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By Christine M. Renella
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Hurricane Irma was both the strongest Cape Verde-type hurricane observed in the Atlantic and the most intense Atlantic hurricane to strike the United States since Katrina and Wilma in 2005. Hurricane Irma was also the first major hurricane to make landfall in Florida in over a decade. The monster storm developed near Cape Verde Island, from a tropical wave that had moved off the west African coast on Aug. 30, 2017. Born under favorable conditions, Irma rapidly intensified and, by Sept. 6, 2017, it reached peak intensity with 185 mph winds and a minimum pressure of 914 hPa, making it the strongest hurricane worldwide.

In preparation for Hurricane Irma and after watching the devastation it left in its path as it approached Florida, on Sept. 4 Florida Governor Rick Scott declared a state of emergency in Florida. Two days later, on Sept. 6, mandatory evacuations commenced from the bottom of the state upward. By Sept. 8, a hurricane warning had been issued for the Florida Keys that extended as far north as Miami. Although it deviated from the originally projected path forecasting a direct hit to Miami, Hurricane Irma’s track shifted westward finally making landfall in the Florida Keys on Sunday, Sept. 10, before moving up the Gulf Coast making landfall a second time near Naples and Fort Meyers.[1]

Early reports after Hurricane Irma estimated approximately 25 percent of the homes in the Florida Keys were destroyed, while many more were damaged. “Basically, every house in the Keys was impacted in some way or another,” Federal Emergency Management Agency Administrator Brock Long announced at a news conference. “This is why we ask people to leave.” Meanwhile, picturesque vacation destinations such as St. Augustine and Naples suffered damage from wind and storm surge leaving complete neighborhoods under waist-deep water and many homes exposed to the elements from collapsed roofs. As Floridians begin the daunting task of repairing and in some cases rebuilding their properties, many of them will look to their insurance companies to offset the cost of repairs. However, in a state that has not sustained major hurricane damage in more than a decade, insurers now face the difficult task of weeding out the event-related damage from non-event-related damage. As claims begin to trickle in, many insurers are questioning Florida’s notice requirement and asking, how long is too long?

The landmark case of Bray & Gillespie IX LLC v. Hartford Fire Insurance Co.[2], involved a dispute over insurance coverage for the Surfside Resort and Suites (“Surfside Resort”) under two property insurance policies following three hurricanes that struck Central Florida in 2004.[3] The first, Hurricane Charley, hit Ormond Beach on Aug. 13, 2004. Following Hurricane Charley, Hurricane Frances struck on Sept. 2, 2004. A third catastrophe, Hurricane Jeanne, struck Surfside Resort on Sept. 25, 2004. Surfside Resort was severely damaged by three events in the span of less than 45 days. Surfside Resort closed in the fall of 2004. The Hartford Fire Insurance Company (“the Hartford”) provided the primary property insurance coverage for the Surfside Resort while Westchester Surplus Lines Insurance Company (“Westchester”) provided excess coverage. The Westchester Policy had no explicit provision that pertained to notice. Rather, as an excess policy, the Westchester policy followed the form of the Hartford policy, which provided:

NOTICE OF LOSS

As soon as practicable after any loss or damage occurring under this policy is known to the Insureds; home office insurance department, the Insured shall report such loss or damage with full particulars for transmittal to this Company.

The parties in the Bray & Gillespie case agreed that notice of the losses suffered at Surfside Resort were provided to the Hartford (the primary carrier) immediately following the storms. However, there were conflicting reports with respect to when and how Westchester, the excess carrier, was notified. Specifically, Westchester claimed that it was not notified of any loss until July 2005 — almost a full year after the first storm hit the Surfside Resort. While Bray & Gillespie acknowledged that its broker notified Westchester of a claim for damage to Surfside Resort twice in July 2005, Bray & Gillespie also contended that Westchester was provided notice when notice was provided to the Hartford.

By its terms, the issue was whether notice to Westchester was made “as soon as practicable.” Pursuant to Florida law, application of this specific policy language is a question for the finder of fact … the jury. The rule in Florida is that the term “as soon as practicable,” as used in the notice provision of an insurance policy, means that notice is to be given within a reasonable time in view of all the facts and circumstances of each particular case.[4]

Here, the Bray & Gillespie court concluded that the “surrounding circumstances” of the case were “replete with factual disputes” regarding when notice was required to have been given and the manner in which notice was provided. The court emphasized that since “the duty to provide notice arises when a reasonable person, viewing all available facts and information, would conclude that an award implicating the policy is likely,” the insurer could not establish for purposes of summary judgment when the duty to notify the insurer first arose.[5] Therefore, the court concluded that “absent a finding as to exactly when the duty to notify arose,” the court cannot determine that notice was untimely as a matter of law, precluding summary judgment on the issue of late notice.

