Following a hail storm in April 2016, insured Blanco West Properties failed to discover and report damage to the roof of its commercial building until October-November 2017. Blanco West’s insurer, Arch, denied the claim based on a policy endorsement that required hail-related claims to be brought within one year of the event. Appealing the district court’s grant of summary judgment in favor of Arch, the insured argued that Arch was required to demonstrate it was prejudiced by Blanco West’s failure to report the claim within the express reporting period.  In a brief opinion, the Fifth Circuit rejected Blanco West’s argument and affirmed the district court’s judgment. Blanco West Properties, LLC v. Arch Specialty Ins. Co., 2019 WL 3296973 (5^th Cir. July 22, 2019).

Although an insurer is generally required to show prejudice from late notice when the policy requires “prompt notice” or notice “as soon as practicable” of a claim, the reporting condition in the Arch Windstorm or Hail Loss Conditions Amendment endorsement stated that the policy “shall not provide coverage” for any claim “wherein notice of the claim is reported to us more than one year after the reported date of loss or damage.”  Id. at *1. Despite the absence of a Texas Supreme Court opinion on all fours with the facts of the case, the court agreed with the district court that the specific deadline for notice constituted a “significant distinction” from the cases construing general notice provisions and imposing a prejudice requirement on the carrier. Id.

Takeaways:  While claim reporting and notice conditions are notoriously difficult to enforce due to judicially imposed prejudice requirements, Blanco West offers a roadmap for policy language that may allow carriers to strengthen these conditions and obtain judgment as a matter of law in at least some cases involving discrete loss events.