Fla. Supreme Court Poised to Decide Burden Allocation of a Late-Reporting Defense

One of the most important contractual obligations imposed by a property insurance policy is for the insured to give prompt notice of a potential insurance claim. Prompt notice means that notice must be given with "reasonable dispatch and within a reasonable time in view of all the facts and circumstances of the particular case." Prompt reporting is required to avoid imposition against an insurance carrier and to combat potential fraudulent claims. When an insured fails to give prompt notice, historically, courts have imposed a presumption of prejudice against the carrier's claim adjustment, thereby placing the evidentiary burden on the insured to establish that the carrier's claim investigation was not made more difficult or hampered by the late reporting. Importantly, the mere fact that a carrier is able to reach a coverage determination is not dispositive-the issue is whether the carrier could have drawn better opinions or conclusions had the claim been promptly reported. By any measure, this is a lofty bar for an insured to meet, as the passage of time inherently complicates the claim adjustment process as memories fade, witnesses and evidence disappear, and untreated damages continue to worsen.

The import of a viable late-reporting defense cannot be understated-and is available to carriers even if coverage is initially extended for a claimed loss. Indeed, a late-reporting defense is often fatal to an insured's claim, as it tends to be practically impossible to establish that the carrier's adjustment would have been no different had the claim been promptly reported (especially when the late reporting goes beyond a few weeks). Furthermore, a late-reporting defense is often prime for summary judgment, and courts have not hesitated to declare an insured's late reporting as violative of the subject policy's post-loss requirements as a matter of law. Opposing a late-reporting summary judgment motion is a precarious task. An insured cannot avoid summary judgment by simply pointing to its own expert's investigation and opinions-or noting that the carrier was able to determine coverage. Instead, an insured needs to put forth substantial and competent record evidence that establishes the carrier's investigation was not, in fact, prejudiced.