Since 2011 and prior to the enactment of SB76, Florida Statute § 627.70132 provided a limitation for reporting hurricane and windstorm claims to an insurer. Specifically, the statue required that any claim, supplemental claim, or reopened claim be reported within three (3) years of the date the windstorm caused the damage or the hurricane made landfall. For Hurricane Irma, that statute of limitations ran out on September 10, 2020. That should have been a relief for carriers, marking the end of any new submissions related to Hurricane Irma. Unfortunately, that has not been the case, as companies claiming proceeds under an assignment of benefits (“AOB”) have been submitting claims after that date. In some instances, the assignment was not even executed until the three-year statute of limitations expired.
These AOB companies have been advancing several arguments to avoid the three-year time limit. For example, if a claim was denied prior to the expiration of the statute, the AOB company may argue that they step into the shoes of the insured and do not have to make a contest of the claim determination because the breach occurred at the time that the claim was denied. Others try to claim that their assignment “relates back” to the date that the claim was initially reported. However, carriers have several arguments to counter these positions and demonstrate that the statute of limitations unequivocally bars these late-reported AOB claims.
Inherent Obligation to Give Notice to a Carrier of Any Claim for Insurance Proceeds
At the very core of this topic are the fundamentals of contract law. First and foremost, in order to state a claim for breach of contract, a plaintiff must establish the existence of a contract, a breach of the contract, and damages resulting from the breach. See Friedman v. New York Life Ins. Co., 985 So. 2d 56, 58 (Fla. 4th DCA 2008). Underlying these elements is the principle that, in order for a breach of contract to occur, a plaintiff must demonstrate that (1) performance of an obligation was tendered and (2) that performance by the defendant – in this case, an insurer – of the reciprocal obligation was demanded. See Ligman v. Realty One Corp. 2006 WL 2788598 (Ohio Ct. App. 9th Dist. 2006); Restatement (Second) of Contracts § 238 (1981) (“Until a party has at least made such an offer, however, the other party is under no duty to perform, and if both parties fail to make such an offer, neither party’s failure is a breach.”).
In the context of insurance, the notice of the loss by a party seeking insurance proceeds is necessarily the “offer” to perform under the contract that is required to trigger action by the carrier. This is precisely why property and casualty insurance policies contain notice provisions,i.e. so that an insurer can be placed on notice of its obligation to investigate a claim and tender performance (coverage) if the claim is a covered loss. The importance of notice is underscored by the fact that prompt notice of loss is a condition precedent to a claim. See Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985). It is only when notice of a claim is provided to an insurer that an insurer has the obligation to perform under the policy (e.g., investigate a claim, render a coverage decision, etc.). In other words, without notice that a claim exists, a carrier is wholly unaware that there is any reason for it to act. Broken down into its most simplistic form, an insurer cannot breach an obligation to adjust any portion of a claim of which it was unaware. As such, the argument that the denial of the insured’s claim for benefits somehow relieves the AOB company from reporting a claim defies logic.
Case Law Interpreting Florida Statute § 627.70132 Indicates that Supplemental Claims and Reopened Claims do not “Relate Back” to the Initially Reported Claim
As noted above, AOB companies have been seeking to have their claims for damages relate back to the original reporting of the loss or damage because it is related to the same hurricane or windstorm as the original claim made by the insured. However, this completely ignores the specific language of the statute, which specifically provides: “For purposes of this section, the term ‘supplemental claim’ or ‘reopened claim’ means any additional claim for recovery from the insurer for losses from the same hurricane or windstorm which the insurer has previously adjusted pursuant to the initial claim.” See Fla. Stat. § 627.70132 (2011).
The statute is clear on its face that “supplemental claims” and “reopened claims” are different and distinct from an initial claim, and must themselves be reported timely. See Koile v. State, 934 So. 2d 1226, 1230-1 (Fla. 2006) (“When the statute is clear and unambiguous, courts will not look behind the statute’s plain language for legislative intent or resort to rules of statutory construction to ascertain intent. . . . In such instance, the statute’s plain and ordinary meaning must control, unless this leads to an unreasonable result or a result clearly contrary to legislative intent.” (internal citations omitted)). If the Legislature had intended for the reporting of any claim arising out of the same incident, they would not have specified that “[a] claim, supplemental claim, or reopened claim under an insurance policy . . . for loss or damage caused by the peril of windstorm or hurricane is barred unless notice of the claim, supplemental claim, or reopened claim was given to the insurer in accordance with the terms of the policy within 3 years after the hurricane first made landfall or the windstorm caused the covered damage.”
This clear interpretation is supported by the only case actually interpreting the statute: Goldberg v. Universal Prop. and Cas. Ins. Co., 302 So. 3d 919 (Fla. 4th DCA 2020). In that case, the Court examined the relevant statute and specifically held that “the definition of a ‘supplemental claim’ in this case encompasses ‘any additional claim for recovery’ for losses from the same hurricane which Universal had ‘previously adjusted pursuant to the initial claim’ . . . .” Id. at 924. When examining the late-reported claims made by these AOB companies in connection with the interpretation of the statute, it is clear that they are either “claims,” which have to be reported within three (3) years, or they are “supplemental claims,” which also have to be reported within three (3) years. Either way, the case law interpreting the statute of limitations supports the position that any AOB company’s claim related to Hurricane Irma reported after September 10, 2020 is barred as untimely.
The Florida Legislature Specifically Imposed a Duty to Report Claims on AOBs by Enacting Florida Statute § 627.7152.
Specifically with respect to assignments executed on or after July 1, 2019, an AOB company filing suit under a property insurance policy is required to provide the insurer with (1) a written notice of intent to initiate litigation, (2) a pre-suit settlement demand and (3) a detailed written invoice or estimate of services at least ten (10) business days before filing suit. See Fla. Stat. § 627.7152(9)(a).
“Such notice must be served by certified mail, return receipt requested, or electronic delivery at least 10 business days before filing suit, but may not be served before the insurer has made a determination of coverage under s. 627.70131.” Id. On its face, the statute clearly indicates that the carrier must make a coverage determination as to the AOB company’s claim.
Moreover, Florida Statute § 627.7152(2)(a)(3) requires that an assignment agreement must “[c]ontain a provision requiring the assignee to provide a copy of the executed assignment agreement to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier.” This requirement also demonstrates that, on its face, the statute requires that the AOB company provide its assignment agreement to the carrier in order for it to be valid at all. Without a valid assignment, the AOB company would have no standing to make an independent claim under the policy.
Conclusion
Given that the statute of limitations for reporting Hurricane Irma claims passed on September 10, 2020, cases involving these late-reported AOB claims are still in their early stages. However, we are hopeful that courts will strictly interpret the law, finding that these claims are barred by the three-year statute of limitations.