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Insurance Coverage Action Filed With Court But Not Timely Served Barred by Insurance Policy Suit Limitations Clause

by | Nov 30, 2015 | Homeowner Insurance, Insurance Law, Property Policy, Suit Limitations Period

In a previous entry I referenced the fact that there are many lawsuits pending in Connecticut against insurance companies that involve disputed claims arising from damage that homeowners in Northeast Connecticut have suffered due to defective concrete used in the construction of their homes.  A Connecticut federal court recently dismissed a case filed by certain homeowners because the policyholders did not comply with a provision in their homeowner policy which required any lawsuit for damages under the policy to be filed within two years of the date the policyholders sustained a loss.  Although the policyholders filed their lawsuit with the court within two years of the date of the loss, the court held that the lawsuit was not commenced against the insurer under Connecticut law until the insurance company was served with the summons and complaint, which occurred beyond the two-year contractual limitations period.  As a result, the policyholders' case was dismissed for failure to comply with the terms of the policy.

In Roberts v. Amica Mutual Insurance Company, 2015 WL 7458510 (D.Conn. Nov. 24, 2015), the insured homeowners filed a declaratory judgment action against Amica, seeking a judgment requiring Amica to indemnify them for damage to the basement walls of their home.  The damage was alleged to be caused by defective concrete from J.J. Mottes Company.  The property owners claimed that the defective concrete caused the basement walls of their home to crack and rendered the home structurally unsound.  The homeowners discovered the defect in their basement walls in late October or the beginning of November 2012.  The policyholders filed the complaint against Amica in federal court in October 2014 and served Amica with the summons and complaint in February 2015.  In response, Amica filed a motion to dismiss the case on the grounds that the policyholders failed to comply the terms of their insurance policy which provided:

Suits Against Us

No action can be brought against us unless there has been full compliance with all of the terms under Section 1 of this policy and the action is started within two years after the date of the loss.

Amica claimed that the policy provision requiring that an action be "started within two years" meant that the insureds had to comply with Connecticut law for commencing an action, which requires service of the summons and complaint on the defendant.  The policyholders claimed that the action was commenced when the complaint was filed in court in October 2014 pursuant to Rule 3 of the Federal Rules of Civil Procedure, which states that a suit is commenced when the complaint is filed in federal court.  The court agreed with the insurance company and held that the insureds were required to serve the insurance company with the summons and compliant in order to commence the action in accordance with Connecticut law.  The court rejected the insureds' claim that Federal Rule 3 governed when the action was started in federal court, holding that the court was required to look to Connecticut law to determine when a state law insurance contract action was commenced.  You can read the court's opinion here.

The insureds in the Roberts case were unable to pursue their insurance policy claims in court because they failed to comply with the terms of their insurance policy.  The Roberts case serves as a reminder that policyholders must understand the terms of their insurance policy and what must be be done in order to recover benefits under a policy and the conditions that must be satisfied in order to pursue a lawsuit under the policy when a disputed claim arises.  Although an action for benefits under an insurance policy may be timely for purposes of a statutory time limitations period, the policyholder may be barred from recovering benefits under the policy if they do not comply with the time limitations in the policy for filing a lawsuit under the policy.   

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