With the anniversary of Superstorm Sandy fast approaching, policyholders who sustained damage during the storm who have not yet settled their insurance claims, may be running up against some contractually imposed deadlines. Most insurance policies limit the time period within which an insured is permitted to file suit against an insurer for the insurer’s failure to provide benefits under the policy. Insurance policies are considered contracts, and normally in New Jersey an aggrieved party has up to six years to sue for an alleged breach of contract. However, parties are free to enter into contracts that contain terms which restrict rights that would otherwise be available to one party or the other. In the insurance context, policy provisions which limit the time period within which an insured is permitted to sue are found in virtually all policies.
Insurance policies often mandate that lawsuits must be filed within one or two years from the date of the loss. For individuals with unresolved Sandy claims, the consequences of not filing suit within the appropriate time frame could prove devastating. However, determining the appropriate date on which claims will be barred may not be as simple as it appears on the face of the insurance policy, and often times, this works in the insured’s benefit.
Although insurers may argue that the insurance policy and its terms regarding bringing suit should be strictly interpreted as written, New Jersey Courts have generally held that insureds should be credited for any time the insurance company spends investigating the claim. Accordingly, from the time the insurance company is put on notice of the loss to the time the insurance company issues its determination, the contractually imposed time period is “tolled.” This acts to provide the insured with the benefit of the full time allotted by the insurance policy without regard to any delay the insurance company itself may cause during its investigation. However, insureds should be aware that any gap in time between when the loss occurs and when the insurance company is placed on notice still counts against the insured.
Policy holders are urged to review their policies carefully and to contact experienced counsel to review the claim history and take steps to ensure that they do not lose valuable rights. This is especially true for insureds with Sandy damage that have policies calling for a one year suit limitation. The facts of each specific case may be different and although tolling can be a valuable tool for insureds, it is always best to have counsel open a dialogue with the insurer beforehand to confirm that everyone is on the same page in terms of lawsuit filing obligations. This will act to avoid unnecessary confusion and will give insureds a reliable sense of what the carrier’s position is, so that informed decisions can be made.