With all that is going on in the world, it is a logical extension to think that insurance companies or states might extend the period for filing suit. For example, most recently, Gov. Andrew Cuomo signed an Executive Order suspending “any specific time limit” on the start or filing of any legal action, notice, motion or “other process or proceeding.” The wide-ranging executive order suspending the statute of limitations applies but is not limited to, criminal procedure law, civil practice law and the courts of claims act. The order pausing those rules goes through April 19, 2020. Likewise, the Supreme Court of Georgia has tolled the statute of limitations in civil cases through April 13, 2020. However, for most states right now, it appears as though it is business as usual when it comes to complying with the statute of limitations. Therefore, it is important that insureds, public adjusters, and attorneys all be aware of any impending suit limitations periods.
The recent case of Brillman v. New England Guaranty Insurance Company, Inc., 2020 VT 16 (Feb. 21, 2020), is a good reminder that a suit limitation provision requiring an action to be commenced within one year after the “date of loss,” does not mean within one year of the insurer’s breach.
The insureds sustained a water damage loss in January 2010. Over the course of the next seven years, the insured and insurer communicated about the claim. In February 2017, the insurer made its final payment. After the insurer did not act on the insured’s request for an appraisal, the insured filed suit alleging breach of contract and bad faith.
The parties presented competing interpretations of the policy’s suit limitation provision. The policy required that suit be brought within one year of the “date of loss.” The phrase “date of loss” was undefined under the policy. The insurer argued that “date of loss” was interpreted as running from the date of the occurrence giving rise to coverage. The insured argued that the term was ambiguous and should be construed against the insurer to mean the date the insurer breached its agreement under the insurance contract.
The Vermont Supreme Court concluded the phrase “date of loss” was not ambiguous and that by its terms, the policy expressly applied only to “loss” that occurred during the policy period. While “date of loss” is not defined in the policy, the policy defines occurrence as an accident that results in “bodily injury” or “property damage.” Property damage, in turn, is defined as “physical injury to, destruction of, or loss of use of tangible property.” Moreover, the court noted that nowhere in the policy is loss used to refer to the date coverage is denied. While the Vermont Supreme Court remanded the case to determine if the insurer had waived the limitations period, the court did hold that “loss” as used in the suit-limitation provision, unambiguously referred to the occurrence giving rise to coverage.
It is worth noting that some jurisdictions and policies do provide that the trigger for filing suit is the insurer’s breach or denial. Therefore, as always, it is important to read your policy fully and know the applicable laws of the jurisdiction in which your claim or loss is pending. Stay safe and be well!