A Capehart Scatchard Blog

Insurance Carrier Not Estopped From Denying Homeowners’ Claim

By on September 19, 2014 in Blog with 0 Comments

In Masaitis v. Allstate, 2014 N.J. Super. Unpub. LEXIS 2100 (App. Div. Aug. 26, 2014), the plaintiffs Marilyn and William Masaitis appealed from a jury verdict that they were not entitled to compensation from their homeowner’s insurance carrier, Allstate New Jersey Insurance co., for loss of property due to a fire. Allstate disclaimed coverage on grounds of fraud and concealment but never returned the plaintiff’s insurance premiums. The plaintiffs claimed that Allstate should have been estopped from denying the claim because it never refunded their premiums.

The plaintiffs’ home was damaged by a fire. The municipal fire marshall was unable to determine the cause of the fire, nor did the county prosecutor’s office attribute the cause of the fire to arson. Nevertheless, based upon circumstantial evidence, at the trial, Allstate argued that the plaintiffs had committed arson.

Allstate also contended that the plaintiffs made false claims to Allstate for the loss of personal property. Allstate was able to prove that items of loss were fraudulent. As an example, plaintiffs claimed the loss of 2 Rolex watches valued at a total of $70,000 but they were not able to prove they ever owned such watches.

The plaintiffs argued that Allstate should have been estopped from denying their claim because it did not refund their insurance premiums although it claimed that the policy was void because of their alleged fraud. However, the Appellate Division held that the law that the insurer could elect to either rescind the insurance policy and return the premium or to affirm the policy and abide by its terms, only applied to circumstances where the insurance policy was obtained by fraud at its inception.

Here Allstate did not claim fraud at its inception. Rather, it claimed that the plaintiffs made a fraudulent claim on their policy. Thus, such a defense did not require Allstate to rescind the policy. Hence, the Appellate Division found that Allstate was not estopped from pursuing its defenses and counterclaim.

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About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020 and 2021, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

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