Florida Federal Court Affirms Insurer’s Denial of Hurricane Irma Claim Reported More Than Two Years Late

The U.S. District Court for the Southern District of Florida granted a motion for summary judgment in favor of the insurer in LMP Holdings v Scottsdale Insurance Co., holding that the insurer was prejudiced by the insured’s delayed reporting of the claim.

The matter concerned a Hurricane Irma claim for a commercial property located in Miami-Dade County, Florida. The insurer, Scottsdale Insurance Co., issued LMP Holdings Inc., the insured, an all-risk commercial property insurance policy. The policy included a “duties in the event of loss or damage” section that provided several conditions imposing an obligation on the insured to provide prompt notice and pertinent information to the insurer as soon as possible.

On September 11, 2017, one day after Hurricane Irma impacted South Florida, an officer of the insured’s holding company visited the property. During the inspection of the property, the officer was informed by a handyman for the holding company that there were “some punctures” on the roof and that a panel to one of the AC units on the roof had come off. The officer also observed “extensive water damage in the storage room” and “some water damage” in the office reception area. Later, in 2018, other problems with the AC unit arose that prompted the insured to replace the compressor to the unit. The same year, the insured noted that a water stain also began to appear on the ceiling tile in the interior of the property along with a missing section of the lower portion of the exterior sign. Still later, sometime in 2019, a header on the top part of a bank of windows on the east side of the property began showing rot and deterioration damage, which resulted in water stains becoming visible.

On December 10, 2019, more than two years after knowing about the initial damage, the insured notified the Insurer for the first time of the loss and made a claim for damages. After inspecting the property, the insurer issued a reservation of rights letter to the insured, noting the insured’s failure to timely report the claim. The insurer then retained an engineer to inspect the property who confirmed during an inspection that there was an absence of wind damage to the roof and exterior walls while taking note that portions of the alleged damages had already been repaired. On July 10, 2020, two years and 10 months after the date of loss, the insurer formally denied coverage for the insured’s claim. The insured subsequently filed suit alleging claims for breach of contract and declaratory judgment.

In granting summary judgment in favor of the insurer, the court took note of the fact that the property was inspected and that the officer of the holding company decided not to timely report the damages because “he believed it was not enough to be over the deductible.” The court then held that the insured’s 27-month delay in reporting the loss to the insurer constituted late notice because the insured was aware of the damages and chose not to report it to the insurer. The court further held that as a result of the insured’s untimely reporting of the claim, there was a presumption of prejudice to the insurer that the insured failed to rebut with sufficient evidence. Finally, the court held that even though the insurer did have the opportunity to have an engineer inspect the property, the insurer was still prejudiced by not being able to inspect the property prior to the insured’s making repairs.