Most insurance policies contain a “suit against us” condition that usually reads along these lines: “No action can be brought against us unless the policy provisions have been complied with and the action is started within five (5) years from the date the loss occurs.” So, do pending requests (e.g., loss inspection or document production) bar you from the courtroom? And what is the “date of loss” for statute of limitations purposes?
As for the first question, the answer is “not necessarily.” If an insurance company breaches the contract under which it is asking the insured to perform, the insured may be excused from continued performance … especially when the carrier’s breach of contract renders the insured’s compliance with policy conditions impossible. “However, modern courts, and the Restatement (Second) of Contracts, recognize that something more than a mere default [by one party] is ordinarily necessary to excuse the [other party’s] performance in the typical situation.” “Thus, if the prior breach of such a contract was slight or minor, as opposed to material or substantial, the nonbreaching party is not relieved of his or her duty of performance, although he or she may recover damages for the breach.” We suggest that you consult with an experienced insurance attorney regarding what you perceive to be the insurer’s breach of contract and whether you are consequently excused from navigating policy condition land mines.
As for the second question, the date on which a peril insured against occurs (not the date on which the insurer decides to deprive the policyholder of benefits) is when the clock starts ticking on an insured’s breach of contract action. In the good ol’ days, “a breach of contract action on an insurance contract accrue[d] on the date the contract [wa]s breached,” but Section 95.11(2)(e) of the Florida Statutes “changed this prior understanding… , designating the date of loss as the new date from which the limitations period would run.”1 Take note of this counterintuitive modern approach, as noncompliance with a statute of limitations could thwart an otherwise perfectly good cause of action.
To read previous posts in my series on insurance policy conditions, click here.
1 W. Palm Gardens Villas Condo. Ass’n, Inc. v. Aspen Specialty Ins. Co., No. 11-23912-Civ, 2012 WL 3017083 at *3 (S.D. Fla. June 25, 2012) (internal citations omitted).