The Eleventh Circuit recently solidified how the notice requirement works in claims-made policies by relying on the majority view of courts on this issue. In L. Squared Indus., Inc. v. Nautilus Ins. Co., the Eleventh Circuit affirmed summary judgment for Nautilus Insurance Company (“Nautilus”), holding that the failure to provide timely notice by the insured barred policy coverage when the insured could not rebut the presumption of prejudice against Nautilus. No. 23-13031, 2025 WL 2922937 (11th Cir. Oct. 15, 2025).

In L. Squared Indus., Inc., Nautilus, a surplus-lines insurer, was required to cover L. Squared Industries, Inc. (“L Squared”) for an accidental release of petroleum from any of its underground storage tanks. See id., at *1. This was required through Nautilus’ storage tank liability insurance, which covered any potential cleanup costs that resulted from pollution conditions caused by the underground storage tanks’ discharge at L Squared’s Exxon station. See id.

After entering into the “Claims Made and Reported Coverage” insurance policy (the “Policy”), effective July 18, 2018, to July 18, 2019, L Squared incurred both cleanup and defense costs because of a discharge incident. See id. L Squared sought indemnification for these costs from Nautilus. See id.

Within the Policy, the following language was provided regarding reporting: “[y]ou must see to it that [Nautilus is] notified as soon as reasonably possible, but in any event, not more than seven (7) days after the insured first became aware of, or should have became aware of a pollution condition which may result in a claim or any action or proceeding to impose an obligation on the insured for cleanup costs…” Id., at *2.

But despite L Squared receiving a report in August of 2018 notifying it of the discharge resulting from its underground storage tanks, L Squared did not notify Nautilus about the discharge until April 19, 2019, a little under a year after the discharge occurred. See L. Squared Indus., Inc., 2025 WL 2922937, at *3. As a result of this time gap, Nautilus denied L Squared’s insurance request. See id.

L Squared brought suit against Nautilus seeking a declaration of its rights under Nautilus’s Policy and damages for Nautilus’ alleged breach of contract, but the United States District Court for the Middle District of Florida granted summary judgment for Nautilus. See id. The district court reasoned that L Squared was not entitled to coverage because it failed to notify Nautilus of the pollution condition within the seven-day policy requirement. See id. L Squared appealed the case to the Eleventh Circuit Court of Appeals. See id. 

The Court of Appeals affirmed the district court’s granting of Nautilus’ summary judgment, but for a different reason – the notice-prejudice rule. See id.  The Court stated that the Policy contained two types of notice provision: (1) a provision requiring the claim be made during the policy period and (2) a provision requiring the insured to notify the insurer of the claim during specified period. See L. Squared Indus., Inc., 2025 WL 2922937, at *4. L Squared correctly notified Nautilus of its claim in April of 2019 – well within the July 2018-2019 policy period – but failed to notify Nautilus of the pollution condition within seven days of receiving the August 2018 report. See id. So while there was a failure to notify, the Court stated that the breach of the second provision does not automatically result in a lack of coverage by the insured because the purpose behind the provision is “directed at ensuring promptness of notice, maximizing the insurer’s opportunity to investigate, set reserves, and control or participate in negotiations with the third party asserting the claim against the insured.” Id.

The Court looked to the majority of courts who have opined this issue by applying the notice-prejudice rule and followed similarly. See id. “The insurer needs to show prejudice in order to bar coverage.” Id. It reasoned that “the concern for expanding the scope of coverage wanes for a prompt-notice provision, which does not define the scope of coverage but rather ensures that the insurer has adequate time to respond to the claim.” Id., at *5 (quoting Ottawa Bancshares, Inc. v. Great Am. Sec. Ins. Co., 764 F. Supp. 3d 1079, 1095 (D. Kan. 2025)). Though there are no Florida cases directly addressing the issue at hand, the Court of Appeals presumes the state courts would adopt the majority view on this issue in absence of any views to the contrary. See L. Squared Indus., Inc., 2025 WL 2922937, at *5. And considering Florida courts have addressed the general rule that prejudice will be presumed (with the ability to be rebutted) if the insured breaches the notice provision of the policy, L Squared did not do enough to overturn the district court’s ruling for summary judgment. See id. L Squared did not provide enough evidence to rebut the presumption that Nautilus was prejudiced, and thus, the ruling is affirmed. See id.  This opinion shows that insurers can rely on a presumption of prejudice when there is a delay of notice but must be prepared to document this prejudice caused by tardy reporting.