In my last post, I discussed the statute of limitations applicable to different claims in New Jersey. Under flood claims, a lawsuit must be filed within 1 year from the date of denial. For homeowner’s claims, the default statute of limitations is six years, but it can be shortened by policy language to as short as one year.
When does the clock on the statute of limitations begin to run? The New Jersey Supreme Court has clearly explained “the statute of limitations begins to run on the date of the casualty, however it is tolled from the time the insured gives notice until the time the insurer declines liability.”1
Thus, the clock started to run on the date Hurricane Sandy made landfall. The statute of limitations clock is stopped when policyholders give notice of claims to their insurance carriers. The time the insurance companies spent investigating will not be counted against policyholders, as the limitation period is tolled from the time notice of the claim is given until the carrier disclaims coverage in writing. It should also be noted that the denial letter sent to the policyholder must be clear and unequivocal.2 A notice that claims to be a denial but is open to interpretation will not constitute a denial for the purposes of determining the statute of limitations.3
Considering the obscene delays New Jersey policyholders have been experiencing, it is very likely the tolling time period will be important.
1 Gahnney v. State Farm Ins. Co., 56 F. Supp.2d 491 (D. N.J. 1999) citing Peloso v. Hartford Fire Insurance Co., 56 N.J. 514, 521 (1970).
2 Azze v. Hanover Ins. Co., 336 N.J. Super. 630, 641-643 (App. Div. 2001).