While the timeframe for filing a legal action is generally defined by the Restrictions Charter, some insurance contracts in some states may set a shorter time to bring an action. In a recent California case Keller v Federal Insurance Company 1 confirmed the ninth circuit a Legal Action Against Us clause to find homeowners waited too long for
I Keller flooded a backup of water and wastewater in the bathroom on the ground floor parts of the home and damaged their newly installed hardwood floors. Around December 2012, households recorded "warping" or "cupping" in parts of their newly installed wooden floors as a result of the flood. In June or July 2013, they decided that cupping did not fall and that it would not be solved on its own. The homeowner reported the claim to the insurance company in September 2014. After the insurance company declined coverage in December 2015, the homeowner submitted his complaint.
The subject policy had a "Legal Action Against Us (LAAU) clause that reads:
You agree not to bring an action against us unless you have first met all the terms of this policy. For property, you also agree to take any action against us within one year after a loss, but not until 30 days after proof of loss has been provided to us and the amount of loss has been determined.
The Court found the LAAU clause established both a condition entry (which presupposes that all conditions of the policy are respected) and a season limitation period which began to run when the loss occurred. According to this interpretation, although the court found the loss did not occur until July 2013, household owners failed to follow the contractual one-year limitation clause in the LAAU clause, as they left their claim over a year after the loss occurred. So, although the limitation period would have been paid while the Federal evaluated the claim between September 2014 and December 2015, it was still timed before submitting the original application.
The Court pointed out that the purpose of the time limitation period was to exclude countless claims, to require the assured's accuracy and to prevent fraud.
1 Keller v Federal Ins. Co. No. 17-55323, 2019 WL 1440947 (April 9, 1, 2019).