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It is long-standing law in Florida (and elsewhere) that an insurer can deny a claim when it was prejudiced by a policyholder’s failure to provide timely notice. However, there has been some debate in recent years about whose burden it is to prove that the insurer was prejudiced, especially in property insurance claims involving Citizens Property Insurance Corporation — one of the state’s largest homeowners insurance companies.

Traditionally, Florida courts have found that once an insurer can establish that notice of a claim was untimely, the burden shifts to the policyholder to show that the delay did not prejudice the insurer. If the policyholder can show that the insurer was not prejudiced by the delay, then the insurer cannot deny the claim based on untimely notice. 

In 2022, the Fourth District Court of Appeal entered an opinion analyzing a provision common to Citizens’ homeowners policies. The court determined that the policy language created an obligation for Citizens to prove that it was prejudiced by the late notice in order to deny the claim — shifting the burden of proof to the insurer (Perez v. Citizens Prop. Ins. Corp., 345 So. 3d 893 (Fla. 4th DCA 2022)). The specific policy language provided as a condition to coverage that “Citizens has ‘no duty to provide coverage under this Policy if the failure to comply with the following conditions is prejudicial to us.’” Citing a 2021 case involving similar language, the court ruled “the policy language . . . requires an express showing of prejudice by the insurer in order for the insured’s failure to comply with policy conditions to constitute a material breach and permit an insure to deny coverage for a claim.”Ultimately, the court held that the presumption of prejudice did not apply because of the policy language, reversing the trial court’s entry of summary judgment.

Perez has not been overturned and remains good precedent in the circuits in the Fourth District Court of Appeal. However, in a recent decision, the Third District Court of Appeal expressly rejected the policy interpretation in Perez and declared a conflict among the circuits (Arce v. Citizens Prop. Ins. Corp., 2024 WL 24945, — So. 3d — (Jan. 3, 2024)). The issue in Arce was a property damage claim on a homeowners policy that was not reported to the carrier for nearly three years.  The trial court had granted summary judgment in favor of the carrier, and the insured appealed arguing that Citizens had not presented evidence of prejudice, relying in part on Perez. The Arce court analyzed the same policy language as Perez but came to the opposite result. Interestingly, the Arce court determined that shifting the burden to show prejudice to the carrier would “frustrate[] the very purpose of the prompt notice provision.” This is interesting because typically the carrier is in the best position to show it was prejudiced by the late notice. The Arce court went on to look at the actual language itself and noted that the provision was silent as to the respective burden-shifting, and the court would not read such burden-shifting language into the policy..

It will be interesting to see when and if the Florida Supreme Court decides this conflict between the districts. The courts in Florida are typically required to read policies in a manner that most affords coverage, but that theory does not necessarily apply to the burden of proof. Under both Perez and Arce, if the carrier is not prejudiced by any late notice, then the carrier cannot avoid coverage — and the only question is who has the burden of proof. As it currently stands, the policyholder must establish the carrier’s lack of prejudice in the courts under the Third District Court of Appeal.

Of course, for policyholders, the best advice is to review your policy and be sure to submit a timely notice of any claims to avoid the issue altogether. But in cases where timely notice is not possible, then policyholders must be prepared to show lack of prejudice to the carrier caused by such late notice regardless of the policy language, especially in Miami-Dade and Monroe counties.