(Article from Insurance Law Alert, February 2018)
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The Third Circuit ruled that an insurer’s rejection of a policyholder’s proof of loss constituted a claim denial sufficient to start the running of the statute of limitations. Migliaro v. Fidelity National Indem. Ins. Co., 880 F.3d 660 (3d Cir. 2018).
Migliaro sought coverage under a Standard Flood Insurance Policy for Hurricane Sandy damage. The insurer reimbursed him based on its adjuster’s recommendation. Months later, Migliaro submitted a proof of loss claiming additional damage. The insurer responded with a letter entitled “Rejection of Proof of Loss,” contesting the additional amount claimed, but expressly stating that “[t]his is not a denial of your claim.” The notice also indicated that Migliaro could provide further documentation to support the claim, but he did not do so. Instead, nearly two years after receiving the letter, Migliaro filed suit against the insurer. (He had previously sued the insurer within one year of receiving the letter, but voluntarily dismissed that action). A New Jersey federal district court granted the insurer’s summary judgment motion, finding that the suit was barred by the one-year statute of limitations set forth in the Standard Flood Insurance Policy. The Third Circuit affirmed.
The Third Circuit held that an insurer’s rejection of a proof of loss is not a
per se denial of claim. However, the court held that where, as here, the policyholder treats the rejection of proof of loss as a claim denial by filing suit after receiving the proof of loss, it should be construed as such for statute of limitations purposes. The court explained that “the very act of bringing suit signaled that, to Migliaro’s mind, his claim had been denied.” The court rejected the policyholder’s argument that even if a rejected proof of loss could constitute a denial of the claim in some cases, the rejection letter at issue did not because it expressly stated that it was “not a denial of [the] claim.” The court reasoned that the statement was “technically true at the time it was made,” because the possibility of additional compensation still existed. However, “Migliaro closed the door by failing to seek an appraisal, file an amended proof of loss . . . or submit additional documentation. Instead, he sued, and in doing so acknowledged that, by virtue of the letter rejecting his proof of loss, his claim had been denied.”