Florida courts have historically adopted a rebuttable presumption of prejudice in favor of insurers when, in violation of their policies, policyholders delay reporting losses. [1] The presumption’s underlying rationale is that reporting delays frustrate the purposes of prompt notice provisions, one of which is to allow carriers to investigate the reported damage under the conditions existing at the time of its origin; time, repairs, and intervening storms all tend to weaken insurers’ causational determinations. [2]
In many late notice-prejudice cases adopting the rebuttable presumption, the prompt notice provision is phrased as follows:
Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed:
a. give immediate notice to us or our agent . . . . ;
[3]
Recently, however, a modified version of the prompt notice provision has become the subject of a potential circuit split. This provision includes the key term “prejudicial,” and reads as follows:
SECTION I—Conditions
. . . .
C. Duties After Loss
In case of a loss to covered property, we have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an insured seeking coverage, or a representative of either:
[4]
Florida’s Third and Fourth District Courts of Appeals seem to diverge on whether these modified prompt notice provisions eliminate the rebuttable presumption of prejudice. Last year, in Perez v. Citizens Prop. Ins. Corp., 345 So. 3d 893 (Fla. Dist. Ct. App. 2022), the Fourth District Court of Appeals interpreted the above-quoted provision to eliminate the presumption; instead, once the court found non-prompt notice as a matter of law, the insurer bore the burden of proving prejudice. Under Perez, therefore, where a policy includes this modified provision, a court does not presume that failure to provide prompt notice prejudiced the insurer. The insurer must conclusively demonstrate that the late notice was prejudicial. Perez relied on two other Fourth District cases, Godfrey v. People's Trust Ins. Co., 338 So. 3d 908 (Fla. Dist. Ct. App. 2022) and Arguello v. People’s Trust Ins. Co., 315 So. 3d 35 (Fla. Dist. Ct. App. 2021), that involved similar policy language but concerned a different post-loss duty– the obligation to submit a Sworn Statement in Proof of Loss.
In contrast, this year, in Navarro v. Citizens Prop. Ins. Corp., 353 So. 3d 1276 (Fla. Dist. Ct. App. 2023), the Third District Court of Appeals considered an identical modified prompt notice provision (and even Perez v. Citizens itself) but retained the rebuttable presumption of prejudice. [5] The Navarro court declined to require that the insurer demonstrate prejudice despite the insured raising this argument on appeal. The court simply used the rebuttable presumption in its analysis, explaining its decision by relying on Florida’s historical approach to late notice cases and the prompt notice provision’s importance to claims investigations. [6]
Navarro and Perez may serve as the basis for a circuit split on whether the rebuttable presumption should be retained in cases involving the modified prompt notice provision. It is certainly a dispute worth watching given the lack of applicable precedent from Florida’s remaining courts of appeal.
[1] The legal analysis requires two steps. First, the court determines whether notice is late as a matter of law and if so, the court decides whether the policyholder can rebut the presumption of prejudice.
[2] LoBello v. State Farm Fla. Ins. Co., 152 So. 3d 595 (Fla. Dist. Ct. App. 2014); see also 1500 Coral Towers v. Citizens Prop. Ins. Corp., 112 So. 3d 541 (Fla. Dist. Ct. App. 2013); Slominski v. Citizens Prop. Ins. Corp., 99 So. 3d 973 (Fla. Dist. Ct. App. 2012); Laster v. U.S. Fidelity Guaranty Co., 293 So. 2d 83 (Fla. Dist. Ct. App. 1974); Tiedtke v. Fidelity Casualty Co. of New York, 222 So. 2d 206 (Fla. 1969).
[3] See 1500 Coral Towers, 112 So. 3d at 544 (citing 13 Jordan R. Plitt, et al., Couch on Insurance § 193.30 (3d ed. Supp. 2012)); see also Ideal Mut. Ins. Co. v. Waldrep, 400 So. 2d 782 (Fla. Dist. Ct. App. 1981) (recognizing that the prompt notice provision’s purpose being frustrated by late notice to be the reason for adopting a rebuttable presumption); De La Rosa v. Fla. Peninsula Ins. Co., 246 So. 3d 438 (Fla. Dist. Ct. App. 2018) (citing Stark v. State Farm Fla. Ins. Co., 95 So. 3d 285, 287-288 (Fla. Dist. Ct. App. 2012)) (the “insured has the burden to show the lack of prejudice if its insurer lost the opportunity to investigate the facts of the claim”).
[4] Perez, 345 So. 3d 893 (Appellee’s Br. 3) (Fla. Dist. Ct. App. 2022) (emphasis added).
[5] See Navarro, 353 So. 3d 1276 (Appellant’s Reply Br., 3-6).
[6] See also Gonzalez v. People’s Trust Ins. Co., 307 So. 3d 956, 959 (Fla. Dist. Ct. App. 2020) (addressing similar policy language as in Navarro and Perez, but a different post-loss obligation, and recognizing in principle that prejudice would be automatically presumed once the insured’s failure to comply with obligation is established).
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