COMPLY WITH YOUR INSURANCE POLICY’S CONDITIONS PRECEDENT (POST-LOSS OBLIGATIONS)

Posted on May 15, 2021May 15, 2021 by Edward Garber

I am of the opinion that if your property insurer requests a sworn proof of loss, furnish one with the assistance of counsel (preferably). Ignoring the insurer’s request or refusing to comply with insurer’s request is NOT value-added; it is simply placing you at a disadvantage based on the insurer’s argument that you, as the insured, materially breached the policy. I generally find no value having to confront this expected argument. Instead, I find value making an effort to comply with post-loss obligations including the insurer’s request to submit a sworn proof of loss. Working with counsel can help you comply with post-loss obligations (conditions precedent) while not weakening the value or merits of your claim.

By way of example, in Edwards v. Safepoint Ins. Co., 46 Fla. L. Weekly D1086a (Fla. 4^th DCA 2021), the insured did not provide its property insurer with the requested sworn proof of loss. The insurer moved for summary judgment that the insured’s failure to submit the sworn proof of loss was a material breach of the policy that rendered the policy ineffective. The trial court agreed and granted summary judgment. The Fourth District Court of Appeal affirmed explaining “[a] total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law. If, however, the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury.” Edwards, supra, quoting Haiman v. Federal Ins. Co., 798 So.2d 811, 812 (Fla. 4^th DCA 2001).

In Edwards, however, it was undisputed the insured failed to submit the sworn proof of loss. Thus, there was a total failure to comply. More so, the Fourth District held that under Rodrigo v. State Farm Florida Ins. Co., 144 So.3d 690 (Fla. 4^th DCA 2014), “(1) an insurer need to show prejudice when the insured breaches a condition precedent to suit, (2) proof of loss is a condition precedent to the insured’s suit, and (3) the insurer did not waive the sworn proof of loss requirement by tendering payment because [i]nvestigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim does not constitute a waiver of a sworn proof of loss requirement.” Edwards, supra (internal quotations omitted).

Clearly, this is not the outcome that any insured wants. But this outcome was due to the insured not complying with its post-loss obligation, or condition precedent to suit, that was requested by the insurer. As you can see, not doing so was not value-added, it disadvantaged the insured to the point where its failure was deemed to render the policy ineffective to its detriment.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

DO NOT FORFEIT COVERAGE UNDER YOUR PROPERTY INSURANCE POLICY

Posted on February 6, 2021February 6, 2021 by Edward Garber

If you have read prior articles (see here and here as an example), then you know that when it comes to first-party property insurance policies, an insured must comply with post-loss obligations in the policy. Failure to comply with a post-loss obligation gives the insurer the argument that the insured materially breached the policy and, therefore, forfeited rights to coverage. Naturally, this is avoidable by ensuring post-loss obligations are complied with, ideally under the guidance of counsel and qualified public adjusters to ensure your rights are being preserved and maximized.

[W]hen an insurer has alleged, as an affirmative defense to coverage, and thereafter has subsequently established, that an insured has failed to substantially comply with a contractually mandated post-loss obligation, prejudice to the insurer from the insured’s material breach is presumed, and the burden then shifts to the insured to show that any breach of post-loss obligations did not prejudice the insurer.

Universal Property & Casualty Ins. Co. v. Horne, 46 Fla.L.Weekly D201b (Fla. 3d DCA 2021) quoting American Integrity Ins. Co. v. Estrada, 276 So.3d 905, 916 (Fla. 3d DCA 2019).

This means when an insured fails to comply with a post-loss obligation (e.g., sworn statement in proof of loss, examination under oath), the property insurer will assert this failure as an affirmative defense. There is an “if-then” framework to determine whether there is “to be a total forfeiture of coverage under a homeowner’s insurance policy for failure to comply with post-loss obligations.” Horne, supra. First, the insurer has the burden to establish that its insured failed to substantially comply with a post-loss obligation in the policy. If the insurer establishes this, prejudice to the insurer is presumed. Then the burden shifts to the insured to demonstrate the breach (failure to comply with post-loss obligations) did NOT prejudice the insurer.

In Horne, the property insurer raised as an affirmative defense that its insured failed to timely comply with its post-loss obligation of submitting a sworn statement in proof of loss within 60 days. The insured argued, and the trial court agreed, that the insurer waived this argument by acknowledging coverage by tendering some payment to its insured for the loss. The appellate court held this was incorrect because “[i]nvestigatig any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim does not constitute a waiver of a ‘sworn proof of loss’ requirement.” Horne, supra (internal citations and quotation omitted). Without waiver applying, this means the insured’s failure to timely submit its sworn statement in proof of loss must fall within the “if-then” framework discussed above to determine prejudice to the insurer and, thus, total forfeiture under the policy.

