Appeals Court Rules in Favor of Insurer in Sandy-Damaged N.J. Home Suit

This week, the Third Circuit of the U.S. Court of Appeals upheld a ruling by a district court which found that a claim denial letter triggered a one-year statute of limitations required in every standard flood insurance policy.

According to background provided within the court documents, because all standard flood insurance claims are paid by the U.S. government, the policies must be identical to the form codified under the Code of Federal Regulations. All standard flood insurance policy must contain the following statute-of-limitations provision:

You may not sue us to recover money under this policy unless you have complied with all the requirements of the policy. If you do sue, you must start the suit within one year after the date of the written denial of all or part of the claim[.] ․ This requirement applies to any claim that you may have under this policy and to any dispute that you may have arising out of the handling of any claim under the policy.

New Jersey resident Anthony Migliaro submitted a claim for property damage his home sustained as a result of Hurricane Sandy. According to court documents, after he received payment in the amount of $90,499.11 from Fidelity National Indemnity Insurance Company, based on an adjuster’s assessment of the damage to his property, he submitted a sworn proof of loss seeking additional compensation in the amount of $236,702.57.

Fidelity rejected the proof of loss alleging the additional damage. As a result of the denial, Migliaro filed suit.

The district court sided with the insurer, finding that the letter rejecting Migliaro’s proof of loss was a “written denial of all or part of the claim.” In addition, since his complaint was filed almost two years after he received the denial, the court dismissed the suit due to the tolling of the statute of limitations.

Migliaro appealed the district court’s decision.

The appeals court affirmed the district court’s decision stating, “Although the rejection of a proof of loss is not per se a denial of the claim in whole or in part, it does constitute a denial of the claim if, as here, the policyholder treats it as such by filing suit against the carrier.”