Travelers wins ruling over policyholder seeking to replace property

An apartment complex owner who sought funds to replace property that was damaged in a fire was too late, a federal appeals court ruled Wednesday, in a dispute over the relevant statute of limitations.

Wajih Ireifej owned an apartment complex in Thomasville, North Carolina, that was covered by an insurance policy issued by Travelers Cos. Inc. unit Travelers Casualty Insurance Co. of America, according to the ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Wajih Ireifej v. Travelers Casualty Insurance Co. of America.

The property sustained damage in an April 2015 fire. Travelers adjusted the claim and made an initial payment that reflected the cost of repair or replacement less depreciation, the ruling said.

The policy provided that Ireifej could also seek compensation for the replacement cost value for covered losses, which would compensate for the cost of repair or replacement without subtracting depreciation. But the policy required the claimant to “actually” repair or replace the damaged property “as soon as reasonably possible after the loss or damage.”

In March 2020, Mr. Ireifej’s representative informed Travelers he intended to purchase a replacement property. Travelers responded that purchasing replacement property more than four years after the 2015 fire was not as soon as reasonably possible.

Mr. Ireifej filed suit against the insurer charging breach of contract, common law bad faith and violations of the North Carolina Unfair and Deceptive Trade Practices Act.

He contended that the statute of limitation accrues from when Travelers informed him it would not make the replacement cost payment, in April 2020.

The U.S. District Court in Greensboro, North Carolina, ruled in the insurer’s favor and was affirmed by a three-judge appeals court panel.

The “statute of limitations here ran from the date of the fire in April 2015,” the ruling said, and the district court “was correct to conclude that Ireifej’s claims were time-barred.”

Attorneys in the case had no comment or did not respond to a request for comment.