In this unreported New York decision,1 Steven Hirth filed suit for breach of contract on a homeowner’s insurance policy after American Insurance Company (AIC) denied coverage for additional living expenses (ALE). On August 12, 2012 Hirth’s apartment sustained water damage when another apartment in his building had a water issue that damaged Mr. Hirth’s apartment so severely, he and his family were forced to evacuate and arrange for lodging elsewhere. AIC paid him $208,108.63 for damage to the apartment and for contents. AIC also paid an additional $10,725.38 in ALE for the Hirth’s hotel stay from August 26 through September 1, 2012. AIC also offered to pay for a comparable hotel in New York City for an additional four months (the period of restoration). Hirth disagreed with AIC’s estimate of the cost of the hotel and instead entered into a short-term sublease at $22,500 per month (AIC originally offered $40,000 per month). The repairs to his apartment took almost two years, and the apartment could not be occupied until July 1, 2014. Hirth declined to provide certain documents to AIC without a confidentiality agreement and AIC declined any further payment for ALE. Hirth filed suit on February 24, 2015.

AIC filed a motion to dismiss based on the statute of limitations clause which read:

No suit can be brought [against AIC] unless the policy provisions have been fully complied with and the action is started within two years after the…accidental loss and damage to covered property which occurs during the policy period and is caused by one or more causes of loss we cover.

The policy also had language requiring suit to be brought within two years of “the occurrence”. The court focused on meaning of the word “occurrence” which was defined as being cn “accidental loss” or “damage to covered property”. The court explained:

While it is hardly unambiguous, the limitations provision may reasonably be read to require that a suit over an “accidental loss” be brought within two years of the accidental loss, and that a suit over “damage to covered property” be brought within two years of the damage to covered property.2

Remember, Hirth’s claim was for ALE, not “damage to covered property”. The Court that the ALE dispute constitutes a separate “loss” and that the loss was not completed until either July 1, 2014 (the date of completion of the restoration) or February 2, 2015 (AIC’s denial letter). Therefore, Plaintiff’s claim is timely because it was filed within two years of loss. The court based their decision on a 2014 New York Court of Appeals case where the court found that a two-year limitations period in an insurance policy covering replacement of property would not be “reasonable if … the property cannot reasonably be replaced within two years.”3

I leave you with a mildly related quote from legendary Dodgers announcer Vin Scully: “Losing feels worse than winning feels good.“

Sorry AIC, you lost this one.

1 Steven Hirth v. The American Ins. Co., 2016 WL 75420 (2016).
2 Id. at 6
3 Executive Plaza, LLC v. Peerless Ins. Co., 22 N.Y.3d 511, 518 (2014).