Insured Failed to Rebut Presumption that Insurer Was Prejudiced by Late Notice, Eleventh Circuit Concludes

January 31, 2015 | Insurance Coverage

The U.S. Court of Appeals for the Eleventh Circuit, affirming a district court’s decision, has ruled that an insured had not rebutted the presumption that its insurance carrier had been prejudiced by its late notice of claim.

The Case

Four years and sevenmonths after Hurricane Wilma struck the Florida coast, The Yacht Club on the Intracoastal Condominium Association, a Florida condominium association with 380 residential units contained in 16 buildings, as well as an office/clubhouse building, garages, and maintenance facilities, sent a formal notice of loss to its insurance carrier, Lexington Insurance Company.

Lexington denied the claim and The Yacht Club sued.

The district court granted the insurer’s motion for summary judgment, holding that The Yacht Club’s notice was not “prompt” as required by its insurance policy and that The Yacht Club had not rebutted the presumption of prejudice arising out of its late notice.

The Yacht Club appealed.

The Eleventh Circuit’s Decision

The Eleventh Circuit affirmed.

In its decision, the circuit court first agreed with the district court that The Yacht Club’s notice to Lexington was untimely.

It then ruled that The Yacht Club had not met its obligation under applicable Florida law to rebut the presumption of prejudice to Lexington. The circuit court observed that The Yacht Club had undertaken certain repairs before filing its claim with Lexington. The Eleventh Circuit found that Lexington was prejudiced “by not beingable to investigate prior to those repairs and by not participating in the repair of those damages.”

Finally, the Eleventh Circuit rejected The Yacht Club’s argument that an insurer could not be prejudiced by late notice if it would have denied the claim even had notice been timely.

The case is Yacht Club on the Intracoastal Condo. Ass’n v. Lexington Ins. Co., Nos. 13-12486, 13-15581 and 13-15842 (11th Cir. Jan. 8, 2015).

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