Amanda S. Keller | It Pays to Be Covered
The Eleventh Circuit’s recent decision in L. Squared Industries, Inc. v. Nautilus Insurance Co. offers important guidance for policyholders navigating notice provisions under claims-made insurance policies—particularly when a policy imposes both a policy-period notice requirement and a separate “prompt notice” clause.
Background
L. Squared Industries owned and operated gas stations in Florida and purchased a storage-tank liability policy from Nautilus Insurance Co., effective July 18, 2018 to July 18, 2019. The policy was written on a claims-made-and-reported basis and required that pollution conditions be reported in writing within the policy period or any extended reporting period. It also included a second, stricter provision requiring Nautilus to be notified within seven days after the insured first became aware of a pollution condition.
In August 2018, L. Squared received an environmental report identifying groundwater contamination. However, it did not notify Nautilus until April 2019—eight months later but still within the overall policy period. Nautilus denied coverage, citing the policy’s strict seven-day notice requirement.
The Court’s Analysis
The Eleventh Circuit affirmed summary judgment for Nautilus but clarified how notice provisions operate in claims-made policies. The court explained that the essence of a claims-made policy is timely notice to the insurer within the policy period. It distinguished between two types of notice clauses:
- Policy-period notice, which defines the temporal scope of coverage; and
- Prompt-notice provisions, which require notice “as soon as practicable” (or within a fixed time, such as seven days) so the insurer can investigate and set reserves.
The court held that breaching the second type of provision does not automatically forfeit coverage. Instead, it applied and adopted the majority-view notice-prejudice rule: the insurer is presumed prejudiced by late notice, but the insured may rebut that presumption with evidence showing no actual prejudice.
Because L. Squared failed to present such evidence until after judgment, it could not create a factual dispute sufficient to overcome summary judgment, and coverage was barred.
Why It Matters for Policyholders
This decision confirms that, under Florida law, coverage under a claims-made policy is not automatically lost when the insured provides notice within the policy period but later than an internal reporting deadline. However, the ruling also underscores that policyholders bear the burden of rebutting the presumption of prejudice—and must do so during the summary judgment phase, not on reconsideration or through other post-judgment filings.
Practically, policyholders should:
- Document the timing of any reportable condition and notify their insurer promptly, even when uncertainty remains about whether a “claim” exists.
- Preserve evidence demonstrating that any delay caused no actual prejudice to the insurer.
- Review claims-made policies carefully to distinguish between the outer reporting window and any prompt-notice requirements that could trigger a presumption of prejudice.
Key Takeaway
The Eleventh Circuit’s opinion harmonizes Florida law with the majority view nationwide: when an insured gives notice within the policy period, coverage turns on prejudice—not perfection. Policyholders can take comfort that technical breaches of prompt notice clauses will not automatically defeat coverage, but they must be prepared to prove the insurer was not harmed by any delay in reporting.
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Republished with permission. The article, “Late Notice Doesn’t Always Mean No Coverage—But Only If You Can Prove It” was originally published on It Pays to Be Covered by Bradley Arant Boult Cummings LLP. Copyright 2025.