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.
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