In part one of this series, which is located here, I discussed the inherent contradiction that arises when insurers deny claims with reference to conflicting policy provisions. This follow-up aims to examine how the Florida courts have handled this persistent issue.
As I discussed earlier, it is perhaps the most common example of insurers relying on inconsistent policy provisions when a letter of denial cites an excluded cause of loss while at the same time claiming that it was damaged by late notification / reporting of the claim. The contradictory language of these letters of denial shows this logical inconsistency to such an extent that it is worth mentioning a second time.
These denial letters contain language as follows:
Based on the inspection, our investigation determined that the damage to your roof appears to be related to lack of maintenance, wear and deterioration, which is not covered by your policy. (Emphasis added.)
Due to the time that has elapsed since the alleged loss date, [Insurance Company] is unable to determine the cause of the alleged damages, and has therefore had prejudices in his investigation. (My emphasis added.)
Relying on these two provisions at the same time to deny a claim represents an obvious contradiction, and the Florida courts agree. The underlying principle in question is as follows: Under Florida law, an insured's failure to comply with a mandatory contractual provision requiring it to notify the insurer in writing of damages in a "timely" or "prompt" manner may void the insurer's coverage obligation, [1
Although this principle is relatively well established, the remaining controversy will determine whether the insurer was actually harmed in its investigation due to "late notification" of the claim. This is where the courts have consistently considered relying on two conflicting policy provisions leading to a potential exemption from the defense with late notification.
I Keenan Hopkins Schmidt & Stowell Contractors, Inc. v Cont & # 39; l Cas. Co. 653 F. Supp. 2d 1255, 1262 (M.D. Fla. 2009) prompted the U.S. District Court of the Middle District of Florida to review a litany of issues included in the insurer's (Continental) draft summary judgment. While the court finally granted the MSJ, the analysis of the Continental's late-message defense in section section B. "The continental was not affected by the late announcement of Keenan's claim" is worth considering.
The following demonstrates the Court's position on Continental's attempts to influence prejudice due to late notification of the claim:
The Florida courts have consistently stated that where an insured person has sufficient information to allow him to reject the claim for other reasons (and the actually rejected the claim for other reasons), it waives its right to object to coverage on the grounds that the insured has failed to notify the claim in good time. 2
In the present case, regardless of whether Continental was required to comply with the statutory guidelines for asserting a defense with late notification, the record reflects that Continental denied coverage – approximately ten months after receiving notification of the claim – provided that it was not too late or potentially detrimental to its ability to investigate the claim, but to Continental's interpretation and application of the terms of the contract itself. Since the Florida Court of Appeals has also ruled in similar circumstances, this court "cannot imagine that [the defendant] would not have denied liability for the same reason if the notice was timely." (Citation omitted). The fact that Continental was able to examine the allegation sufficiently to enable it to deny the claim on other grounds effectively refutes any presumption of prejudice arising from the late notice. Consequently, Continental has not established that it is entitled to a summary judgment on that basis. 3 (My emphasis added).
As this case shows, the insurer's ability to investigate and deny a claim for reasons other than late termination can effectively nullify any assumptions about prejudice that arise as a result of late notice. Applying this reasoning to correspondence such as the one quoted at the beginning of this blog post leads to the same conclusion reached by the Court in Keenan : Determining that the damages in a particular claim are related to lack of maintenance, wear and tear, deterioration or any other excluded cause of loss effectively waives the right to rely on prejudice as a basis for denying claims.
One can speculate on how many different arguments insurers will try to offer to disprove this obvious principle, but the answer to these efforts is simple and straightforward. Relying on two conflicting policies at the same time is a logical inconsistency, and for those who are still not convinced, I refer to a simple Google search of the following:
What does logical inconsistency mean?
(also known as: internal contradiction, logical inconsistency ) Description: In the case of a false argument, two or more proposals are claimed that both cannot be true. In a more general sense, with two or more opinions / beliefs that not all can be true together. 4 (Emphasis added).
It cannot possibly be true that an investigation both determined  that the loss was caused by an excluded danger, while the investigation at the same time could not determine the cause of the alleged damage due to prejudices from late notice of claim. It is a logical inconsistency.
1 Keenan Hopkins Schmidt & Stowell Contractors, Inc. v Cont & # 39; l Cas. Co. 653 F. Supp. 2d 1255, 1262 (M.D. Fla. 2009), with reference to Tiedtke v. Fid. & Cas. Co. in New York 222 So.2d 206, 209 (Fla.1969).
2 Id. with reference to Nationwide Mut. Fire Ins. Co. v. Beville 825 So.2d 999, 1004 (Fla. 4th Dist.Ct.App.2002); Wegener mot Int & # 39; l Bankers Ins. Co. 494 So.2d 259, 259 (Fla. 3d Dist.Ct.App.1986); Hartford Accident & Indem. Co. v. Phelps 294 So.2d 362, 365 (Fla. 1st Dist.Ct.App.1974).
3 Keenan, at 1263.
4 Definition of logical inconsistency via Google