All insurers contend that Indiana GRQ’s contract action is barred by the policy’s twelve-month statute of limitations. The policy prohibits any suit “for the recovery of claims” unless the insured “has fully complied” with all the provisions of the policy. The policy requires that any lawsuit be commenced within twelve months “after the date of direct physical loss or damage to the covered property or to other property as set forth herein. The loss here occurred on August 15, 2016. Indiana GRQ filed suit on June 18, 2020 – approximately forty-six months later.
No one disputes that the trial began outside the twelve-month period. Indiana GRQ instead argues that the insurers waived this defense, or that the law should prevent the insurers from exercising it. Indiana GRQ insists that these doctrines—waiver and estoppel—present questions of fact properly reserved for the jury on this record.
Although disadvantageous, Indiana applies contract provisions that shorten the time to commence an action if “reasonable time is given, except [when] there is fraud, duress and the like”;, … or when it is contrary to law or public policy … “Provisions limiting actions on an insurance policy to twelve months have been established as valid and enforceable; accordingly, any insurance action brought after the expiration of such statutes of limitations will be barred. … Such a provision prevents unnecessary delay in pursuing a claim for damages. …
An insurer may waive such a provision or be estopped from asserting it… either expressly or by implication… Waiver or estoppel may “result from acts of [an] the insurer causes [the] insured or injured party under the policy to postpone the initiation of the action until after the time stated in the policy.’ If the insurer’s conduct causes the insured to “reasonably believe” that the company will not insist on the timeliness of the suit, the insurer “can no longer raise the statute of limitations as a defense”…. To allow otherwise would “permit the insurer to lull” an insured into not enforce their rights and then waive liability on the basis of the statute of limitations.’ Whether an insurer has waived the statute of limitations is usually a question of fact…
In general, an insurer need not inform an insured of his liability under the policy. … The insured can read the contract – not least a sophisticated party like Indiana GRQ…
But you have to keep reading the law. Summers says there is an exception when “an insurance company does not deny coverage or liability and continues to negotiate with the insured to settle the claim.” Summers719 NE2d at 416. Under these circumstances, the statute will constitute a waiver of the contractual limitation on bringing suit, unless and until the insurer advises the insured that litigation is necessary if he wishes to pursue the claim. ‘ Id. Several Indiana cases after Reilly also apply this exception, including one just nine months after Reibly, see Schafer v. Buckeye Union Ins. Co.381 NE2d 519, 523 (Ind. Ct. App. 1978), and one from the Indiana Supreme Court, see Huh363 NE2d at 992 (‘Where notice is given and no objection is made to the mode of documentation and liability is not denied until well after the twelve-month period, the insurer has waived its right to insist on [the] provision’). See also Cox731 NE2d at 468 (`unless the insurer otherwise informs the insured that action must be brought to pursue the claim’, a lack of denied coverage and pending settlement negotiations constitute waiver… .
Through this lens, the Indiana GRQ points out that the insurers made payments, continued to adjust the claim and engaged in settlement negotiations – both within and beyond the contractual statute of limitations (which would otherwise have expired on August 15, 2017). For example, in late 2016, Mr. Thoman experts to assist with the loss adjustment worked with Indiana GRQ’s environmental consultant (Burns & McDonnell). At this time he recommended two advance payments, and at least one was made on this item in the first year after the loss. In February 2017, Indiana GRQ provided a “substantial amount of cost documentation” and requested “again assistance in funding a portion of [its] loss so far.’ This prompted McLaren’s recommendation for a second advance. In June 2017, Thoman reported that he was in “essentially daily discussions” and “working closely with” Indiana GRQ regarding the loss, proposed work plans, and outstanding claim documentation and costs.
