Managing Challenges in Late-Reported Property Claims

Late-reported property claims present significant challenges for insurers and adjusters, primarily due to difficulties in determining the cause and timeframe of the loss. Such claims often involve multiple insurers over several years, complicating the identification of the specific policy period in which the damage occurred. Insurers are typically required to establish that a delay in reporting has prejudiced their ability to investigate, which can be particularly challenging when repairs have already been made or the property has sustained further damage.

To defend against allegations of bad faith, insurers must meticulously document their investigation and consider involving Special Investigation Units (SIUs) and legal counsel. This documentation becomes crucial if a claim is denied due to late notice, as courts in various states, including Florida, California, New York, Louisiana, and Texas, have set differing standards on whether insurers need to prove prejudice in such cases. In jurisdictions with a notice-prejudice rule, insurers must demonstrate substantial prejudice resulting from late reporting to justify a denial of coverage.

Ultimately, a thorough and well-documented investigation is essential for insurers to navigate the complexities of late-reported claims and to defend against potential litigation.