In Clarabelle Wheeler v. The Standard Fire Insurance Company, 2016 WL 1164651 (W.D. Va. Mar. 23, 2016), the insurer argued that the insured failed to give “prompt notice” of the loss as required by the policy’s notice condition because she waited six-months to report five large trees had fallen on her barn. In support of this argument, the insurer offered evidence that the insured’s delay in providing notice prejudiced it by depriving it of an opportunity to investigate the claim and mitigate the resulting damage to the barn. Summary judgment in favor of the insurer as to whether there is coverage for the insured’s claim under the policy would often be granted on these facts.

But, the United States District Court for the Western District of Virginia denied summary judgment in this case based on the distinction between a “loss” and an “occurrence.”

The policy required the insured to give prompt notice of a loss.  It reads:

in case of a loss to covered property, we have no duty to provide coverage under this policy if the failure to comply with the following duties is prejudicial to us.

(a)    Give prompt notice.

The trees fell on the insured’s barn in early March 2013. The insured, however, did not notify the insurer of any loss at that time. She instead undertook to repair the damage she discovered, which was all to the barn’s porch, herself and without making a claim. She did not make a claim because she believed the cost of the repairs would be less than her deductible.

Time passed. And, in August 2013, the insured heard rumbling noises emanating from the barn’s basement. She investigated and discovered that the foundation wall had collapsed on the side of the barn on which the trees had fallen. She then finally reported the porch damage and wall collapse to the insurer.

The insurer’s engineer and an engineer that the insured hired to repair the wall could not draw a definitive conclusion as to whether the trees were the cause of the collapse, in part because of the passing of time between their falling and the insured providing notice. The insurer also contended that, had the insured reported the claim earlier, the wall could have been repaired prior to it deteriorating further and completely collapsing.

The court recognized that the falling of the trees in March 2013 was the only covered occurrence that could have caused the damage to both the porch and the wall, but it continued on to find that only a loss triggered any duty to notify on the part of the insured because the notice condition uses the term loss as opposed to occurrence. The term loss is not defined in the policy, so the court gave it its ordinary meaning: damage or harm to property.  It then found that there was a question of fact as to whether the porch loss was separate and divisible from the wall loss such that the insured did not have any duty to notify until after she discovered the wall collapse. As such, the court denied the insurer’s motion for summary judgment.

This case reinforces the need for insurers and coverage attorneys addressing notice issues to examine the specific language of the notice condition in the policy they are applying. Indeed, the court opined that had the notice condition used the term occurrence as opposed to loss, this might have been an easy case because the insured indisputably knew of the fallen trees and damage to the barn six months prior to providing notice to the insurer. This case also emphasizes that a more in-depth coverage analysis is necessary when the notice condition uses the term loss as opposed to occurrence, because one occurrence can potentially give rise to multiple, distinct losses.