Mere Speculation is not Enough to Demonstrate Prejudice After Late Notice

Bryan-Wilson, etc. v. Universal Property & Casualty Insurance Company, Case No. 4D2024-1547

The Fourth District Court of Appeals reversed a jury verdict in favor of Universal Property & Casualty Insurance Company after it found Universal did not meet its burden to demonstrate it was prejudiced by the late notice of a plumbing loss. The subject claim was reported fifty-eight days after the alleged loss. Following the field adjuster’s inspection, coverage was afforded for the loss, and payment was issued. Suit was filed on behalf of the insureds for damages they claimed the insurer failed to pay. In response to the complaint, Universal raised (amongst others) failure to provide prompt notice of the loss as an affirmative defense and stated the failure prejudiced its investigation of the claim. At trial, when questioned as to how Universal was prejudiced, the corporate representative testified:

Because during those 58 days that we weren't told of the loss, [the homeowner wife] had someone out there at the property, taking photos of the property as of October 14, 2019, and we have no idea . . . what else happened within that time span of those 58 days, which prejudiced our investigation because we're not aware if the damages we're seeing at the time that we're out there are actually in fact from what she's saying happened on September 1st.

Following the close of evidence, both parties moved for directed verdict on the late notice issue. The court denied both motions and the jury found in favor of Universal. However, the appellate court found the factual basis for the claim of prejudice to be based on speculation. As the appellate court explained, the insurer had no evidence that the condition of the property had changed during the time period between the date of loss and the date the claim was reported. Rather, the claim of prejudice was due to the fact that the insurer did not know what happened to the property during the fifty-eight days and, therefore, it could have changed between the date of loss and when it was reported. Insomuch as the policy language required the failure to provide prompt notice of the loss to be prejudicial to the insurer, Florida law places the burden on the insurer to prove it has been prejudiced. In reversing the jury’s verdict, the appellate court found the insurer did not meet its burden by merely stating it could not determine what happened, if anything, to the property during the relevant time period.