Use Common Sense

By Michael J. Gelfand, Esq. / Published May 2023

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nsurance: Coverage Denied Though Claim Made Within Six Months Before Express Deadline When Delay Causes Prejudice

     How long after a property is damaged can a claim be filed with an insurer? One year? Two years? Three years?

     A Florida appellate court recently ruled that filing a claim for damage from Hurricane Irma with an insurer two years and seven months after it hit was not timely and was barred. The facts in Navarro v. Citizens Property Insurance Corp., 48 Fla. L. Weekly D 152 (Fla. 3rd DCA, January 18, 2023), indicate that an insurance policy contained at least two notice of claim timing requirements. One timing requirement barred any damage claim filed three years after the hurricane caused damage. A second timing requirement stated that that the insurer had no duty to provide coverage if the insurer was prejudiced by the insured’s failure to provide “prompt notice” to the insurer.

     After Hurricane Irma hit Florida in September 2017, the insured filed a claim for damage to his home within the first notice requirement deadline of three years. But, utilizing the second timing requirement deadline, the insurer asserted its adjuster was unable to determine whether the damage was caused by Hurricane Irma or another occurrence because of the passage of time, two years and seven months after Hurricane Irma made landfall. The insurer thus denied the claim, and the insured sued the insurer.

     The insurer moved for summary judgment on the grounds that insured did not report in a timely fashion the claim for damage. The insured opposed the motion with affidavits which only offered a conclusory opinion that the damage resulted from Hurricane Irma. The trial court granted summary judgment for the insurer.

     The Florida appellate court agreed with the decision of the trial court. The court pointed out that the word “prompt” is synonymous with “forthwith,” “immediate,” and “as soon as practicable.” The court concluded that by waiting two years and seven months, the insured failed to report his claim in a reasonable amount of time.

     Having concluded that the claim was not reported forthwith, the court next looked to see whether the insurer was prejudiced by the untimely notice. The court found that the conclusory affidavits were not sufficient to rebut the presumption of prejudice to the insurer.

     The lesson to take from this case for a Florida community association is to report as soon as possible all claims for damage to your insurer or risk a denial of coverage. It may take time to determine the full extent of damage, but if there is a belief that there is damage, reporting it first and following up later may be the prudent course of action. Note, in order not to be too quick to file if there is no claim, to help avoid unnecessary loss reports that could cause a premium increase or denial of renewal, consult with your insurance broker.

A Claim For Cents May Not Make Sense

     How much money is too little to sue? $100.00, $10.00, or $1.00? If you sue for a small amount and win, will you recover your attorney’s fees? Associations have frequently faced this question when an owner makes a late payment, or on the flip side if the association does not pay a vendor on time. Think about if you missed a credit card payment by a day!

     In Baker Family Chiropractic, LCC v. Liberty Mutual Insurance Co., 48 Fla. L. Weekly D 269 (Fla. 5th DCA, February 6, 2023), an insurer failed to pay insurance benefits expediently. The insurer ultimately paid the benefits but paid late and omitted interest that accrued on the late payment. Baker sued the insurer seeking $1.48 in interest plus attorney’s fees. The trial court found that Baker was owed the $1.48 in interest but denied attorney’s fees.

     The Florida appellate court reversed the decision of the trial court, finding that Baker was entitled to attorney’s fees. The court pointed out that under the applicable insurance law, benefits are overdue if not paid within 30 days. Since the insurer did not pay the benefits within 30 days, Baker was also entitled to receive interest on the late payment.

Even though Baker won, the appellate court considered, implicitly, winning at what cost. Should the courts encourage claims for relatively small amounts? Put into a Latin legal phase, “De minimis non curat lex,” the court wrote, “[u]nder what circumstances, at what amount, and for what benefits or penalties are the damages simply too small to deserve judicial consideration and recovery of attorney’s fees?” The court concluded that since the legislature permits an award of attorney’s fees under the specific circumstances, the court has no choice but to grant attorney’s fees no matter how small the judgment amount.

     Nevertheless, the court directed that an award of attorney’s fees must take into account factors which you would normally find reasonable “including but not limited to, the result obtained, the certainty of payment, and whether the litigation was a test case.” Thus, the trial court may have significant discretion to award all that was sought, or nearly nothing. One judge writing separately warned that cases such as this one “involving meaningless amounts of interest” could be subject to dismissal based on the principle that “scarce judicial resources should not be wasted on trifling matters.”

     This decision reinforces the need for good business judgment when deciding whether to pursue claims for a few cents or a few dollars. The long-term impact on a community may have to be shown. In other words, you may never know when a court finds enough is enough and dismisses a case when the damages are considered “de minimus,” that is, too small to deserve the court’s time and energy.

Michael J. Gelfand, Esq.

Senior Partner, Gelfand & Arpe, P.A.

     Michael J. Gelfand, Esq., the senior partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar board-certified lawyer in condominium and planned development law and in real estate law, a certified circuit and county civil court mediator, a homeowners association mediator, an arbitrator, and parliamentarian. He is a past chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at ga@gelfandarpe.com or 561-655-6224.