AVOID THE HEADACHE – SUBMIT THE SWORN PROOF OF LOSS TO PROPERTY INSURER

Posted on August 29, 2020August 29, 2020 by Edward Garber

Property insurance policies (first party insurance policies) contain post-loss obligations that an insured must (and should) comply with otherwise they risk forfeiting insurance coverage. One post-loss obligation is the insurer’s right to request the insured to submit a sworn proof of loss. Not complying with a post-loss obligation such as submitting a sworn proof of loss can lead to unnecessary headaches for the insured. Most of the times the headache can be avoided. Even with a sworn proof of loss, there is a way to disclaim the finality of damages and amounts included by couching information as estimates or by affirming that the final and complete loss is still unknown while you work with an adjuster to quantify the loss. The point is, ignoring the obligation altogether will result in a headache that you will have to deal with down the road because the property insurer will use it against you and is a headache that is easily avoidable. And, it will result in an added burden to you, as the insured, to demonstrate the failure to comply did not actually cause any prejudice to the insurer.

By way of example, in Prem v. Universal Property & Casualty Ins. Co., 45 Fla. L. Weekly D2044a (Fla. 3d DCA 2020), the insured notified their property insurer of a plumbing leak in the bathroom. The insurer requested for the insured to submit a sworn proof of loss per the terms of the insured’s property insurance policy. The insurer follow-up with its request for a sworn proof of loss on a few occasions. None was provided and the insured filed a lawsuit without ever furnishing a sworn proof of loss. The insurer moved for summary judgment due the insured’s failure to comply with the post-loss obligations, specifically by not submitting a sworn proof of loss, and the trial court granted the insurer’s motion. Even at the time of the summary judgment hearing, the insured still did not submit a sworn proof of loss.

On appeal, the appellate court affirmed that the insured failed to comply with its post-loss obligation by not submitting a sworn proof of loss. That decision seemed easy. However, it remanded back to the trial court to determine whether the insurer was prejudiced by the insured’s failure to comply with the post-loss obligation in accordance with case law putting a burden on an insured to establish the insurer was not prejudiced by the failure to comply:

By failing to submit a sworn proof of loss to [the property insurer], the Insureds deprived [the property insurer] of the “opportunity to make a timely investigation, and to prevent fraud and imposition upon it.” Not only did the Insureds fail to provide the information required under the policy, but they also objected to [the property insurer] obtaining information from their public adjuster via subpoena and failed to coordinate any depositions prior to the filing of and hearing on the motion for summary judgment.

As a result of the Insureds’ failure to submit a sworn proof of loss at any point in time prior to the trial court’s entry of summary judgment, the trial court correctly found, based on this record, that the Insureds materially breached a post-loss contractual condition precedent to the commencement of a lawsuit against [the property insurer]. We affirm the trial court’s finding on the Insureds’ lack of compliance with their post-loss obligations because the Insureds failed to provide [the property insurer] with a sworn proof of loss prior to filing suit and failed to provide any evidence sufficient for a jury to find that they had substantially complied with that requirement.

A panel of this Court recently held, “when an insurer has alleged, as an affirmative defense to coverage, and thereafter has subsequently established, that an insured has failed to substantially comply with a contractually mandated post-loss obligation, prejudice to the insurer from the insured’s material breach is presumed, and the burden then shifts to the insured to show that any breach of post-loss obligations did not prejudice the insurer.” Estrada, 276 So. 3d at 916 (certifying conflict with Rodrigo v. State Farm Fla. Ins. Co., 144 So. 3d 690 (Fla. 4th DCA 2014) and Goldman v. State, 660 So. 2d 300 (Fla. 4th DCA 1995)). We are bound by that decision.

At the time the trial court heard and ruled on [the property insurer’s] motion for summary judgment, this Court had not issued its opinion in Estrada. The record on appeal, therefore, does not contain any discussion of the shifting burden of proof and whether [the property insurer] was prejudiced by the Insureds’ failure to submit any sworn proof of loss.

Lacking the subsequently provided analysis in Estrada, the trial court cannot be faulted for ending its analysis at summary judgment as to whether the insured complied or substantially complied with the post-loss obligations. Under Estrada — applicable to this appeal, which was pending at the time of Estrada‘s release — trial courts are required to analyze whether the insurer was prejudiced by the insured’s failure to comply prior to determining that the insured forfeited coverage by the breach. Thus, we reverse and remand to permit the parties to make supplemental filings and for the trial court to consider and analyze the question of prejudice, as set forth in Estrada.