Insurance coverage corporations are more and more drafting property insurance coverage insurance policies with a double-barreled procedural weapon aimed instantly 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 current case, Amaro Meals Enterprises Inc. v. Liberty Mutual Insurance coverage, demonstrates precisely how harmful these clauses can turn into for unsuspecting policyholders and counsel. The information are that Amaro Meals Enterprises suffered a major meals spoilage loss after an influence surge broken freezer tools at its New Jersey warehouse in July 2022. The corporate reported the loss, sought protection underneath its marine cargo coverage, and Liberty Mutual denied the declare in March 2023.
The insured then filed go well with in New Jersey state courtroom inside the coverage’s one-year go well with 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 go well with 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 truly did file go well with inside one yr. The policyholder merely filed within the “improper” state in accordance with the insurer’s coverage language. The courts however enforced the procedural entice strictly.
The New York federal trial courtroom targeted on the literal wording of the coverage, which required {that a} go well with 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 availability. As a substitute, 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 go well with limitation clauses and that the insured couldn’t cite New York authority holding that submitting a well timed lawsuit within the improper discussion board constituted “substantial efficiency” of the coverage situation.
The lesson right here is vital for policyholders, public adjusters, restoration contractors, and attorneys dealing with first-party property claims. These clauses are not boilerplate provisions buried harmlessly at the back of 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 go well with limitation intervals. These provisions can work collectively to create procedural forfeitures totally unrelated to the deserves of the loss itself. A policyholder can have a reputable lined declare and nonetheless lose all the pieces 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 situations. The outdated assumptions about submitting go well with the place the property is positioned or the place the insured resides have gotten more and more harmful.
The most secure apply when confronted with each a discussion board choice clause and a one-year limitation provision is to file go well with within the contractually designated discussion board earlier than the deadline expires, even when there’s a reputable argument that one other discussion board is correct. Protecting filings could appear inefficient, however they’re far less expensive than shedding a declare totally on procedural grounds.
This case ought to turn into required studying for anybody concerned in property insurance coverage claims dealing with. It demonstrates how fashionable insurance coverage insurance policies more and more include procedural defenses each bit as harmful as exclusions or valuation limitations.
For these considering 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 reside.”
— 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).