Federal Court Finds 27 Months is Too Late to File Irma Claim

If the insurance policy calls for “prompt notice” of property damage after a storm, the policyholder cannot wait two years to file a claim, a federal court in Miami has ruled.

In LMP Holdings vs. Scottsdale Insurance Co., the U.S. District Court for the Southern District of Florida found that the all-risk commercial property policy spelled out that the insured had a duty to promptly report damages and pertinent information.

The case stemmed from Hurricane Irma, which struck Florida in September 2017 and left widespread damage in its wake. The litigation has been watched by insurers, many of whom have complained for years about “Johnny-come-lately” or “door knocker” hurricane claims – certified by public adjusters — that insurers may have difficulty examining or rebutting.

The Scottsdale policy did not specify a time frame for reporting claims. But the court found that the insurer was prejudiced by the policyholder waiting 27 months to file.

The opinion by U.S. District Judge Jose Martinez recounted that one day after Irma blew threw the Miami area, the insured’s handyman found holes in the roof of the building. The site housed architectural offices and a daycare center.

The insured also found water damage in a storage room and reception area. A few months later, the plaintiff also found issues with the air conditioner unit, along with water stains on the ceiling tile. Later, the owners, Adrian and Laura Perez, said they found damage to windows and an exterior sign. They made some repairs, then filed a claim in December 2019 and a public adjuster inspected the property.

Scottsdale’s engineer failed to find significant wind damage and the carrier denied the claim. The property owners sued for breach of contract.

The federal judge quoted from previous court decisions, noting that under Florida law, “a 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.” Late notice also creates a rebuttable presumption of prejudice to the insurer, and courts have held that a delay of even six months or less is considered less-than-prompt notice, the judge said.

The judge granted Scottsdale’s motion for summary judgment.

Late claims had become such an issue in Florida that the Legislature in 2011 approved a three-year limit on hurricane claims. Claims can be reopened or supplemental claims related to the original claim can still be filed as long as the insurer received the first notice of loss ahead of the corresponding storm’s deadline.

The judge in the Scottsdale case did not specifically address the 2011 three-year statute of limitations on hurricane claims.