Florida law provides that the failure to give timely notice creates a rebuttable presumption of prejudice to the insurer. “If the insured breaches the notice provision, prejudice to the insurer will be presumed, but may be rebutted by a showing that the insurer has not been prejudiced.”[6] The “determinations of (1) whether the notice provision was complied with and (2) what is reasonable time under the surrounding circumstances are questions of fact.”[7] In order to prevail on a late notice defense under Florida law, a party must show that there are no genuine issues of material fact regarding (a) what the insurance policy required with respect to notice; (b) when notice was provided within the meaning of the policy and Florida law; (c) whether notice was timely; and (d) whether prejudice exists, either by operation of the unrebutted presumption or otherwise.[8]

In Clena Investments Inc. v. XL Specialty Insurance Co., a shopping plaza owner insured under a commercial policy issued by XL Specialty Insurance Company (“XL”) filed suit against its insurer seeking coverage for Hurricane Wilma related damage nearly four years after the storm hit South Florida.[9] The subject policy contained the following loss notice provision: “You shall, as soon as practicable, report in writing to [XL] every loss, damage or occurrence which may give rise to a claim under this Policy.” XL sought summary judgment on the ground that the insured’s notice was too late as a matter of law. The insured countered with the argument that whether notice was timely presented was a question of fact for the jury under Florida law. The insured further argued that late notice created a presumption of prejudice to the insurer, which the insured was entitled to rebut.

“Under Florida law, the insured’s failure to provide ‘timely notice of loss in contravention of a policy provision is a legal basis for the denial of recovery under the policy.’”[10] Although one Florida appellate court recently held that the mere fact of untimely notice was itself sufficient to warrant summary judgment in the insurer’s favor, most Florida cases follow a two-step analysis.[11] The first step is to determine whether the insured provided timely notice.[12] Next, if notice was untimely, prejudice to the insurer is presumed, but that presumption may be rebutted.[13]

Florida courts have not articulated a “bright-line” rule setting forth a particular period of time beyond which notice cannot be considered “prompt.”[14] Rather, Florida courts have found that notice several years after an occurrence is “prompt” in some cases, but not others. In LoBello v. State Farm Fla. Insurance Co., for example, new homeowners moved into their home in 2002 and noticed cracking in 2004, but they attributed the problem to normal settling of the home. It was not until four years later when a friend recommended the homeowners consult with a public adjuster that they learned the cracking was caused by a sinkhole and filed a claim with their insurer. In that case, the court found that whether notice was “prompt” under the circumstances was a question for the jury.[15]

On the other hand, Florida courts have interpreted “prompt” differently when the damage is caused by a known event, such as a hurricane, or when the insured was on-site when readily apparent problems developed. For example, in 1500 Coral Towers Condo. Ass’n Inc. v. Citizens Prop. Insurance Corp., Coral Towers admitted that it had some knowledge of damage to the complex within a month after Hurricane Wilma, and that minimal repairs were made to the roof.[16] However, no insurance claim was made until June 29, 2010, almost five years after the event. Under these circumstances, the court found in that case there was “no factual dispute that Coral Towers failed to give timely notice of the loss.”[17]

Further, in May 2011, as a result of the Hurricane Wilma-related litigation, the Florida legislature amended Florida Statute section 95.11(2), giving new effect to the statute of limitations for breach of contract actions. Prior to May 2011, the Florida Supreme Court held that under section 95.11(2)(b), a breach of contract action accrued on the date the contract was breached.[18] However, the amendment provided that an action for breach of a property insurance contract must be commenced within five years, “with the period running from the date of the loss.”[19] This change provided a much-needed cut-off date for litigation to commence following an event such as a hurricane.

So, while it may make sense in some cases to wait and gather information before notifying an insurer of a loss, in the context of damage caused by a known event, it is always best to notify the insurer immediately. The closer in time to the event, the more likely an insurer will be able to conduct a timely investigation and adjust the loss without prejudice. Additionally, the insurer may be able to provide guidance or advance payments related to mitigation and repairs, not otherwise available if notice is delayed. So, while the question of “how long is too long” may depend on the facts and circumstances of each case, early and timely reporting is always the most prudent course.

Christine M. Renella is a senior associate with Zelle LLP in Miami.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general informational purposes and is not intended to be and should not be taken as legal advice.

