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Vol. 7 - Issue 9
December 19, 2018

Insurer “Closing Its File” Started Running Of Statute Of Limitations

There is a fair amount of case law addressing when the statute of limitations begins to run on a coverage dispute.  In Williams v. Travelers Home & Marine Ins. Co., No. 17-17368 (9th Cir. Oct. 12, 2018) the Ninth Circuit held: “Under Nevada law, an insured’s limitations period does not begin to run until the insurer ‘formally denies’ liability or additional benefits.  No magic words are necessary to constitute a denial of further benefits; rather the limitations period is triggered by ‘notif[ication] that [the] carrier has failed to fulfill its promise to pay a claim.’ Here, the limitations period was triggered by Travelers’ October 5, 2011 letter, which stated that Travelers was closing the claim file because the Williamses had failed to cooperate with Travelers’ previous two requests for inspection of the property and additional information in support of the claim. The letter (1) notified the Williamses that Travelers was ‘closing [its] file,’ and (2) referred the Williamses to their insurance policy’s ‘Suit Against Us’ provision, which set forth a two-year limitation period for breach of the policy. The letter put the Williamses on notice that Travelers would not make further payments on the claim.” 

Insurers often use the words “closing its file” when addressing coverage with an insured, such as following a determination of no coverage or if an insured has not replied to a coverage investigation.   But I’ve never seen the words “closing its file” have any formal impact on coverage.  After all, can’t a closed file be re-opened? 

Court Addresses Meaning Of Insured’s Request for “Soup To Nuts” Coverage

In Frederick Mutual Ins. Co. v. Hall, No. 17-3477 (3rd Cir. Nov. 8, 2017) the Third Circuit addressed the reasonable expectations doctrine in the context of coverage for construction defects under Pennsylvania law.  Such coverage can be very hard to find under the law of the Commonwealth.  Yet the lower court did -- based on the insured’s reasonable expectations of coverage.  But the appeals court reversed, noting that there is “a crucial distinction between cases where one applies for a specific type of coverage and the insurer unilaterally limits that coverage, resulting in a policy quite different from what the insured requested, and cases where the insured received precisely the coverage that he requested but failed to read the policy to discover clauses that are the usual incident of the coverage applied for. When the insurer elects to issue a policy differing from what the insured requested and paid for, there is clearly a duty to advise the insured of the changes so made. The burden is not on the insured to read the policy to discover such changes, or not read it at his peril.  In contrast, Hall did not apply for the specific type of insurance coverage he now claims that he expected as he asked in general terms for ‘soup to nuts’ coverage though a broad term that was not specific. Thus, Frederick could regard Hall’s application for insurance as seeking a general liability insurance policy.”




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