Friday, March 3, 2017
A recent case out of the Southern District of Florida, Rodriguez v. Liberty Mutual Fire Insurance Company, Case Number 16-21926-CIV-MORENO (behind paywall), clarifies the statute of limitations on insurance claims. Rodriguez filed an insurance claim in 2005, to cover damage resulting from Hurricane Katrina. That same year, Liberty Mutual sent Rodriguez a check with a letter indicating that the claim had been completely reviewed. Rodriguez took the check and cashed it. Then, ten years later, in 2015, Rodriguez requested an appraisal of the claim, which Liberty Mutual denied. Rodriguez then brought suit, alleging that the statute of limitations should be measured from Liberty Mutual's denial of the appraisal request in 2015, rather than from the payment of the claim in 2005.
The court disagreed with Rodriguez. Florida has a five-year statute of limitations on breach of property insurance contract claims. The statute of limitation runs from the breach of the policy. The complaint here alleged that Liberty Mutual breached the contract by failing to make full and adequate payment for the damage done in 2005. Liberty Mutual had informed Rodriguez in 2005 that it considered its review to be complete and Rodriguez made no indication to Liberty Mutual that it was dissatisfied with Liberty Mutual's decision until 2015. Rodriguez also gave no reason to try to justify the ten-year delay in notifying Liberty Mutual of a dispute. Therefore, the statute of limitations began accruing in 2005, not in 2015 when the appraisal request was denied. Otherwise, an insured could simply sit on rights an indefinite period of time, ask for an appraisal many years later, and never be barred by the statute of limitations, which the court thought could not be the right result.
In addition, the court found that, even if the statute of limitations did not bar the action, Rodriguez breached the insurance policy by failing to provide "prompt notice" as required under the policy. In Florida, this failure to provide prompt notice can justify a denial of coverage. The court found that waiting ten years constituted late notice, and, in Florida, also raised a presumption that Liberty Mutual was prejudiced by the delay, which Rodriguez did not even attempt to overcome. Even without the presumption, the court held that Liberty Mutual had shown prejudice because evidence showed that the house had been damaged again in 2013, which would have made it difficult for Liberty Mutual to investigate the previous 2005 damage at issue in this case.