Insurer Just In Nick Of Time Under Statute Of Limitations For Indemnity Loss (PA)

The statute of limitations, effectively the timeline gatekeeper of the courts, is an important consideration for anyone looking to bring a claim, as well as for those looking to defend one. A lawsuit is most appropriate when the evidence is still fresh, the related property or scene of an accident remains unchanged, and the memories of those involved have not yet begun to fade. The applicable statute of limitation is contingent upon the cause of action pled. In Lincoln General Insurance Co. v. Kingsway America Agency Inc., the court applied a statute of limitations analysis that allowed the insurance company to bring suit in an effort to collect losses it had incurred as a result of its agent’s sloppy (and expensive) mistakes.

Lincoln General was permitted to resume an indemnity suit against Kingsway America Agency, a brokerage firm, to recoup a settlement to the estate of a truck driver involved in a fatal accident. The language of the contract between the parties unambiguously provided that Lincoln General was to be indemnified by Kingsway America for both loss and liability claims. The crucial issue addressed by the court that ultimately led to Lincoln General’s success, surrounded the determination as to when the statute of limitations clock began to tick for each claim—a starting point which may differ depending on whether it is applied to a loss or liability provision.

The court determined that the statute of limitations for Lincoln General’s loss claim could not have begun until the company settled a claim made by its insured. With regard to indemnity against loss in Pennsylvania, the courts have agreed that the clock does not begin to tick until payment is made. In the case at hand, Lincoln General settled the claim brought by the truck driver’s estate for $1 million in September of 2007. It in turn brought suit against Kingsway America in June of 2011, after it determined that the broker’s failure to get a proper write-down resulted in its payment of the settlement. Since the indemnity suit was brought three months shy of the four year time frame permitted by the statute of limitations, Lincoln General appears to have just been saved by the bell.

Special thanks to Samantha Kaskey Berman for her contribution.  For more information contact Denise Fontana Ricci at dricci@wcmlaw.com.