COURT REJECTS NOTICE PREJUDICE ARGUMENT AND ENFORCES SPECIFIC, ONE-YEAR PROMPT NOTICE REQUIREMENT TO REPORT WINDSTORM OR HAIL DAMAGE CLAIMS

The Fifth Circuit recently affirmed summary judgment in favor of an insurer after the insured failed to report hail damage to a commercial roof within one year, as required by the policy. In Blanco West Properties, L.L.C. v. Arch Specialty Ins. Co., No. 18-20745, 2019 WL 3296973 (5^th Cir. July 22, 2019), the roof on a commercial property in San Antonio was damaged in an April 2016 hail storm. The owner, who lives in Houston, did not discover the damage until October 2017 and then filed a claim the following month. Arch denied the claim based on an endorsement that required hail-related damage claims to be brought within one year of the loss or damage. On appeal, Blanco West argued that Arch must show that it was prejudiced by late notice before it can deny coverage.

The Fifth Circuit analyzed the policy terms in a Windstorm or Hail Loss Conditions Amendment that required in part that “In addition to your obligation to provide us with prompt notice of loss or damage, with respect to any claim wherein notice of the claim is reported to us more than one year after the reported date of loss or damage, this policy shall not provide coverage for such claims.” And in response to Blanco West’s argument that Texas insurers must establish prejudice to enforce prompt notice requirements, the court observed that the policy language here, was very specific and that no Texas Supreme Court opinion addressed the specific facts of this case. The Fifth Circuit agreed with the district court’s findings made after a thorough review of Texas cases, that “Unlike provisions requiring “prompt notice” or “notice as soon as practicable,” the Endorsement’s one-year notice provision establishes a specific deadline for notice.”  And in this case, because the deadline was not met, summary judgment in favor of the insurer was affirmed.