An Oklahoma hail damage loss was needlessly lost because a lawsuit for breach of contract was not filed on time. It serves as an example that policyholders and public adjusters should immediately send cases to competent legal counsel as soon as a denial letter is issued by the insurance company. 

The Oklahoma case1 was decided yesterday and had the following facts:    

Plaintiff and Defendant entered into a property-insurance contract in July 2018. During the contract’s term, five of Plaintiff’s properties were allegedly damaged by hail on April 17, 2019. Plaintiff submitted a claim for the alleged damage, but Defendant denied the claim on June 5, 2020. Plaintiff later filed suit on August 2, 2021––more than two years after the alleged hail damage––alleging breach of contract and bad faith. The parties’ insurance contract, however, contains the following provision: ‘[n]o [o]ne may bring a legal action against us under this Coverage part unless . . . [t]he action is brought within 2 years after the damage on which the direct physical loss occurred.’

When I looked at the court filings, I noted that the denial letter was sent to the policyholder’s public adjuster. Best practice requires public adjusters to immediately suggest that the policyholder seek legal help as soon as a coverage denial letter is sent. There may have been a belief that Oklahoma extended the statute of limitations because of Covid-19 Orders from the insurance commissioner.

Regardless, the court ruled against the policyholder:

Though Defendant argues that the Insurance Commissioner lacked authority to extend the contractually set limitations period, the Court need not reach this argument. That is because even if the bulletins could extend the parties’ two-year limitations period, the third bulletin rescinded the relevant portion of the prior bulletin. As explained above, the first bulletin extended the ‘applicable grace period for nonpayment of premiums by an additional forty-five (45) days,’ and the second bulletin ‘suspend[ed] all claims reporting deadlines for the duration of the emergency declaration and extend[ed] all policyholder rights or benefits related to deadlines until 90 days after the state of emergency ends.’ The final bulletin later rescinded the first and second bulletins, except that ‘[t]he term of extended grace periods [for nonpayment of premiums] . . . [and] [t]he term of extended claims reporting periods, afforded to insureds pursuant to the original bulletin, [were] allowed to expire upon reaching the end of the extension.’ This is not a case involving either the nonpayment of premiums or the claims-reporting period. And even assuming the phrase ‘all policyholder rights or benefits related to deadlines’ included the parties’ contractually set limitations period, the third bulletin rescinded that extension as of June 2020. The Court thus concludes that Plaintiff ‘cannot rely upon the subject bulletins to support an extension of the limitations period.’

I can appreciate that the policyholder could have relied upon the extensions and that they would not be retroactively rescinded. It is certainly a harsh and unfortunate outcome.  

Deadlines to file lawsuits are important. This post is to remind policyholders and public adjusters to always know when that deadline will occur.

Thought For The Day    

Dream up big, hairy, audacious goals that you are passionate about and pursue them relentlessly. You have to begin with the end goal in mind, knowing that a goal is a dream with a deadline.

—Clay Clark

1 Concept Ventures v. Navigators Specialty Ins. Co., No. CIV-21-00845 (W.D. Okla. May 24, 2023).