A federal appellate court has ruled in favor of a Traveler Cos. Inc. unit on Tuesday in a dispute with a homeowners association over policy language that required the policyholder to sue the insurer within two years of damage to its property.
In September 2016, Indianapolis-based Legend’s Creek Homeowners Assn. Inc. filed a claim with Travelers Indemnity Co. of America for hail and wind damage that had occurred in May of that year on the north-facing sides of insured condominium buildings, according to the judgment of the 7th U.S. Circuit Court of Appeals in Chicago in Legend’s Creek Homeowners Assn., Inc. v. Travelers Indemnity Co. of America.
Legend Creek̵7;s adjusters initially agreed with travelers’ agents to repair the north-facing sides of the condominiums, and travelers issued a check for $ 644,674.85. After informing travelers that the repairs were unacceptable, it submitted additional checks totaling $ 267,204.90.
Travelers were told that the repairs were still insufficient and the north-facing sides had to be replaced. Less than three weeks before the two-year contractual deadline for bringing a lawsuit, however, the adjuster demanded that travelers replace all sides of the condominium buildings because the new sides did not match the undamaged ones to his satisfaction.
Travelers rejected the request, stating that it would only replace the damaged sides and paint them to match, and Legend’s Creek filed a lawsuit, accusing the insurer of breach of contract and bad faith.
The U.S. District Court in Indianapolis ruled in favor of the insurer, finding that the association had not met the two-year deadline to file a lawsuit.
This was confirmed by a panel of three judges. “In Legend’s Creek’s reading, the policy makes it impossible for an insurer to initiate legal action against the insurer in situations where the claims investigation takes more than two years,” the statement said.
“No matter how important such a concern may be in general, it has little relevance here. Legends point out that there is no term in the policy that it did not have or could not have followed without the two-year window,” the ruling said. the lower court.
Lawyers in the case did not respond to requests for comment.
In February, a federal appellate court ruled in favor of an insurer seeking to cancel its insurance for a homeowners’ association, arguing that the association had not disclosed a situation that would likely give rise to a claim in its coverage application.