Before 2017, the question of when the statute of limitations accrued for uninsured motorist (“UM”) and underinsured motorist (“UIM”) claims was relatively straightforward: UM/UIM claims accrued when either the insured sustained bodily injury in an accident and knew of the tortfeasor’s policy limits (or lack thereof) or the insured settled with or secured a judgment against the tortfeasor. But in 2017, the Pennsylvania Supreme Court revisited the issue in Erie Insurance Exchange v. Bristol, 174 A.3d 578 (Pa. 2017), ultimately overruling long-standing precedent and creating an entirely new “test” to determine when the statute of limitations expired.
In Bristol, the claimant was injured in a motor vehicle accident and sought UM/UIM benefits under his personal policy that contained an arbitration clause. Arbitrators were selected and correspondence was exchanged, but no further action was taken until the insurer sought a declaratory judgment to bar coverage because the statute of limitations had run. The trial court granted summary judgment to Erie, and the Superior Court affirmed.
But the Pennsylvania Supreme Court labeled the issue of when UM/UIM claims accrue as a matter of first impression. It explained that under general contract principles, the statute of limitations accrues when there is a “breach.” Upon reviewing the MVFRL, the Pennsylvania Supreme Court determined that no specific language indicates when the statute of limitations accrued for UM/UIM claims, and that there were no compelling public policy grounds to differentiate insurance contracts from other contracts. In turn, the Supreme Court held that UM/UIM claims accrued upon an alleged “breach” of contract, which the Court limited in the insurance context to an insurer’s denial of coverage or refusal to arbitrate.
This new “test” was easily applied to insurance coverage cases, which regularly involved a formal denial of coverage, and thus easily calculated the statute of limitations from the date the denial was issued. See e.g., O’Brien v. GEICO Employees Insurance Co., 2019 WL 2866092, (E.D. Pa., 2019) (Applying statute of limitations to bar recovery four years after date of denial letter); Novak v. Mut. Benefit Ins. Co., 287 A.3d 861 (Pa. Super. Ct. 2022), appeal denied, No. 541 MAL 2022, (Pa. 2023) (Same) Devine v. GEICO Gen. Ins. Co., No. 5:21-CV-02679-JMG, 2022 WL 79630 (E.D. Pa. 2022) (rejecting arguments that the statute accrued upon an insured’s demand of payment, as opposed to date of denial); Krueger v. GEICO Casualty Company., 1:19CV00279 (W.D. Pa. 2020) (Rejecting arguments that statute of limitations tolled by request to reevaluate claim that was previous denied.) Likewise, for the few remaining policies that contain arbitration clauses, the date a request for arbitration is denied remained a straightforward calculation.
For the remaining UM/UIM claims, however, the Bristol decision created more confusion. For example, claimants involved in decade-old accidents may resurface to seek benefits on claims that have long been closed by an insurer. Indeed, if the Bristol “test” is applied as drafted, an accident dating back decades for which the insurer neither denied coverage not refused to arbitrate would not involve a “breach” of contract by the insurer that would trigger the calculation of the statute of limitation. Such claims were routinely barred via the statute of limitations in the pre-Bristol era under the once unproblematic pre-Bristol rule. Now, however, further appellate authority will be necessary to determine whether appellate courts are willing to limit Bristol in a manner that avoids the need to revisit these stale, decade-old claims. Unless and until such authority is issued, the Bristol “test” will continue to control the calculation of the statute of limitations for all claims, young and old.
For additional questions, please contact Kylie Griffith, Esq., Glen Shikunov, Esq. and/or Scott Tredwell, Esq.
This article was prepared by McCormick & Priore, P.C. to provide information on recent legal developments of interest to our readers. This publication is in no way intended to provide legal advice or to create an attorney-client relationship. All Rights Reserved. This article may not be reprinted without the express written permission of McCormick & Priore, P.C.