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Move It Or Lose It - Timeliness When Making A Claim

March 8, 2024

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Prompt notice of loss or damage to an insurer by an insured is key to first-party insurance coverage. In cases where an insured lets a problem develop for months or even years, insurer’s must confront issues such as what loss exactly is covered during the term of the policy or may be prejudiced in their ability to timely investigate a claim. Therefore, most policies include time bars to both claims and suits against them in order to justifiably protect against these concerns.

The Supreme Court of New York recently confronted such an issue in the matter of Bronstein Properties LLC v. Wesco Ins. Co. See Bronstein Properties LLC v. Wesco Ins. Co., No. 155806/2018, 2024 WL 839419 (N.Y. Sup. Ct. Feb. 27, 2024). In this declaratory judgement action, plaintiffs sought coverage for damage to the walls of a building due to water flow from beneath. Plaintiff’s believed the cause was from short-term increased water flow from a sewer pipe, while Defendant’s engineer saw the issue as one indicating long-term settlement.

Wesco disclaimed coverage, in part because of the long amount of time the insured took to actually report the issue. As the court order reveals, Bronstein became aware of water damage cracks in the building as early as 2014, four years prior to commencing the suit. The court further noted that the policy clearly limited suits to two years in which the direct physical loss or damage occurred. Such policy terms were “clear and unambiguous” and that even “[g]iving plaintiffs the benefit of the most generous interpretation of when their loss occurred” (2016), any causes of action against defendant insurer had to be time barred. The claim was dismissed, and Wesco was not required to provide coverage.

While the court in this case declined to comment extensively on prejudice, this case highlights the importance of prompt notice by insureds to get the claims process moving along smoothly. Just as important is for insurer’s to question when exactly losses occur and to inquire about how long their insured’s sit on a problem before deciding to address it.

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