One-Year Limitations Period Enforceable for Insurance Policy Claims

In what may seem to many as a harsh decision, the New Hampshire Supreme Court has upheld a one-year limitations period in an insurance policy.

The insurance carrier and insured homeowners were in contact soon after the loss. The carrier did some investigating and requested documentation, which the homeowners provided. But the homeowners did not file a lawsuit until almost two years after the loss, and the NH court dismissed the lawsuit as untimely.

The insurance policy included a “Suit Against Us” provision, stating that ‘No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of the loss.”

The home had suffered major damage on March 4, 2016 due to burst pipes. Initial recommendations by the insurance company’s adjuster led to partial collapse of the house and – effectively – permanent loss. The carrier initially denied coverage for the collapse in May 2016, on the grounds that it had not been allowed to inspect the damage before the house was fully torn down.

Just the same, in early 2017, the carrier asked for additional documentation from the homeowners to support their claim, which they provided. The carrier’s attorney even communicated on March 19, 2017 that the carrier “would like to resolve the claim if possible.” In early 2018, the carrier reported that its position had not changed from the May 2016 letter.

The lawsuit was filed on February 23, 2018, obviously more than one year after the loss. The carrier moved to dismiss based on the one-year limitations period in the policy. The homeowners objected, arguing that the one-year period was unreasonably short and violated public policy, and also that the carrier had tolled or waived the one-year period through its continued communications and requests for information.

The court found that the one-year period is enforceable. It held that statutes of limitation are issued to prevent stale claims, but there is nothing to prevent parties to a contract from agreeing on a shorter time period; such an agreement “does not allow the parties to ‘circumvent’ the public policy underlying the statute.” The court also held that the one-year period was not unreasonable under the circumstances presented.

On the waiver and tolling defenses, the court noted that there was no evidence that the carrier had waived the one-year limitations period. And there were no communications amounting to an admission of liability or agreement to pay; thus, no material facts to support equitable tolling.

The case is Zannini v. Phenix Mutual Fire Insurance Company, N.H. Supreme Court (Dec. 17, 2019).