Judge Throws Out Yacht Club’s Hurricane Sandy Suit: Insurer Must Be Allowed to Inspect “Damaged” Property

A District of New Jersey Federal Judge dismissed a yacht clubaEUR(TM)s case with prejudice and ordered the yacht club to show cause for why its counsel should not be sanctioned for filing a baseless claim after the yacht club refused to let the insurer inspect its property after making a claim. The Judge stated that the yacht club refused to let the insurer inspect its property, yet claimed $540,000 worth of wind damage to its buildings from Superstorm Sandy. After the initial claim was made, an insurance adjuster inspected the yacht club and found wind damage to two fences and no damage to the buildings. The inspector valued the damage at approximately $1,600. Subsequently, the yacht club demanded that the insurance company pay $540,000 for property damage and $135,000 in attorneyaEUR(TM)s fees. The Judge stated that under the policy, the insurer is allowed to inspect the property as often as is reasonably required, and it asked several times to re-inspect the property after it received the demand letter. The yacht club never responded to those requests. The insurer alleged that the yacht clubaEUR(TM)s claim was fraudulent. Based on the refusal to let the insurer inspect the property, the judge stated that the facts raise a strong suspicion of bad faith. The judge dismissed the case, and ordered the yacht club to show cause as to why it should not be sanctioned. Lighthouse Point Marina & Yacht Club, LLC v. International Marine Underwriters, United States District Court, District of New Jersey, Index No.: 14-2974

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