Typical property policies require the insured to cooperate with the insurer in the investigation of the claim, and specifically require the insured to submit a sworn proof of loss, provide timely responses to an insurer’s request for documentation related to the claim and, if requested, submit to examinations under oath. If the insured fails to abide by such requirements, the issue, in many jurisdictions, then becomes whether the requirement is a condition precedent to coverage (which may result in a presumption of prejudice to the insurer that may be rebutted), or whether the requirement is a condition subsequent (which may place the burden on the insurer to establish a material breach that prejudices the insurer). See, e.g., Bankers Ins. Co. v. Macias, 475 So. 2d 1216 (Fla. 1985).
In Allstate Floridian Ins. Co. v. Farmer, 2012 Fla. App. LEXIS 22157, (Fla. 5th DCA, Dec. 28, 2012) the 5th DCA essentially extends Florida’s presumption of prejudice rule to proof of loss cases. In Farmer, Allstate sent multiple requests to the Farmers seeking executed proofs of loss. The policy provides, in relevant part:
- Allstate agrees to provide the coverages you indicated on the Policy Declarations. In return, you must pay the premium when due and comply with the policy terms and conditions…”
- In the event of a loss, the policy requires the insured to provide Allstate with a “signed, sworn proof of loss” within sixty days after the loss.
- “No suit or action may be brought against us unless there has been full compliance with all policy terms.
At trial, Allstate denied ever having received the requested proofs. The Farmers claimed they mailed the proofs, but Mr. Farmer admitted that it was not notarized. At trial, Allstate moved for a directed verdict claiming that the Farmers were barred from recovery because a completed proof of loss was a precondition to suit. The trial court denied the motion and allowed the jury to address two key factual questions which led to the following findings: (1) the Farmers failed to substantially comply with the duty to provide Allstate with signed, sworn proofs of loss for both claims; and (2) Allstate had not been prejudiced by the noncompliance. A verdict was returned for the Farmers.
On appeal, Allstate argued, inter alia, that the trial court ignored the appellate court’s precedent in Starling v. Allstate Floridian Ins. Co., 956 So. 2d 511 (Fla. 5th DCA 2007), and “essentially obliterated” a condition precedent in the policy. In short, Allstate argued that the trial court should have entered judgment in its favor upon the jury’s finding that the Farmers failed to substantially comply with the proof of loss condition, and should not have allowed the jury to determine whether Allstate had been prejudiced by the noncompliance. Starling also involved a proof of loss and similar facts (insured brought an unnotarized, incomplete form to her EUO; insured claimed to have already mailed the form to the insurer; insured submitted completed form three months after suit). The Starling court granted summary judgment in favor of the insurer after determining the insured failed to comply with a condition precedent to suit, and noted that the insurer did not have to prove prejudice.
The parties in Farmer stipulated that the proof of loss provision in the policy is a condition precedent in the contract. Nevertheless, the Farmers relied on Bankers Ins. Co. v. Macias, 475 So. 2d 1216 (Fla. 1985) in response to Starling and argued that an insured may avoid forfeiture resulting from breach of a proof of loss condition upon proving the insurer was not prejudiced by the breach. The 5th DCA was persuaded that the presumption of prejudice rule discussed in Macias is equally applicable to breaches of proof of loss conditions. In particular, the court found support in recent 4th DCA cases that applied the prejudice presumption rule where an insured failed to provide both notice and proof of loss. See, e.g., Soronson v. State Farm Fla. Ins. Co. 96 So.3d 949, 952-53 (Fla. 4th DCA 2012); Kramer v. State Farm Fla. Ins. Co., 95 So. 3d 303, 306-07 (Fla. 4th DCA 2012). We note that Justice Berger, in accordance with his dissent, would rely upon Starling as the controlling authority for this case.
It remains to be seen whether the Florida Supreme Court would agree with the 5th DCA’s expansion of the holding in Macias in finding that failure to provide a sworn proof of loss will not vitiate coverage if the insured is able to establish no prejudice to the insurer.