In my last two posts, I explained insurance broker negligence in New Jersey. I discussed the standards to which brokers will be held as well as the elements that must be proven to demonstrate a breach of those standards. A client who had been reading the blog asked me how long he had to file a broker negligence suit. The statute of limitations for any cause of action is extremely important for both the client and attorney to know. New Jersey law provides different periods, depending on the type of claim you are filing.
New Jersey courts have noted that “[a]lthough the relationship of broker to insured may be described as contractual, our cases have recognized that the insured ‘does not sue on a contract of insurance’. The claim asserted is based on the broker's negligent failure to procure the appropriate coverage”1 Thus, the courts could very well apply a statue of limitations for negligence as opposed to breach of contract.
While the potential application of two different statutes of limitations could be problematic, it seems to be a distinction without a difference. Both potential claims carry a 6 years statute of limitations and fall under New Jersey Statute 2A:14-1, which states:
Every action at law for trespass to real property, for any tortious injury to real or personal property, for taking, detaining, or converting personal property, for replevin of goods or chattels, for any tortious injury to the rights of another not stated in sections 2A:14-2 and 2A:14-3 of this Title, or for recovery upon a contractual claim or liability, express or implied, not under seal, or upon an account other than one which concerns the trade or merchandise between merchant and merchant, their factors, agents and servants, shall be commenced within 6 years next after the cause of any such action shall have accrued.
What is not clear, however, is whether New Jersey’s courts will toll the statute of limitations while underlying litigation with a carrier is resolved. New Jersey operates under the discovery rule, which will toll a statute of limitations until the claim is or should have been known to the plaintiff.
Often, policyholder swill not be certain they have a claim against their brokers until they have concluded lawsuits against their carriers. In these circumstances, the discovery rule could protect a plaintiff from losing her right to sue a broker if the underlying litigation drags out. As this issue has not yet been addressed, it is in your best interest to file a lawsuit against a negligent broker within the statutory limitations period.
1 Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Group, Inc., 135 N.J. 182, (1994) citing Rider v. Lynch 42 N.J. 465 (1964).