The Kentucky Supreme Court recently reversed a court of appeal’s holding that a policy provision limiting the time to make an underinsured motorist claim was void because it was unreasonable. State Farm Mut. Auto. Ins. Co. v. Riggs, 2016 WL 1068192 (Ky. Mar. 17, 2016).
An insured asserted a claim against his auto insurer three years after the date of a car accident. The insurer moved for summary judgment arguing that the claim was untimely under its policy. The policy limited the time to make a UIM claim to two years from the date of an accident or the date of the last basic reparation benefit payment, whichever occurred later. The trial court granted summary judgment in favor of the insurer, and the court of appeal reversed, finding the time limitation unreasonable because it may require an insured to sue an insurer before knowing whether the tortfeasor is uninsured.
The Kentucky Supreme Court indicated that the insurer linked its UIM coverage to the tort claim time limitation found in KMVRA, KRS 304.39-230 (6), and stated that it is unable to find the limitation unreasonable because “it encourages the prompt presentation of all the potential insurance claims relating to a single accident and forces them to progress through the court system in a more cohesive way....” and is thus not contrary to public policy. The Supreme Court found the trial court did not err when it concluded the time limitation provision to be enforceable and that the insured’s claim was untimely.