Mansell, Engel & Cole

Court to plaintiffs: you waited too long to object to policy

We suspect that many readers of our insurance law blog across Oklahoma and elsewhere will find fault in the recent insurance-linked ruling issued by one state’s highest court. And we can understand why.

Namely, that tribunal is the Illinois Supreme Court, which ruled 5-2 in a decision released last week that a couple was time barred from bringing a claim against an American Family Mutual Insurance agent. The couple’s complaint was grounded in negligence and breach of contract centered on the agent’s failure to secure them the same level of coverage they had obtained in a previous policy. The agent was directly advised of the couple’s wishes prior to the issuance of their American Family policy.

That contract failed to safeguard the policyholders against a defamation claim that was later brought against the couple’s son. Although the couple sought claim coverage to defend against the lawsuit, the insurer refused to perform, stating that the policy covered only physical harm, excluding claims based on emotional/mental distress.

A state appellate court issued a pro-plaintiffs’ ruling in the matter, stressing that the relevant statute of limitations started ticking only upon the couple’s discovery of the coverage denial. The high court reversed that outcome, though, stressing the policyholders’ affirmative duty to read and understand all policy provisions relevant to coverage and limitations prior to entering into a contract. The panel pronounced the couple’s claim as tardy and ruled in favor of the insurer.

We know that many of our readers will reasonably agree that it is incumbent upon policyholders to carefully peruse their insurance contracts prior to signing. We also know that readers will readily point out, though, that insurance policies typically feature scores of pages of legalese. That wording is often in fine print and accompanied by a host of riders, footnotes, exclusions and other complicating factors.

Arguably, it is close to impossible for most intelligent people to fully comprehend every aspect of an insurance policy. Indeed, insurers depend on that and purposefully draft contracts to challenge lay persons and build in company protections.

Policyholders often have questions and concerns regarding policy language and coverage. They can turn for answers and diligent legal representation to proven insurance law attorneys who routinely safeguard the rights of insured individuals and families.

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