Four homeowners filed suit against Farmers after loss due to fire. Henderson v. Farmers Group, Inc., 2012 WL 5246912 (Cal. Ct App. Oct. 24, 2012). The issue was whether Farmers must provide coverage where late notice was given, but no prejudice was shown.

   In August 2009, the Station Fire destroyed 89 homes in Southern California. None of the insureds' homes were burned by the fire, but they claimed their homes sustained damage from smoke, soot, and ash. Each had policies issued by Farmers insuring against first-party property loss. The policies required timely notice of loss as a condition to coverage. The policies also required sworn proof-of-loss statements within 60 days of a request by Farmers.

   The insureds gave notice of loss on various dates, ranging from February 9, 2010, to June 2, 2010. In each case, Farmers sent a hygienist to the homes to inspect for damage caused by fire. In one case, the hygienist recommended the house be cleaned, but there was no such recommendation in the three remaining cases. Farmers sent letters and reminders to each insured for submitting proof-of-loss forms. In each case, the insureds failed to provide the proof-of-loss statements and Farmers denied the claims after the 60 days.

   The insureds sued Farmers. The trial court granted Farmers' motion for summary judgment. The court found the submission of a proof-of-loss was a condition precedent to coverage and Farmers did not need to show substantial prejudice based on the lack of a proof-of-loss.

   The Court of Appeals reversed. The insureds did not withdraw their claims or fail to make a claim. They notified Farmers of their claims and cooperated to allow testing at their properties to investigate and measure the extent of damage. Therefore, in order to enforce a defense based upon the insureds' failure to provide a timely proof of loss, Farmers had to show that it suffered substantial prejudice as a result. Therefore, the order granting summary judgment to Farmers was reversed.

   In one of the four cases, Farmers did not object to the insured's late notice. Farmers sent the hygienist to test the property and ultimately denied the claim. The denial letter did not mention the delayed notice. Instead, Farmers denied the claim because there were insufficient levels of smoke ash, and soot present at the time. Because Farmers did not object to the delayed notice of loss until the lawsuit was filed, it waived its defense based on untimely notice.