(Article from Insurance Law Alert, June 2024)
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Holding
Reversing a final judgment following a jury trial, a Florida appellate court ruled that a homeowner violated the policy’s prompt notice provision as a matter of law. Sec. First Ins. Co. v. Visca, 2024 Fla. App. LEXIS 4358 (Fla. Dist. Ct. App. June 5, 2024).
Background
Approximately two months after a hurricane made landfall near the homeowner’s residence, the homeowner discovered water stains on the ceiling of his home. He repaired a small area of the roof on his own without notifying his property insurer. One year later, the homeowner discovered another leak. He spoke with his neighbor, a public adjuster, who agreed to handle an insurance claim on his behalf. The adjuster did not file a claim with the homeowner’s insurer for more than a year. When the claim was finally filed, the insurer denied coverage, citing a policy provision related to excluded “wear and tear” damages. The insurer did not mention late notice as a basis for the coverage denial.
In an ensuing trial, the insurer moved for a directed verdict based on untimely notice. The court denied the motion and the jury found that the homeowner gave prompt notice. Thereafter, the insurer renewed its motion for a directed verdict or alternatively, for a new trial. The trial court denied both motions.
Decision
Reversing the trial court, the appellate court ruled that the homeowner failed to give “prompt notice,” as required by the policy, as a matter of law. The appellate court explained that notice is prompt if it is “given within a reasonable time of the event triggering the insured’s duty to notify.” As the court noted, this duty is not necessarily triggered when the loss initially occurs or when the policyholder first discovers damage, but rather when a reasonable person would conclude that a claim would arise.
Applying this standard to the undisputed facts of this case, the appellate court concluded that the homeowner waited an unreasonable length of time before notifying his insurer of the damage. While the court took no position on whether the homeowner’s initial discovery of water stains triggered the policy’s notice provision, it ruled that a duty to provide notice unequivocally arose after the second leak was discovered and a public adjuster became involved. As such, the appellate court ruled that the insurer was entitled to a directed verdict on the untimely notice defense. The court remanded the matter for a new trial on whether the untimely notice prejudiced the insurer.
Comments
The decision is notable in other respects. The court rejected the homeowner’s assertion that the insurer waived its right to assert an untimely notice defense by failing to raise it in the initial coverage denial. The court stated:
by denying a claim based on a policy exclusion, a property insurer asserts that the claim falls entirely outside the policy’s scope. In that instance, the insurer’s conduct does not clearly demonstrate an intent to otherwise relinquish its contractual right to prompt notice of the loss, as necessary to support an implied waiver.
The court further emphasized that the insurer asserted untimely notice as an affirmative defense early on in the litigation. Importantly, the waiver analysis for property insurers is different from that for liability insurers; under Florida statutory law, liability insurers waive coverage defenses that are not timely raised in a reservation of rights.