In McClees v. New Jersey Insurance Underwriting Association, an insured property owner lost his bid to contest a declination of coverage for a fire loss. The insurer denied the claim on the basis of a policy condition that the property not be left vacant for more than sixty days. The insurer had information that the tenant was evicted four months before the fire that burned down the dwelling.
Immediately following the fire, the insured filed a notice of claim. After the denial of coverage, the insured appealed the denial with the insurer, documenting the alleged occupation of the premises through the time of the fire. However, the insurer continued to decline coverage as it was still convinced that the premises had been vacant for more than sixty days before the fire.
Plaintiff again wrote to the insurance carrier appealing the decision and specifically asking for clarification of the deadline to bring a court action. The insurer advised the plaintiff that the appeals period had expired and informed him that he had approximately two months to file a lawsuit based upon a one-year limitations provision contained within the insurance policy. Plaintiff did not file a lawsuit until three months after the expiration of the limitations period.
Due to the plaintiff’s lack of diligence, the Appellate Division upheld the policy limitation period and affirmed dismissal of the claim. Although the plaintiff argued that the limitation condition should not be enforced, the court was not persuaded.
The plaintiff cited to a prior decision that refused to enforce the limitation. Warren v. Employers’ Fire Insurance Co. However, that case proved unavailing because therein the insurer had acknowledged coverage and attempted to negotiate a lower amount than the covered loss, delaying the matter beyond the policy time limit. Whereas, in McLees, the insurer never conceded coverage.
Significantly, the court noted that had the plaintiff filed his complaint within the one-year limitations period, he would have had the opportunity to present his case in court and dispute the insurer’s contention that the property had been vacant.
Thanks to Steve Kim for his contribution.