In this age where assaults against policy conditions are common, it is good to see a court recognize that an insured has an obligation, and a burden, when seeking to recover insurance benefits.  In Meyers v. Farm Aid Association of Loudon County, No. E2103-02585-COA-R9-CV, filed December 9, 2014 (download Meyers v. Farmers Aid), the Tennessee Court of Appeals upheld a “twelve month” suit clause contained in the policy, which required suit to be filed “within twelve months next after inception of the loss.”  The Court held that an insured’s cause of action accrued sixty days after the insured submitted his Proof of Loss.  The policy at issue provided that payment would be made within sixty days after the company reviewed the Proof of Loss, and either reached agreement with the insured, there was a final judgment entered or there was a filing of an appraisal award. That much of the holding has become fairly standard.

Factually, there was apparently no communication between the carrier and Mr. Meyers after the Proof of Loss until the filing of suit, which occurred 18 months after the loss and more than a year and a half after the insured filed the Proof of Loss.  There was obviously no coverage denial.  The trial court, in denying the carrier’s motion for summary judgment, excused the failure to comply with policy conditions, arguing that the carrier’s failure to ascertain the loss tolled the contractual limitations period.  The appellate court reversed and remanded for entry of an order granting summary judgment to FAA in a suit that sought damages for breach of contract, bad faith and consumer protection violations. 

While this is significant in and of itself, I wanted to draw attention to the Court’s commentary on the burden that the insured had:

Of course, any right of payment under the policy inured to Mr. Meyers’s benefit, and it was his burden to protect those rights….While we may find some measure of fault in FAA’s inaction, it was Mr. Meyers who waited more than a year before taking any action to secure payment of his insurance claim.