Breach of the Notice Provision of an Insurance Policy

In many insurance claims cases, the insurance company will argue that the insurer (policyholder) breached the notice provision of an insurance policy. As a result of this breach, the insurance company typically raises the defense that they have been prejudiced by this breach, in order to deny the insurance claim.

The issue of prejudice as it relates to the above scenario was recently addressed in a District Court of Appeal decision. The Fourth District Court of Appeal in the case of Stark v. State Farm Florida Ins. Co., So.3d 37 FLW D1446 (Fla. 4th DCA 6-20-2012) held that “if the insured breaches the notice provision, prejudice to the insurer will be presumed, but may be rebutted by a showing that the insurer has not been prejudiced by the lack of notice.”

Therefore, the notice condition in an insurance policy can be avoided by a party alleging and showing that the insurance carrier was not prejudiced by non-compliance. In the Stark case the trial court erred by conclusively presuming that the insurer was prejudiced of a timely investigation, because there was record evidence available for the insurer to investigate. As a result there remained a disputed issue of material fact as to whether the insurer was prejudiced, and the case was remanded for further proceedings.