On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-8305-06.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 4, 2007
Before Judges Skillman, Winkelstein and Yannotti.
The issue presented by this appeal is whether an insured under a standard homeowners policy may be relieved of the one- year limitations period for filing suit provided in the policy if the endorsement reflecting this limitation was omitted from the copy of the policy sent to the insured. We conclude that an insured is bound by the one-year limitations period if he knew or should have known of this term of the policy even though he received notice of the limitation by means other than the policy itself.
Defendant Farmers Mutual Fire Insurance Company of Salem County (Farmers Mutual) issued a homeowners policy to plaintiffs insuring their summer home in Toms River. On December 10, 2004, water escaped from a broken pipe in a crawl space, causing damage to the home. That same day, plaintiffs submitted a claim to Farmers Mutual, which included a claim for alleged water damage to their patio.
The insurance adjuster assigned to plaintiffs' claim, Cervini Adjustment (Cervini), employed engineer David Yelner to examine the patio. Yelner found that the patio damage was caused by normal wear and tear and "improper compaction of the backfill that the pavers were laid upon," and not by water flowing out of the crawl space.
After receiving this report, Cervini sent a letter, dated May 6, 2005, notifying plaintiffs that their claim for damage to their patio was denied, but that Farmers Mutual would issue a check for $3451.17, which covered water damage to their furnace and other emergency services, less a $500 deductible. The letter also stated:
Pursuant to N.J.S.A. 17:29E-9, [Farmers Mutual] has an internal appeal process and a panel that will review the claim. If you want to take advantage of the internal review panel, you can call Kent Jones at [number].
If you disagree with our determination, please be advised that pursuant with N.J.A.C. 11:2-17, litigation must be instituted within 12 months of the date of this letter. [Emphasis added.]
In response to a request from plaintiffs' counsel, Farmers Mutual sent a letter to plaintiffs, dated July 1, 2005, enclosing the appeal request form and stating in part:
Pursuant to N.J.S.A. 17:29E-9, [Farmers Mutual] has established an Internal Appeals process which gives you the opportunity to have your disputed claim reviewed by insurance professionals. This panel will review your claim focusing on your concerns and advise you of its decision within 10 working days.
Should you wish to appeal your claim the enclosed Appeal Request Form must be completed and returned to begin the appeal process. Please respond at your earliest convenience. We must point out that your request for appeal does not waive any of the terms, provisions or conditions under the policy, including but not limited to the time limit for filing suit in this matter. [Emphasis added.]
On July 8, 2005, plaintiffs' counsel sent a letter to Farmers Mutual, which stated that plaintiffs were appealing the decision set forth in Cervini's May 6, 2005 letter and requested a copy of Yelner's engineering report. The letter also stated that plaintiffs were in the process of obtaining their ...