Notice Of A Hail Claim Needs To Be Communicated To The Insurance Company ASAP

Weatherford insurance lawyers who handle hail claims will tell clients that a hail damage insurance claim needs to be reported to the insurance company as soon as possible.  This issue is discussed in a 2016, United States 5th Circuit Court of Appeals opinion.  The opinion is styled, Hamilton Properties v. American Insurance Company.

This short but interesting case is a per curiam case.  In July 2009, a hailstorm damaged the Dallas Plaza Hotel in Dallas, Texas.  The owner, Hamilton Properties, had property and casualty insurance covering the hotel with American Insurance Company (AIC).  At the time of the hailstorm, the hotel was no longer in use as a hotel, but still had a few permanent residents.  The damage was significant, with evidence suggesting significant roof leakage and destruction of ceiling tiles.

Hamilton did not immediately make a coverage claim.  Instead, it waited until November of 2010 before hiring an inspector to look at the damage.  Hamilton’s representative then emailed AIC in February of 2011.  AIC responded that it was no longer Hamilton’s broker of record and refused to report a claim.  Hamilton made a formal claim in October of 2011, which AIC denied due to the amount of time that had passed since the damage, the multiple intervening instances of hail damage (which would not be covered by the policy at issue, since it had expired in September 2009), and an early inspection report by an AIC engineer just a few weeks after the July hailstorm that had found no damage to Hamilton’s property from water or hail.  Additionally, AIC asserted that the roof itself was not adequately designed, which suggested the damage may have resulted from a faulty roof.

Hamilton sued for coverage.  In the district court, AIC successfully moved for summary judgment and Hamilton appealed.

The court of appeals began by analyzing Hamilton’s contract claim.  Observing that the policy required Hamilton to provide “prompt” notice of any claim, the court enunciated the general Texas rule about such provisions: although a prompt notice provision is a condition precedent , an insured’s failure to give prompt notice does not excuse the insurer unless it can show prejudice.  Although the parties dispute when notice occurred, the court assumed, for the purposes of its review, that notice had occurred on the first email in February of 2011 (the earliest possible date).

The court found that Hamilton’s delay was without excuse, in part because the damage was not hidden — indeed, one of the hotel’s residents, whom Hamilton had used as a witness, had reported damage to Hamilton quickly after the hailstorm.

The court reaffirmed its prior position that where a substantial delay is without explanation, it is appropriate to conclude that prompt notice was not given as a matter of law.

The insurer still had to show prejudice to escape liability.  The court found that AIC was prejudiced by its inability to investigate the damage.  Because Hamilton had delayed so long in reporting the claim, the court reasoned, AIC did not have sufficient evidence to properly adjust or defend the claim, because it could no longer determine the state of the roof before or immediately after the July hailstorm, during the period between the hailstorm and the end of the coverage period, or during the period between the July hailstorm and the additional intervening storms.

Even though the court had disposed of all relevant questions, it then took the unusual step of giving an alternative ground for its decision.  It held that even if AIC had not been prejudiced by Hamilton’s late notice — which the court had just held it had — Hamilton failed to establish a prima facie claim for coverage under the policy, because it had not provided sufficient evidence to show that the damage occurred during the time the policy was active.

Because the court found no breach of contract by the insurer, it also held Hamilton could not recover under any of the various insurance and consumer protection statutes, all of which first required a demonstrated breach.