ALBANY, N.Y., March 29 – The New York Supreme Court, Appellate Division ruled that insurance claims adjusters can be sued for negligent misrepresentation of policy coverage to homeowners under certain conditions.

Under most circumstances, claims adjusters cannot be held liable in cases where homeowners assert that their insurers were not forthcoming about coverage exceptions. However, adjusters who make statements regarding coverage to policyholders with the knowledge that the policyholders believe that information is accurate and actionable may be found to be negligent if they have misrepresented the policy stipulations.

The case at hand, Matthew J. Ryan (homeowner) v. Preferred Mutual Insurance, Co. et al. and H.R. Talmon Claim Associates, began in 2004 when Ryans home heating system malfunctioned, resulting in damage to the property. Preferred Mutual sent a claims adjuster from Talmon to the property to assess the damage. That adjuster told Ryan to replace the system with an equally expensive system and make other related repairs, and to submit the bills to the insurer for a full reimbursement. The adjuster assured Ryan the replacement would be covered under the policy and did not immediately file a formal claim on Ryans behalf. When the receipts were submitted to Preferred Mutual, the insurer denied the claim, citing a policy exclusion, leading to the current case.

In the initial action related to this case, the Supreme Court granted the defendants motion for dismissal of Ryans claims sounding in negligence and fraud, but denied the motion to dismiss Ryans claim of negligent misrepresentation. In the current case, Talmon appealed this ruling, which enabled Ryan to sue Talmon as well as Preferred Mutual for negligent misrepresentation, and was denied.