1st Party Replacement Cost Reimbursement Must Wait For Completion of All Repairs (NJ)

The adjustment of a first party claim for property damage resulted in a curious dispute between the homeowner and its insurer. In Hall v. Cumberland Insurance, the dispute arose out of windstorm damage to plaintiff’s home.  The homeowner submitted a claim to Cumberland, and both retained independent adjusters to estimate the repair costs.  Both adjusters agreed that the roof needed replacement and portions of the home’s interior repaired.

Despite a dispute between the adjusters as to the replacement cost of the repairs, Hall agreed to the value placed by his insurer. Cumberland then deducted from the replacement cost depreciation and deductible.  The plaintiff signed a proof of loss, and his insurer issued a check for the balance.

Trouble came after the plaintiff had his roof repaired. At that point, he sought reimbursement for the replacement cost for just that component of his damages.  Based upon its policy language that would allow for such a payment but only after the actual repairs were complete for the damaged building, Cumberland declined.  Rather than completing all repairs and then seeking replacement cost reimbursement, the plaintiff filed suit.

The Court found that the homeowner’s policy was clear. The insurer was not required to make piecemeal payments each time a component of the home was repaired. Inasmuch as the plaintiff sought payment only for a portion of the adjusted repairs, the insurer had no obligation to make any further payment.

Both the lower court and appellate court took issue with the plaintiff’s lack of diligence in the litigation in general – missing deadlines and even failing to file opposition to Cumberland’s summary judgment motion. Only after the motion was granted did the plaintiff seek reconsideration.  This dilatory attitude after a premature turn to the courts over a dispute that was at best a total of $5,000 likely had an impact on the ultimate outcome of the decision.

Thanks to Sathima Jones for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.