As of October 2017, Indiana GRQ had submitted over $3.8 million in expenses and three additional outstanding loss citations. Mr. Thoman reported that they agreed with the Indiana GRQ that the loss “can and will be protracted due to the nature” of the spill, contamination and cleanup. A reasonable juror could conclude that the insurers had not denied the claim and continued to negotiate a settlement; indeed, a reasonable juror could find that the parties understood that an adjustment to this claim would necessarily exceed the one year the policy expected for lawsuits, simply given the nature of the flood damage and cleanup. After the first year after the loss, further installments were made. The insurers’ independent adjuster was still having “weekly if not daily” discussions with the Indiana GRQ about the claim in late 2017 and 2018. Settlement negotiations were ongoing in 2019. Coverage was not denied until August 2019. To a reasonable jury, it could enforce a waiver, unless the insurers notified the Indiana GRQ that they intend to insist on the time requirement. But that didn’t seem to happen.
From the time of the loss until May 2019, the contractual limitation period was not mentioned. For example, in the November 2016 Reservation of Rights letter, the insurers listed numerous policy provisions—the statute of limitations was not one of them. Only in May 2019 did the insurers state the statute of limitations from the policy in a letter. Even then, the insurers did not express an intention to enforce this provision given the ongoing negotiations. One might imagine that a reasonable jury could read the May 2019 letter as expressing such intent, but then the letter invites even more discussion: “Once you have presented your claim and the insurers have had an opportunity to complete their review , Insurers will be in a better position to evaluate the extent of coverage.’ The insurers asked Indiana GRQ to forward additional information for “further evaluation” on “without prejudice.” At this point, the insurers had not denied coverage and continued to negotiate with the insured toward a settlement; and, as required by law, the insurers still had not notified Indiana GRQ that litigation is necessary if [it] wish[d] to pursue the claim further.’ Summers719 NE2d at 416. Even the August 2019 letter denying coverage did not appear to view the May 2019 letter as starting the clock.
In fact, even in July 2019, Indiana GRQ continued to correspond and offer claim information. On this record, each letter issued by the insurers to the Indiana GRQ (November 2016, September 2018, November 2018, March 2019, May 2019 and August 2019) included a general statement reserving their rights under the policy. The insurers argue that they should not be precluded from asserting their rights under the policy. They may not be just because of their behavior. Just because they have time and again reserved a right does not mean that by their affirmative behavior they cannot waive it. A general reservation of rights was not express notice that the insurers now intended to rely on a statute of limitations in the policy and set the Indiana GRQ on the clock, and Indiana law says so. Looks id.; see also Shaffer, 381 NE2d at 521, 523; 28th St. Superior Hosp., Inc. v. Cincinnati Ins. Co., 2022 US Dist. LEXIS 26854, 13-14 (ND Ind. Feb. 15, 2022) (‘Not until this denial [of coverage] did [insured] has reason to believe that its claim would not be paid” after more than three years of negotiations.).
Here, adjustment and settlement negotiations began within the first year and continued years after the expiration date without a denial of coverage, or a notice that litigation was necessary. According to this record, the denial of coverage did not occur until August 2019—more than two years after the contractual limitation expired… Based on the insurers’ conduct prior to their denials, Indiana GRQ had no cause of action to this point and reasonably held that the statute of limitations would not be enforced years after its expiration, so a reasonable jury might say. Indiana GRQ filed suit on June 18, 2020—within the twelve months after the insurers had denied coverage and notified the company.
Based on this document, the court must reject the insurers’ claim of timeliness. A reasonable jury could find that the insurers’ conduct created a reasonable belief on the part of the Indiana GRQ that the limitation provision would not be enforced. The insurers made payments, continued to adjust the claim and began settlement negotiations within and after the original contractual statute of limitations expired; and with that, coverage was not denied until August 2019. Under such circumstances, a reasonable juror could say that they waived the contractual statute of limitations, “unless and until [they put] the insured upon notice that trial [was] necessary” in August 2019.
What is the lesson? “Safe is better than sorry.” File a lawsuit before an agreed deadline or get a written extension. The policyholder won, but this was a close issue that could have been avoided.
My favorite city in Indiana is Columbus. The city builds public buildings designed by famous architects. This has been going on for so long that it is an architectural dream, with people visiting Columbus from all over the world.
My favorite counsel in Indiana is Rich Eynon, a former president of the Indiana Bar who lives in Columbus.
She grew up in a town in Indiana Had a good looking mother who was never around But she grew up tall and she grew up right with them Indiana boys on an Indiana night