NOTICE AND PREJUDICE
Property owners have an obligation to provide notice of a claim soon after loss or damage has occurred. This obligation is found in the insurance policy. It is a contract obligation held by the property owner. Insurance companies can argue it is a breach of contract when property owners fail to provide quick notice.
What constitutes proper notice? Some policies have a deadline of 30 or 60 days. Some polices state language such as “as soon as possible” or “as soon as practical”. What is possible or practical depends on the situation. Sometimes property owners are out-of-town on business or vacation when loss or damage occurs. For example, someone may spend the winter in Florida when a pipe bursts. People may be out of town on business when a hail storm hits. Property owners are focused on their families and work, not climbing a two-story roof to see hail damage unknown to them.
I once represented an estate of a deceased insured property owner. The estate gave notice of the claim years after the hail storm. The judge allowed the claim in part because the elderly property owner was in no condition to get on the roof and view damage from a hail storm. The estate did give notice “as soon as possible” when it found out, as opposed to the elderly deceased. In this instance “as soon as possible” was as soon as it was possible for the estate to know of and report the claim.
In the jurisdictions where I practice an allegation of late notice can only void insurance coverage if the insurance company can demonstrate prejudice. Prejudice in this context means the insurance company has been hindered in investigating and adjusting the claim.
One example of prejudice to an insurer is when notice of a claim is made after the property owner has commenced repairs. If the old damage is not archived, either in photographs or put in storage, the insurance company does not have the opportunity to review the damage, consider the cause of it, its severity, and thus the scope of repair. I have seen several insurance companies dispute the extent and quality of photography. Any time an insurance company is unable to see the damage it will likely assert a prejudice argument.
When the impact of a loss event (storm or fire) is still evident an insurer should not be able to establish prejudice. When the damage is still open, obvious, and can be assessed by insurance company I ask this question: where’s the prejudice? Nothing has changed since the loss event. Hail hits to siding months old are still there, can still be measured, have not degraded, and are ready for inspection and an adjustment.
Insurers establish prejudice when its ability to investigate has diminished. Old claims are not prejudicial per se. Just because the damages old does not mean there is prejudice. There has got to be some reason why the claim cannot be investigated in order to establish prejudice. That is the law in every jurisdiction where I practice.
Please contact me if you need help arguing that an insurance company has not suffered prejudice by your notice.