A federal court in Tennessee held that the one-year limitation of action period in a policy commences upon denial by the insurer. Murphy v. Allstate Indemnity Co., 2014 WL 1024165 (E.D. Tenn. Mar. 17, 2014). 

Insureds made a claim under their homeowners’ policy and argued that the home could not be repaired within policy limits. Their insurer disagreed and stated it would pay no more than its estimate. Suit was later filed, but it was almost a year after a one-year limitations period in the policy had run. The insurer moved to dismiss, and the court held that the limitations began to run when the insurer denied coverage for additional funds. The court rejected the insureds’ argument that they were never advised of the limitations period and that they were given an extension of the 60-day proof of loss period which (they argued) extended the limitations period. The court also held that the insureds’ claims under the Tennessee Consumer Protection Act fail because the Act no longer applies to insurance claims (as of April 29, 2011), and that the fact that the damage occurred prior to the date is irrelevant because the cause of action did not occur until the insurer denied coverage – after April 29, 2011.