[1] Before striking Florida, Hurricane Irma wreaked havoc in the Caribbean and then cut through Cuba as a Category 5 hurricane. Irma temporarily weakened to a Category 3 due to land interaction before strengthening to a Category 4 as it crossed warm waters between Cuba and Florida.

[2] Plaintiff, Bray & Gillespie IX LLC, acquired all rights to the Surfside Resort property, including rights to the insurance policy proceeds pursuant to a cash collateral stipulation dated Dec. 1, 2004, in Surfside Resort’ s Chapter 11 bankruptcy proceeding.

[3] Bray & Gillespie IX LLC v. Hartford Fire Insurance, Case No. 6:07-cv-326-Orl-DAB, 2009 WL 1513400, at * 1 (M.D.Fla. May 27, 2009).

[4] Renuart-Bailey-Cheely Lumber & Supply Co. v. Phoenix of Hartford Insurance Co., 474 F.2d 555, 557 (5th Cir.1972); citing Hendry v. Grange Mutual Casualty Co., 372 F.2d 222 (5th Cir.1967). In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.

[5] See Harbor Insurance Co. v. Trammell Crow Co., Inc., 854 F.2d 94, 99 (5th Cir. 1988).

[6] Bankers Insurance Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985).

[7] Bray, 2009 WL 1513400, at *6 (M.D.Fla. 2009).

[8] Id.

[9] Clena Investments Inc. v. XL Specialty Insurance Co., Case No. 10-cv-62028, 2012 WL 1004851, at *3-4 (S.D.Fla. March 26, 2012).

[10] Kendall Lakes Towers Condo. Ass’n Inc. v. Pac. Insurance Co., Ltd., Case No. 10-24310-CIV, 2012 WL 266438, at *2 (S.D.Fla. Jan.30, 2012) (quoting Ideal Mut. Insurance Co. v. Waldrep, 400 So. 2d 782, 785 (Fla. 3d DCA 1981)). 

[11] see Kroener v. Fla. Insurance Gaur. Ass’n, 63 So. 3d 914, 916 (Fla. 4th DCA 2011); LoBello v. State Farm Fla. Insurance Co., 152 So. 3d 595 (Fla. 2nd DCA 2014).

[12] Id.

[13] Bankers Insurance Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985); see Yacht Club on the Intracoastal Condo. Ass'n Inc. v. Lexington Insurance Co., 599 F. App'x 875, 879 (11th Cir. 2015).

[14] See, e.g., Kings Bay Condo. Ass’n Inc. v. Citizens Prop. Insurance Corp., 102 So. 3d 732 (Fla. 4th DCA 2012).

[15] See 152 So. 3d at 602.

[16] 112 So. 3d 541 (Fla. 3d DCA 2013).

[17] Id. at 543; see also Nat'l Trust Insurance Co. v. Graham Bros. Constr. Co., 916 F.Supp.2d 1244 (M.D.Fla. 2013) (holding that a four-year delay was untimely where the insured’s representative was present on the construction site when buried stumps, roots, and clay were discovered); Hope v. Citizens Prop. Ins. Corp., 114 So. 3d 457 (Fla. 3d DCA 2013) (stating that notice was not prompt where homeowner made his own repairs to property following Hurricane Wilma and did not file claim until four years later); Soronson v. State Farm Fla. Insurance Co., 96 So. 3d 949 (Fla. 4th DCA 2012) (holding that notice was not prompt where homeowner filed claim for damage to roof allegedly caused by Hurricane Wilma over three years after hurricane struck); Kramer v. State Farm Fla. Insurance Co., 95 So. 3d 303 (Fla. 4th DCA 2012) (holding that notice was not timely where homeowner alleged roof damage by Hurricanes Frances and Jeanne in 2004 and claim not filed until 2009); Vision I Homeowners Ass’n Inc. v. Aspen Specialty Insurance Co., 674 F.Supp.2d 1333 (S.D.Fla. 2009) (question of fact where insured initially reported some damage from Hurricane Wilma and insured’s request that insurer do complete investigation allegedly went unheeded).

[18] Dinerstein v. Paul Revere Life Insurance Co., 173 F.3d 826, 828 (11th Cir.1999) (citing State Farm Mut. Auto. Insurance Co. v. Lee, 678 So.2d 818, 821 (Fla.1996)); Olear Org. Inc. v. N. Pointe Insurance Co., Case No. 6:12-CV-850-ORL-28, 2012 WL 5471789, at *2 (M.D.Fla. Nov. 9, 2012).

[19] Section 95.11(2)(e), Florida Statutes.