As Sandy Anniversary Nears, Recovery Window Closing in Some Policies

As the one-year anniversary of Superstorm Sandy approaches, business owners and risk managers must immediately analyze their insurance policies to assess and evaluate coverage and to watch out for any “service of suit” limitations that may prescribe the period in which a suit can be brought against the insurer. In New York, the statute of limitations for contract actions is six years. However, parties to a contract, such as an insurance contract, may agree in writing to a shorter (but reasonable) period of time.¹ It is not infrequent for an insurance policy to reduce the time in which an insured may institute litigation in the event of a coverage dispute. For example, a Travelers commercial property policy contains the following language:

No one may bring a legal action against us under this Coverage Form unless: a) There has been full compliance with all of the terms of this Coverage Form. b) The action is brought within 2 years after the date on which the direct physical loss or damage occurred.²

1. CPLR § 201.
2. See Plon Realty Corp. v. Travelers Ins. Co., 533 F. Supp. 2d 391, 393 (S.D.N.Y. 2008).