{"id":886968,"date":"2016-02-09T17:20:37","date_gmt":"2016-02-10T00:20:37","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=886968"},"modified":"2016-02-09T17:20:37","modified_gmt":"2016-02-10T00:20:37","slug":"too-little-too-late-the-harsh-bright-line-of-suit-limitation-provisions","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/too-little-too-late-the-harsh-bright-line-of-suit-limitation-provisions\/","title":{"rendered":"Too Little, Too Late: The Harsh Bright Line of Suit Limitation Provisions"},"content":{"rendered":"<p>Zachary D. Ludens | PropertyCasualtyFocus | February 5, 2016<\/p>\n<p>Approximately twenty percent of Americans\u00a0have been classified as chronic procrastinators, which means one in five policyholders faces a potential problem when suing for coverage.\u00a0 While the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-and-design-claims-beware-of-the-statute-of-limitations-and-repose\/\" target=\"_blank\">statute of limitations<\/a> for breach of contract varies by state, it is typically three years or more.\u00a0 However, insurance policies often impose their own, contractual suit limitations, and it is often only a year or two.\u00a0 When and how these provisions operate to bar coverage varies under the circumstances. Some recent decisions highlight the fact that, unlike notice provisions, they are often applied rigorously, without regard to whether the insurer was prejudiced, and whether or not enforcement results in a disproportionate forfeiture to the insured.<\/p>\n<p>In <em>Dilley v. Auto-Owners Ins. Grp<\/em>, No. 14-1240 (Iowa Ct. App. Dec. 23, 2015), Iowa\u2019s Appellate Court recently affirmed a summary judgment ruling against a policyholder who waited until the last day before the end of a two-year contractual suit limitation period to sue her auto insurance company for underinsured motorist benefits.\u00a0 Unfortunately for her, the plaintiff named the wrong entity in the lawsuit, bringing her suit against \u201cAuto-Owners Insurance Group\u201d (a non-existent entity), rather than Owners Insurance Company, whose name appeared on her policy.\u00a0 She sought to add the correct party after the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/insurers-from-coast-to-coast-notch-suit-limitation-victories\/\" target=\"_blank\">suit limitation<\/a> period had ended, and she argued that the claims against the newly-added entity should relate back to the date of her complaint\u2014in which case they would not be barred by the suit limitation period.\u00a0 The trial court disagreed, and the Appellate Court affirmed, finding that the plain terms of the insurance policy controlled.<\/p>\n<p>In <em>B.S.C. Holding, Inc. v. Lexington Insurance Company<\/em>, No. 14-3131 (10<sup>th<\/sup> Cir. Sept. 15, 2015), the U.S. Court of Appeals for the Tenth Circuit examined the issue of whether an insurer must demonstrate prejudice before it can enforce a suit limitation provision.\u00a0 The case involved a salt mine that first experienced problems in 2004, when its operators discovered that the space between the floor and ceiling was contracting at an abnormally high rate.\u00a0 In September 2005, a consultant advised that water might be entering the mine, creating a \u201chuge problem\u201d of abnormal closure rates.\u00a0 By the end of 2006, one portion of the mine had closed by over ten feet.\u00a0 In early 2008, a water leak was discovered, and, two years later, a panel of experts concluded 2010 that an improperly-sealed well had resulted in deformation in the rock above the mine, causing many of these issues.\u00a0 In May 2010, the insured sued for coverage.<\/p>\n<p>The insurance policy at issue required that all suits must be commenced within twelve months of the discovery of the underlying loss.\u00a0 The policyholder noted, however, that Kansas applies a \u201cnotice prejudice\u201d rule, under which an insured may be excused for late notice of a claim, if the insurer was not prejudiced by the late notice.\u00a0 The insureds argued that the same rule should extend to application of a policy\u2019s suit limitation provision. The Tenth Circuit rejected the argument; it held that the suit limitation provision was unambiguous, and barred the claim.<\/p>\n<p>Similarly, in <em>Hawley v. Preferred Mutual Insurance Company<\/em>, No. 14-P-917 (Mass. App. Ct. Sept. 16, 2015), a landlord received notice in June 2004 of a water leak that eventually caused a ceiling to collapse.\u00a0 The landlord gave prompt notice to the insurer, who determined that the water leak was the result of a crack in a bathtub, which became exacerbated through continued use.\u00a0 The insurer provided notice in November 2004 that it was denying the claim.\u00a0 Some nineteen months later, the insured sent the insurer notice of violations, and it requested arbitration a mere five days before the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/how-low-can-you-go-shortening-the-statute-of-limitations-in-arbitration-agreements\/\" target=\"_blank\">statute of limitations<\/a> ran.\u00a0 The insurer declined arbitration.\u00a0 The insured filed suit in June 2008.<\/p>\n<p>The policy incorporated the statutory, two-year statute of limitations for insurance coverage claims, which also provides that an action must be commenced within two years of the loss, <em>absent a referral to arbitration<\/em>.\u00a0 If arbitration commences, the statute is tolled until 90 days after any arbitration award.<\/p>\n<p>In this case&#8230;<\/p>\n<p><a href=\"http:\/\/propertycasualtyfocus.com\/too-little-too-late-the-harsh-bright-line-of-suit-limitation-provisions\/\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Zachary D. Ludens | PropertyCasualtyFocus | February 5, 2016 Approximately twenty percent of Americans\u00a0have been classified as chronic procrastinators, which means one in five policyholders faces a potential problem when suing for coverage.\u00a0 While the statute of limitations for breach of contract varies by state, it is typically three years or more.\u00a0 However, insurance policies&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/too-little-too-late-the-harsh-bright-line-of-suit-limitation-provisions\/\">Continue reading <span class=\"screen-reader-text\">Too Little, Too Late: The Harsh Bright Line of Suit Limitation Provisions<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3],"tags":[9073],"class_list":["post-886968","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","tag-statute-or-limitations","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Too Little, Too Late: The Harsh Bright Line of Suit Limitation Provisions - Advise &amp; 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