Notice provisions in property insurance policies typically require the insured to promptly provide notice of a loss to the insurer. Despite the plain language requiring prompt notice, some jurisdictions require that an insured’s late notice cause some prejudice to the insurer in order to make a finding of no coverage. The court’s decision in De La Rosa v. Fla. Peninsula Ins. Co., 2018 Fla. App. LEXIS 6893 (Fla. Dist. Ct. App. May 16, 2018), demonstrates the consequences of failing to provide prompt notice that resulted in prejudice to the insurer. 

In De La Rosa, the insureds noticed in April 2014 that water was backing up in the master bedroom’s bathroom shower and seeping into the floor. The insureds called a plumbing company and the plumbing company fixed the underlying issue. The insureds did not file a claim with their insurer until July 2015, after the plumbing issue had been resolved for about a year, and after completing major renovations to the master bedroom. The insurer denied the claim based on the policy’s late notice provision, which required that the insureds  “[g]ive prompt notice to” the insurer after a loss. The insured filed suit.

Following the completion of discovery, the insurer moved for summary judgment. The insureds conceded at the hearing on the summary judgment motion that they did not provide prompt notice of their claim. Thus, the court found that under Florida law, a rebuttable presumption arose that the insurer was prejudiced by the delay. The insureds, however, in an attempt to rebut the presumption, asserted that there was an issue of fact regarding the cause of the loss. The trial court stated that “there may be a genuine issue of fact concerning causation, but the pertinent issues were whether the insurer received timely notice of the damage and whether [the insureds] rebutted the presumption of prejudice.” The trial court concluded that there was no genuine issue of fact regarding the presumed prejudice and granted the insurer’s motion for summary judgment.

The appellate court affirmed, agreeing that the record evidence failed to overcome the presumption of prejudice. Specifically, the appellate court noted that the insureds’ “engineer’s report itself showed that the damage would likely have increased over time” and that “[t]he insurer was prejudiced by a delay in investigating the claim as it would not be able to determine the damage at the time of the incident.” In reaching this conclusion, the appellate court distinguished its decision in Stark v. State Farm Florida Insurance Co., 95 So. 3d 285 (Fla. Dist. Ct. App. 2012). In Stark, the court concluded that there was a genuine issue of fact regarding prejudice based on the insured’s expert’s affidavit stating that the roof damage represented “classic storm damage,” and therefore, it was plausible that the insurer was not prejudiced in the ability to determine cause of the loss. In the present case, however, the court stated that while there were issues of fact regarding causation, the proffered evidence demonstrated that the insurer was “prejudiced by the passage of time in investigating the extent of the loss, and thus, the cost of repair.” (emphasis in original).

De La Rosa provides a good analysis of how an insurer may be prejudiced by late notice based on difficulties in determining not only the cause of a loss, but also the extent of damages at the time of the loss.