The question of whether the contents of a disclaimer letter could limit an insurer in a later denial of a property damage claim was addressed recently by the Second Department in Swanson v. Allstate.  Therein, the court determined that an insurer does not waive its right to rely on an exclusion in the policy if that exclusion was not cited in the initial disclaimer letter.

 Swanson owned commercial property that was vacant for six months before a fire damaged the building.  Swanson made a claim for loss with its carrier, Allstate.  Allstate’s initial disclaimer letter failed cite to the policy’s “vandalism” exclusion that excluded fire damages if caused by vandalism in a building left vacate for more than 90 consecutive days.  Based upon the town fire investigator’s report, the fire was intentionally set, and the owner had admitted to the vacancy in excess of 90 days. 

A lower court denied Allstate’s summary judgment motion finding that the exclusion was waived under Insurance Law 3420(d) because it was not mentioned in the disclaimer letter.   However, the Second Department reversed finding that Section 3420(d) only applied to claims involving death and bodily injury, and hence, not applicable to a pure property damage claim.

Thanks to Georgia Coats for her contribution.

For more information, contact Denise Fontana Ricci at .