The contractual limitation period for an insured to sue on a breach of the insurance policy, which provided coverage for damages involving an unidentified automobile, did not begin to run until the insured’s demand for coverage was denied.

[2015] N.J. No. 129

2015 NLCA 21

Newfoundland and Labrador Supreme Court - Court of Appeal

J.D. Green C.J.N.L., B.G. Welsh, M. Rowe, M.F. Harrington and L.R. Hoegg JJ.A.

April 21, 2015

The insured appealed an order dismissing the insured’s claim against the insurer due to it being time barred.

The insured was injured as a pedestrian by an unknown driver in a November 2007 motor vehicle accident. At the time of the accident, the insured held an automobile insurance policy with the insurer which provided the insured with coverage for damages resulting from an accident involving an unidentified automobile. Immediately after the accident, the insured informed the insurer of the circumstances of the accident and indicated his intention to seek coverage. Little communication between the parties took place until November 2010, when the insured submitted a claim to the insurer for compensation for his injuries. The insurer denied the claim in February 2011 on the basis that the insured had not submitted his claim within the two-year contractual limitation period in the policy. The insured filed an action for breach of the insurance contract. Upon finding that the contractual limitation period began to run on the date of the accident and had expired by the time that the insured’s suit was filed, the court dismissed the suit. The insured appealed the order.

On appeal, the court found that the the two-year contractual limiation period applied because the parties had contracted out of the six-year limitation period provided for in s. 9 of the Limitations Act, SNL 1995, c. L-16-1. The court then noted that the clock on the contractual limitation period could be triggered by the insurer's express refusal to pay a potential claim, or when the insured demands recovery from an insurer and does not receive it. Finding the latter circumstance to be applicable, the court held that the limitation clock only began to run in November 2010. Thus, the insured's claim was not time-barred. The appeal was allowed and the insured's claim against the insurer was reinstated.