Insurance coverage corporations are more and more drafting property insurance coverage insurance policies with a double-barreled procedural weapon aimed immediately at policyholders. One clause requires that any lawsuit be filed in a particular state or federal courtroom chosen by the insurer. The second clause requires that the lawsuit be filed inside one yr of the date of loss. When mixed, these provisions create a procedural minefield the place even a well timed filed lawsuit might in the end be deemed too late.
A latest case, Amaro Meals Enterprises Inc. v. Liberty Mutual Insurance coverage, demonstrates precisely how harmful these clauses can turn out to be for unsuspecting policyholders and counsel. The details are that Amaro Meals Enterprises suffered a major meals spoilage loss after an influence surge broken freezer gear at its New Jersey warehouse in July 2022. The corporate reported the loss, sought protection below its marine cargo coverage, and Liberty Mutual denied the declare in March 2023.
The insured then filed swimsuit in New Jersey state courtroom inside the coverage’s one-year swimsuit limitation interval. That ought to sound cheap to most individuals. The loss occurred in New Jersey. The insured was a New Jersey firm. The broken property was in New Jersey. But Liberty Mutual moved to dismiss the lawsuit as a result of the coverage additionally contained a discussion board choice clause requiring litigation in New York courts.
The New Jersey courtroom agreed with Liberty Mutual and dismissed the case. By the point the policyholder refiled in New York, Liberty Mutual argued the one-year swimsuit limitation had expired. The New York federal district courtroom agreed and dismissed the case. 1 The appellate courtroom affirmed. 2
What makes this case particularly troubling is that the insured really did file swimsuit inside one yr. The policyholder merely filed within the “incorrect” state based on the insurer’s coverage language. The courts nonetheless enforced the procedural lure strictly.
The New York federal trial courtroom targeted on the literal wording of the coverage, which required {that a} swimsuit be “commenced inside twelve (12) months subsequent after the calendar date of the inception of bodily loss or harm.” The courtroom rejected the policyholder’s argument that well timed submitting the New Jersey motion considerably complied with the supply. As an alternative, the trial courtroom dominated that the New York lawsuit earlier than it was filed too late and subsequently couldn’t proceed.
The appellate courtroom adopted the identical reasoning. It famous that New York courts strictly implement contractual swimsuit limitation clauses and that the insured couldn’t cite New York authority holding that submitting a well timed lawsuit within the incorrect discussion board constituted “substantial efficiency” of the coverage situation.
The lesson right here is essential for policyholders, public adjusters, restoration contractors, and attorneys dealing with first-party property claims. These clauses are now not boilerplate provisions buried harmlessly behind insurance coverage insurance policies. They’re more and more being weaponized as claims defenses. Many policyholders nonetheless assume that submitting a well timed lawsuit someplace is sufficient. This case proves in any other case.
Insurance coverage corporations perceive precisely what they’re doing by combining necessary discussion board choice clauses with shortened swimsuit limitation intervals. These provisions can work collectively to create procedural forfeitures fully unrelated to the deserves of the loss itself. A policyholder can have a reliable coated declare and nonetheless lose every little thing due to a procedural misstep about the place the lawsuit was filed.
I’ve repeatedly warned that policyholders and their representatives should learn each coverage after a loss with cautious consideration to jurisdictional and procedural circumstances. The previous assumptions about submitting swimsuit the place the property is positioned or the place the insured resides have gotten more and more harmful.
The most secure follow when confronted with each a discussion board choice clause and a one-year limitation provision is to file swimsuit within the contractually designated discussion board earlier than the deadline expires, even when there’s a reliable argument that one other discussion board is correct. Protecting filings could appear inefficient, however they’re far less expensive than shedding a declare fully on procedural grounds.
This case ought to turn out to be required studying for anybody concerned in property insurance coverage claims dealing with. It demonstrates how trendy insurance coverage insurance policies more and more include procedural defenses each bit as harmful as exclusions or valuation limitations.
For these curious about discussion board choice clauses, I recommend studying Discussion board Choice Clauses in Extra Insurance policies.
Thought For The Day
“New York is the place you go to make your fortune; New Jersey is the place you go to dwell.”
— Jon Stewart
1 Amaro Meals Enterprises v. Liberty Mutual Ins., No. 24-cv-7784 (S.D. N.Y. Mar. 25, 2025).
2 Amaro Meals Enterprises v. Liberty Mutual Ins., No. 25-1915-cv, 2026 WL 1361824 (2nd Cir. Could 15, 2026).