A recent appellate decision in Pennsylvania reiterated that an insurer’s failure to cite a certain policy provision in a declination letter does not necessarily act as a waiver of that provision or estop the insurer from later asserting rights under that provision. Prime Medica Associates v. Valley Forge Ins. Co., involved a suit limitation clause which required the insured to bring legal action against the insurer within two years after the date of loss.
The insured contended that the insurer failed to reference the policy’s suit limitations clause as further grounds to deny coverage for a claim of property loss and that the failure acted as a waiver of the clause and the insurer was estopped from enforcing that policy provision.
The Superior Court disagreed, holding that mere failure to raise the provision did not act as a waiver absent any action by the insurer to induce the insured to believe he was not subject to the limitations period. Furthermore, the insurer was not estopped from asserting the suit limitations provision because the failure to cite the relevant policy provision was not a promise by the insurer and was not sufficient grounds for the insured to rely on not having to comply with the policy provision.
Thanks to Mendel Simon for his contribution.