Insurance Statute of Limitations Upheld Even After Timely Notice

The insured sustains major water damage on December 19, 2009 (an unoccupied house under construction), and learns about the damage on December 28. He gives prompt notice to the carrier. The carrier investigates, and January 14, 2011 – just over a year later – denies coverage. The insured inexplicably waits until December 28, 2011 to file suit against the carrier, just over two years after the damage occurred. He argues that the discovery rule should apply since he did not learn of the damage until December 28, 2009, and so that his lawsuit would be deemed filed within the two year statute of limitations.

Massachusetts laws governing insurance companies specify a number of clauses that must be included in certain insurance policies issued in the state. One clause, in Mass. Gen. Laws c. 175, § 99, cl. Twelfth, , is a two-year statute of limitations for filing suit to pursue a claim against the carrier.

On these facts, the Massachusetts Appeals Court allowed summary judgment in favor of the carrier. It held that the damage was not “inherently unknowable,” which is the standard normally applied to invoke the discovery rule. The court also cited to federal court decisions, which had previously held that the discovery rule does not apply to the Massachusetts statute, since the trigger is the incident “causing the damage to the property.” So the insured may have been only nine days late, but might as well have been a year late. The case is Nurse v. Omega US Insurance Company, Mass. App. Ct., Oct. 5, 2015, available here.