Insurance companies are increasingly drafting property insurance policies with a double-barreled procedural weapon aimed directly at policyholders. One clause requires that any lawsuit be filed in a specific state or federal court selected by the insurer. The second clause requires that the lawsuit be filed within one year of the date of loss. When combined, these provisions create a procedural minefield where even a timely filed lawsuit may ultimately be deemed too late.
A recent case, Amaro Food Enterprises Inc. v. Liberty Mutual Insurance, demonstrates exactly how dangerous these clauses can become for unsuspecting policyholders and counsel. The facts are that Amaro Food Enterprises suffered a significant food spoilage loss after a power surge damaged freezer equipment at its New Jersey warehouse in July 2022. The company reported the loss, sought coverage under its marine cargo policy, and Liberty Mutual denied the claim in March 2023.
The insured then filed suit in New Jersey state court within the policy’s one-year suit limitation period. That should sound reasonable to most people. The loss occurred in New Jersey. The insured was a New Jersey company. The damaged property was in New Jersey. Yet Liberty Mutual moved to dismiss the lawsuit because the policy also contained a forum selection clause requiring litigation in New York courts.
The New Jersey court agreed with Liberty Mutual and dismissed the case. By the time the policyholder refiled in New York, Liberty Mutual argued the one-year suit limitation had expired. The New York federal district court agreed and dismissed the case. 1 The appellate court affirmed. 2
What makes this case especially troubling is that the insured actually did file suit within one year. The policyholder simply filed in the “wrong” state according to the insurer’s policy language. The courts nevertheless enforced the procedural trap strictly.
The New York federal trial court focused on the literal wording of the policy, which required that a suit be “commenced within twelve (12) months next after the calendar date of the inception of physical loss or damage.” The court rejected the policyholder’s argument that timely filing the New Jersey action substantially complied with the provision. Instead, the trial court ruled that the New York lawsuit before it was filed too late and therefore could not proceed.
The appellate court followed the same reasoning. It noted that New York courts strictly enforce contractual suit limitation clauses and that the insured could not cite New York authority holding that filing a timely lawsuit in the wrong forum constituted “substantial performance” of the policy condition.
The lesson here is critical for policyholders, public adjusters, restoration contractors, and attorneys handling first-party property claims. These clauses are no longer boilerplate provisions buried harmlessly in the back of insurance policies. They are increasingly being weaponized as claims defenses. Many policyholders still assume that filing a timely lawsuit somewhere is enough. This case proves otherwise.
Insurance companies understand exactly what they are doing by combining mandatory forum selection clauses with shortened suit limitation periods. These provisions can work together to create procedural forfeitures entirely unrelated to the merits of the loss itself. A policyholder can have a legitimate covered claim and still lose everything because of a procedural misstep about where the lawsuit was filed.
I have repeatedly warned that policyholders and their representatives must read every policy after a loss with careful attention to jurisdictional and procedural conditions. The old assumptions about filing suit where the property is located or where the insured resides are becoming increasingly dangerous.
The safest practice when confronted with both a forum selection clause and a one-year limitation provision is to file suit in the contractually designated forum before the deadline expires, even if there is a legitimate argument that another forum is proper. Protective filings may seem inefficient, but they are far less costly than losing a claim entirely on procedural grounds.
This case should become required reading for anyone involved in property insurance claims handling. It demonstrates how modern insurance policies increasingly contain procedural defenses every bit as dangerous as exclusions or valuation limitations.
For those interested in forum selection clauses, I suggest reading Forum Selection Clauses in Excess Policies.
Thought For The Day
“New York is where you go to make your fortune; New Jersey is where you go to live.”
— Jon Stewart
1 Amaro Food Enterprises v. Liberty Mutual Ins., No. 24-cv-7784 (S.D. N.Y. Mar. 25, 2025).
2 Amaro Food Enterprises v. Liberty Mutual Ins., No. 25-1915-cv, 2026 WL 1361824 (2nd Cir. May 15, 2026).
