In July 2001, a roofing inspector informed the Ridglea Estate Condominium Association that the roofs on its property had suffered significant hail damage. Ridglea then submitted a claim to its insurance broker, Chubb Custom Insurance.
Based on its inspection, Chubb informed the homeowner’s association the damage must have been caused during a severe hailstorm on May 5, 1995. Chubb recommended submitting the roof repair claim of $449,199 to its insurer at the time, Lexington Insurance Co.
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Lexington denied Ridglea’s claim. Ridglea then sued Lexington, which pointed to the insurance policy that says an insured may not sue the insurer without first giving “prompt notice of the loss or damage” to the covered property. The insurance company argued that notice of the damage six years after the damage was not “prompt notice.”
Ridglea’s attorney replied that Lexington had not waived its late notice defense and the notice clause in the policy is vague and ambiguous. In addition, he pointed out, Lexington was not harmed by Ridglea’s delay in filing its claim for the hail damage.
If you were the judge, would you rule Ridglea’s six-year delay in filing its claim for insured hail damage bars payment?
The judge said no!
No rational person could argue that Ridglea reported the 1995 hail loss and damage within a reasonable time, the judge said. Although there was other hail damage to the building shutters and nearby parked automobiles, there is no evidence the homeowner’s association knew its roofs were also damaged, he explained.
It would be difficult to discover the damage because the roofs are atop two-story buildings and thus were not visible from the ground until the roofing inspector discovered the damage in 2001, the judge said.
Because the insurance policy only requires “prompt notice” of a claim, it is impossible to exactly determine what is a reasonable time. However, six years appears to be an unreasonable period, he noted.
But Lexington failed to show the six-year delay in filing this claim has harmed or prejudiced the company. Therefore, Ridglea’s lawsuit shall be allowed to proceed to determine if Lexington was prejudiced by the delay and, if not, then the exact amount of Ridglea’s damages shall be determined, the judge ruled.
Based on the 2005 U.S. Court of Appeals decision in Ridglea Estate Condominium Association v. Lexington Insurance Co., 415 Fed.3d 474.
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