Nicole Levine | Property Insurance Coverage Law Blog | July 16, 2017
This blog has often discussed the importance of carefully reading your insurance policy. It is imperative to know of your rights should your insurance claim become problematic. It is crucial to know the policy’s suit limitation clause as well as your state’s statute of limitations, so you don’t miss the filing deadline. Once this period of time lapses, your right to sue and recover your unpaid or underpaid loss is waived.
MZM Real Estate Corp v. Tower Insurance Company of New York,1 is a recent New York case that demonstrates the importance of filing a timely lawsuit. The court followed the general rule that most courts will uphold all reasonable suit limitations periods unless the insurer extends or waives this period. Here, MZM sought coverage for wind damage caused by Superstorm Sandy. MZM was not satisfied with the insurers’ payment of $4,000, so they invoked their right to appraisal under the terms of the policy and served the insurer with a $170,129.96 appraisal award. Insurer denied the appraisal award for several reasons and MZM filed suit to enforce the appraisal award. The lawsuit commenced approximately six months after the tolling of the policy’s two-year suit limitation clause. The insured argued the filing was timely because completing the appraisal process was a condition precedent to filing suit. The insurer defended the denial by asserting that the suit was barred as untimely as nothing in the policy specifies that once appraisal is invoked, it must be completed before the commencement of a lawsuit.
The court agreed with the insurer and determined that “MZM cites no authority and the Court has not found any to support the proposition that under the facts similar to this case, once an appraisal is demanded, the completion of the appraisal serve as a condition precedent to the commencement of an action.” The court also found it was “uncontroverted that MZM never requested a waiver of the limitation period or an extension of time.” Furthermore, “an insured can protect itself by either beginning an action before the expiration of the limitation period or obtaining from the carrier a waiver or extension of its provisions.”
This case exemplifies the importance of understanding the insurance policy time limitations as well as the statute of limitations. Failing to file a timely lawsuit can have disastrous results by barring recovery for a loss that might have otherwise been covered under the terms of the policy.
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1 MZM Real Estate Corp v. Tower Ins. Co. of New York, 2017 NY Slip Op 30691(U) (Apr. 7, 2107).