A federal court in South Carolina recently found a claim for breach of contract and bad-faith denial of insurance benefits brought against an insurer to be time-bared despite the insurer only recently having closed the claim file. Lowcountry Block LLC v. Cincinnati Ins. Companies, 2017 WL 3278878 (D. S.C. Aug. 1, 2017).
Metal molds were stolen from an insured’s business, and the insured made a claim to its insurer. Roughly three years later, upon the expiration of the statute of limitations for both claims for breach of contract and bad faith, the insurer closed its claim file. After the claim file was closed, the insured sued the insurer for breach of contract and bad-faith denial of insurance benefits. The insurer moved to dismiss the complaint, arguing that the causes of action were time-barred by the three-year statute of limitations. The court agreed, noting that the complaint only alleged the date of loss and the date on which the insurer closed the claim file. The court rejected the insured’s argument that causes of action for breach of contract and bad faith only accrued when a claim file is closed because, under South Carolina law, the accrual date of causes of action is not delayed until the full scope of consequential damages is known. The court held that the cause of action for breach of contract and bad-faith denial of insurance benefits accrues on the date of loss, more than three years prior to the filing of the lawsuit, and the cause of action was thus time-barred.