Late Notice Dooms Policyholder (Or, Do Not Be Like Archie Bunker)

Back when New York was the last of the no-prejudice notice jurisdictions, we policyholder lawyers had a saying that giving notice in New York was like voting in Chicago: do it early and often.  Fortunately for policyholders in New York, the legislature amended Section 3420 in 2009 to add a requirement that insurers prove they were prejudiced by late notice before they could disclaim coverage obligations. Plus, New York law has always put a tight deadline on insurers to respond with a late notice defense (recently requiring a disclaimer within 15 days in AIU Ins. Co. v. Veras, 2012 NY Slip Opinion 03116 (N.Y. App. Div., 1st Dept. Apr. 24, 2012)). Many instances of late notice by New York policyholders has been excused by an insurer’s similarly late disclaimer.

While New York now is a relatively forgiving jurisdiction when it comes to late notice, Florida is not so forgiving.  The latest lesson comes from Southern District of Florida Judge Kenneth Marra in Wheeler’s Moving & Storage v. Markel Ins. Co., 2012 WL 3848569, 2012 U.S. Dist. LEXIS 125726 (S.D. Fla. Sept. 5, 2012).  In Wheeler’s, the policyholder failed to inform its insurer (Markel) of a personal injury lawsuit filed against it until 18 months after the suit was filed, and two weeks before trial.  Compounding the problem was that the policyholder’s defense counsel withdrew from the case, resulting in an uncontested $1.4 million jury award.

Judge Marra had little hesitation in entering judgment in favor of the insurer.  Based on these facts, Judge Marra essentially found that the insurer suffered greater prejudice than Sammy Davis Jr. at Archie Bunker’s house.

In Florida, late notice creates a rebuttable presumption that the insurer is prejudiced.  That is, the policyholder has the burden of proving that, despite the late notice, the insurer had the ability to sufficiently investigate and defend the claim.  Typically, this is an issue of fact.  Under these facts, however, Judge Marra found that no reasonable jury could conclude that Markel was not prejudiced.

Florida has a similar statute to New York’s 3420: 627.426, Florida’s Claims Administration Statute, which requires insurers to provide notice of its coverage defenses within 30 days.  If the insurer does not respond in 30 days then it loses the right to raise certain coverage defenses, such as late notice.  Unfortunately for Wheeler’s, however, Markel was much more diligent than it was.  Markel disclaimed a mere six days after receiving the late notice.

The lesson for defense counsel is this: if you are unclear about the availability or applicability of insurance coverage for a particular lawsuit, advise your client to consult coverage counsel.  If the client refuses, make it clear in your engagement agreement that you are not coverage counsel and take no responsibility to preserve or pursue coverage.  Your malpractice carrier will thank you.

There is a lesson here for plaintiff’s counsel as well: do not rely on the defendant, its broker, or its counsel to provide notice.  Get copies of the defendant’s insurance policies either through a 627.4137 disclosure request or in discovery.  If the defendant does not, or will not, provide notice, then provide your own notice directly to the insurer(s).  In these situations, the ultimate loser typically is the injured party, who may be left holding an uncollectible judgment.

So, please, do not give insurers a free pass.  Do not be like Archie Bunker.  Give notice early and often.