida Supreme Court has applied to late reported claims. When an insured fails to give timely notice of a loss, prejudice to the insurer is presumed. Bankers Ins. Co. v. Macias, 475 So.2d 1216 (Fla. 1985). A court should presume that the insurance company’s investigation into the cause and damages associated with the loss was prejudiced, however, policyholders can rebut that presumption by showing that the insurer was not, in fact, prejudiced by the late notice. Macias, 475 So.2d at 1218.

A recent opinion from the Fourth District Court of Appeal in Florida, Kroener v. FIGA, No. 4D09-3604 (Fla. 4th DCA June 22, 2011), does not discuss the Florida Supreme Court’s rebuttable presumption test from Macias and instead holds that:

[A]s a matter of law, notice to the insurer of a claim of loss more than two years and two months after the loss occurred was not prompt notice; the untimely reporting of the loss violated the insurance policy and was sufficient to bar the claim. (emphasis added)

There is no mention in the opinion of the Florida Supreme Court’s rebuttable presumption test or why it was not applied. However, there is one distinguishing fact of the case that makes it different from many late reported claims.

In Kroener, the claim involved damages from Hurricane Wilma, which hit on October 24, 2005. The Kroeners purchased the house involved in the claim on April 10, 2007. The prior owners never made a claim under the policy for the Hurricane Wilma damages they were purportedly aware of. Sometime after the sale, the Kroeners discovered a roof leak, which their contractor attributed to Hurricane Wilma. The prior owners signed an Assignment of Benefits form on December 5, 2007, which directed their insurer to pay to the Kroeners any and all insurance benefits for all coverage periods available under the policy they had with Atlantic Preferred. Thereafter, the Kroeners filed a claim with Florida Insurance Guaranty Association (FIGA) for the Hurricane Wilma damage, as Atlantic had become insolvent, and FIGA had been appointed its successor in interest.

This assignment appears to have been the distinguishing detail for the Fourth District. The Court noted that

“[A]ny authorized benefits that had arisen under the policy during the time of the prior ownership of the property could be assigned.”

The Court concluded in the pertinent part that:

[T]he Kroeners did not receive any claims through the previous owners’ assignment because there were no claims timely made by the previous owners to assign.

It seems that the Court viewed the prior owners’ failure to present a claim to Atlantic Preferred fatal to the assignment of benefits that the parties executed after the sale. Oftentimes, there are numerous factual issues surrounding a late reported claim, as well as factual issues surrounding potential prejudice to the insurer. It seems unfair that the Court reached this conclusion without applying the rebuttable presumption test outlined by the Florida Supreme Court in Macias.

The Kroener decision is not final until the Fourth District Court of Appeal rules on any motion for rehearing that may be filed.