Court nixes policyholders’ claim for being tardy

On Behalf of | Nov 1, 2018 | Denied Insurance Claims

It was a question of timing, stressed one state’s highest court, and a couple contesting an insurer’s denial of their policy claim erred on when the relevant legal clock started ticking.

And it was also a question of responsibility. In a lawsuit with relevance for insurers providing coverage to policyholders in Louisiana and elsewhere across the country, the Illinois Supreme Court admonished a suing couple dispassionately yet firmly. In a 5-2 appellate decision, justices ruled that the plaintiffs could not prevail on a policy claim because they apparently never made an effort to read their policy.

The couple had sued an American Family agent for negligence, citing his failure to provide them with a policy that contained a similar level of protection as that contained in their previous policy. Their lawsuit followed upon litigation filed by a third party against their son for alleged defamation.

The American Family policy lacked a protective provision against defamation. The couple sued when they first became aware of that fact.

They should have acted sooner, ruled a clear majority of justices from Illinois’ highest court. The case ruling stressed that no showing was made as to why the couple “could not have [timely] read their American Family policy and understood its terms.” Ruling in their favor would be unfair, given that the primary duty must be upon consumers to educate themselves as to coverage rather than simply waiting for years to file a claim in the event a dispute arises.

The court’s ruling stressed that customers are logically in the best position to know their policy goals, the determination of which “will be difficult when [they] do not read the policy.”

The court stated that the statute of limitations relevant to the matter began to run from the date the policy was signed, not from the moment the couple first became aware of the failed coverage.