On January 27, 2023, the Second District Court of Appeals released their decision in Cordero v. Florida Insurance Guaranty Association, Inc.1 (hereinafter "Cordero"). While the case law regarding prompt notice of an insurance claim seems all but settled, the Cordero opinion expands upon the analysis as it pertains to when an insured must place the carrier on notice of a claim.
Background and Facts
In January 2011, the insured noticed cracks to the exterior of his home while painting. At the time, he painted over the cracks thinking very little of the implications of same. He did not file a claim and did not otherwise place his carrier on notice.
About a year later, the insured noticed that the cracks were expanding and also started seeing cracks in the driveway. This, combined with information in the news regarding sinkholes in Florida, led the insured to believe that he may be experiencing sinkhole activity. Shortly thereafter, he reported a claim.
After adjusting and investigating the loss, the carrier denied the claim based on the failure to provide prompt notice as mandated by the policy's duties after loss section. After the denial, the insureds were left with no choice but to initiate litigation.
During the lawsuit, the carrier moved for summary judgment contending that the insured's failure to report the claim for over a year resulted in prejudice to the carrier. In opposition, the insureds argued that they provided notice as soon as they became aware that sinkhole activity was possible, arguing that the issue of notice and prejudice should be left up to the jury to decide. Citing to the case of Mora v. Tower Hill,2 the insureds noted that it was reasonable to consider whether the cracking was a maintenance issue rather than one which warranted consideration as a sinkhole loss. According to the Cordero opinion, the trial court “interrupted” this argument saying:
That's irrelevant. Whatever it is, it could be settling, it could be lots of things, but the point is when you know something you got to give them notice. . . . I think they had a duty and, you know, whether it was caused by a squirrel or a Martian, whatever, they had a duty. If a meteor hit the house they had a duty, right?3
Ultimately, the trial court entered full and final summary judgment in favor of the insurer. The appeal followed.
2d DCA Opinion
The 2d DCA ultimately held that the carrier failed to meet its burden under the summary judgment standard as no evidence was submitted showing “that a reasonably prudent person would have believed that a policy award was likely, thereby constituting an event ‘of significant consequence' to trigger the [insureds'] duty to notify.”4
Analysis, Impact, and Effect
Nearly every insurance policy I have seen has a duty that requires “prompt” or “immediate” notice of a claim to the respective carrier. The purpose of such a notice requirement “is to enable the insurer to evaluate its rights and liabilities, to afford it an opportunity to make a timely investigation, and to prevent fraud and imposition upon it.”5 The generally accepted definition of “prompt” meaning “‘as soon as practicable' and ‘call[s] for notice to be given with reasonable dispatch and within a reasonable time in view of all the facts and circumstances of each particular case.'”6 Despite this, courts have routinely held that the “excuse” that a policyholder did not know their claim would exceed the policy deductible was insufficient to avoid a trigger of the duty to provide notice.7 Enter Cordero.
While it does not say it outright, the Court in Cordero potentially opened the door for an insured to argue that a failure to exceed the deductible is a consideration which may mitigate the duty to provide notice. In Cordero, the court noted that “[a]n event must be of sufficient consequence to trigger an insured's duty to provide notice. ‘Notice is necessary when there has been an occurrence that should lead a reasonable and prudent man to believe that a claim for damages would arise.'”8 Here, the insured believed the cracks in question to be maintenance related. The Cordero court determined that two cracks may not be “of sufficient consequence” triggering the duty to notify an insurer, especially considering the policy in question “excludes coverage for losses caused by ‘[s]ettling, shrinking, bulging or expansion, including resultant cracking, of ... foundations [and] walls.'”9
It is true that "[t]he question of whether an insured's untimely reporting of loss is sufficient to result in the denial of recovery under the policy implicates a two-step analysis… The first step in the analysis is to determine whether or not the notice was timely given… If the notice was untimely, then prejudice to the insurer is presumed… However, the presumption of prejudice to the insurer 'may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice.'"10 It must be noted, however, that recent case law had held that, when the policy contains a lead in clause to the duties after loss stating that the carrier has “no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us,” the burden is actually on the carrier prove prejudice.11 Regardless, absent an egregious fact pattern or a failure to rebut summary judgment appropriately,12 the question of notice and prejudice remains an issue of fact for the jury to weigh.13
Perhaps there is a difference between a hurricane which would be a triggering event that is known to the insured versus a sinkhole which may lay dormant; however, even with a storm, under the analysis set forth by Cordero, if the insured believes the damages may be unrelated or solely pertain to maintenance issues, those could be mitigating factors in the analysis required for coverage forfeiture related to a breach of the notice condition. As every case is unique, should you have any questions about how this analysis may relate to your own claim, please do not hesitate to contact us for a free consultation.
1 Cordero v. Florida Ins. Guar. Ass'n, Inc., 2D17-766, 2023 WL 449061 (Fla. 2d DCA Jan. 27, 2023).
2 Mora v. Tower Hill Prime Ins., 155 So. 3d 1224 (Fla. 2d DCA 2015).
3 Cordero at 2.
4 Id. at 3.
5 LoBello v. State Farm Florida Ins. Co., 152 So. 3d 595, 598 (Fla. 2d DCA 2014).
6 LoBello, 152 So. 3d at 599 citing Am. Fire & Cas. Co. v. Collura, 163 So. 2d 784, 792 (Fla. 2d DCA 1964).
7 See, e.g., 1500 Coral Towers Condo. Ass'n, Inc. v. Citizens Prop. Ins. Corp., 112 So. 3d 541 (Fla. 3d DCA 2013) (upholding summary judgment on the insured's failure to give “prompt” notice of roof damage caused by a hurricane where the insured was aware of roof damage one month after the hurricane, but waited more than four years to report the damages because it was unsure if the damages would exceed the policy deductible).
8 Cordero at 2 quoting LoBello, 152 So. 3d at 599.
9 Cordero at 3.
10 LoBello v. State Farm Florida Ins. Co., 152 So. 3d 595, 599 (Fla. 2d DCA 2014) quoting Macias at 1218 (additional citations omitted).
11 Godfrey v. People's Tr. Ins. Co., 338 So. 3d 908, 909 (Fla. 4th DCA 2022).
12 Navarro v. Citizens Prop. Ins. Corp., 3D22-0032, 2023 WL 219032 (Fla. 3d DCA Jan. 18, 2023).
13 Renuart–Bailey–Cheely Lumber & Supply Co. v. Phoenix of Hartford Ins. Co., 474 F.2d 555, 557 (5th Cir.1972) (“All of the Florida cases bearing upon the question of the requirement of notice being given to the insurer seem to be uniform in the proposition that what is a reasonable time depends upon the surrounding circumstances and is ordinarily a question of fact for the jury.”) citing Hartford Accident & Indem. Co. v. Mills, 171 So.2d 190 (Fla. 1st DCA 1965).