The U.S. Eighth Circuit Court of Appeals affirmed a jury award to an insured for its costs to rebuild a plant, finding that a limitations provision in the policy was void under Arkansas law. Simmons Foods, Inc. v. Indus. Risk Insurers, 2017 WL 2945420 (8th Cir. July 11, 2017).
Two property policies contained a provision requiring any action against the insurer to be brought within one year of the date of loss. Following damage to multiple insured properties, the insured made a claim for repair of all the properties. The parties resolved most of the claim, but disputed coverage for a facility in Oklahoma, which the insured contended needed to be rebuilt and not merely repaired. The insured rebuilt the facility over the insurer’s objection and thereafter demanded reimbursement, which the insurer denied. The insured field suit in Arkansas where the company is incorporated and the policies were issued. As suit was filed after the one-year time period had passed, the insurers moved to dismiss based on a time-limitation provision in the policies, which they argued was enforceable under Oklahoma law. The district court found Arkansas law applied and, pursuant to Arkansas Code §23-79-202, any policy provision shortening the limitations period for property insurance suits to less than the five-year period provided by Arkansas Code §16-56-111 is void. The court denied the insurer’s motion to dismiss.
The Eight Circuit affirmed the district court’s application of Arkansas law and its voiding of the one-year limitations provision as violative of Arkansas statute that prohibits the imposition of a limitations period for an insured to sue an insurer for breach of property claim shorter than five years.