Late Notice Defense of Excess Carrier to Hurricane Claim Rejected.

   Banta Properties, Inc. is a property management company.  It purchased Primary Property Insurance Coverage from General Star and Excess Coverage from Arch Specialty.  The Arch Specialty Excess Policy was 'following form,' i.e., it followed the forms of the underlying General Star Policy and provided the same Coverage except on an Excess basis in this case.

   Immediately after incurring damage from Hurricane Wilma on or about October 24, 2005, Banta gave notice to General Star and filed a claim with General Star for Property Damage Coverage.  Banta Properties, Inc. v. Arch Specialty Insurance Co., 2011 WL 5928578  *1 (S.D. Fla. November 23, 2011),  Download Banta Props., Inc. v. Arch Specialty Ins. Co. (S.D. Fla. Case No. 10.61485, Order Denying Defendants MSJ Entered Nov. 22, Filed Nov. 23, 2011) PUBLIC ACCESS.  In March, 2008, General Star "tendered the policy limits of $2.5 million under that [General Star] insurance contract".    Banta then "filed an insurance claim against Arch for its excess coverage."  Id.

   Arch reserved rights to deny all Coverage.  In pertinent part, Arch asserted "prejudice" from late notice of Banta's Hurricane Claim.  With its reservation of rights in place, Arch inspected the properties.  Banta filed a Proof of Loss.  Arch did not pay.  Banta filed suit against Arch for Declaratory Relief and for alleged Breach of Contract.  Arch defended and filed a Motion for Summary Judgment based on late notice of Banta's Hurricane Claim.

   The District Court summarized Florida law concerning late notice under an insurance policy.  Florida law raises a rebuttable presumption of prejudice to the Insurance Company from late notice.  As noted, the presumption of prejudice from late notice is rebuttable.  Id. at *2.

   The District Court thereafter discussed two ways in which an Insured may rebut the presumption of prejudice "to survive a motion for summary judgment.  First, an insured may rebut the presumption by showing that another insurer using competent individuals made a complete investigation of the claim.  [Citation omitted.]  Second, an insured may show that the insurer had access to 'substantial information' regarding the claim, creating an issue of fact of whether the delay prejudiced the insurer."  Id. at *4.

   Here, General Star as the Primary Carrier thoroughly investigated Banta's Hurricane Damage Claim.  To say again, Arch was Banta's Excess Carrier.  Nonetheless, Arch retained consultants to inspect the properties where Banta claimed that it had incurred Damage.  Banta "also provided evidence" that Arch's inspectors/consultants inspected Banta's properties but that they did not inspect many of the items of Damage claimed by Banta or review any repair invoices for already completed repairs.  Further, "Arch's consultants stated that they did not review any documents from General Star's investigation record, so these consultants never saw the photographs or reports made by General Star's several consultants [record references omitted]."  Id. at *2.  [Emphasis added.]

   On this record, Arch, the Excess Carrier, filed a Motion for Summary Judgment based on late notice.  Arch argued in support of its motion that in this case, Banta's notice of loss to Arch was untimely as a matter of Florida law.  The District Court held that Banta's notice to Arch did not fall into that category in this case based on past case law, but that, even if it did, Florida law even then provides for a rebuttable presumption of prejudice from the late notice.  In this case, Banta had rebutted the presumption.  Arch's Motion was denied.  Id. at *4.

 

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Comments

[Van R. Mayhall, III]

Great summary of an interesting case.

[Dennis Wall]

Thank you.
Dennis Wall

[Veronica Sehnaz]

In legal battles, one can never know when and how tables turn around so surprisingly. Thank you for sharing this interesting case.

[Dennis Wall]

Thanks to Anthony Kang, "AK," the Westlaw cite of this case was corrected on Tuesday, March 27, 2012, the day of this comment (the cite was inadvertently one digit off).

Thanks, AK!

Dennis Wall