On April 6, 2015, the Tennessee Court of Appeals (Western Section), decided the case of Daniel v. Allstate, No. W2014-01965-COA-R3-CV (download copy here).  In this case, the trial court had granted summary judgment to an insurer based upon the one-year contractual limitations period under the policy.  Factually, the subject property was damaged by fire on December 15, 2011.  A claim was submitted, but the case does not indicate that formal Proof of Loss was involved.  The insurer submitted an estimate and tendered a settlement check to the insured, advising actual cash value was being paid at that time, and that the insured would be entitled to a claim for recoverable depreciation in accordance with the policy.  Over a year later, the insured filed suit alleging they were owed additional monies under the policy.  The trial court granted summary judgment to Allstate, and the Court of Appeal affirmed.

The Court of Appeals noted:

             The trial court determined that Allstate’s acceptance of the Daniels’ claim had the same effect as a denial in triggering the contractual limitations period prior to the expiration of the settlement.  The trial court concluded that because the Daniels failed to file suit within one year of the date that the settlement check was tendered and accepted their claim was barred by the one-year contractual limitations period.  We agree with the trial court’s reasoning. 

(See Page 5).  In explaining the rationale, the court noted:

             Accordingly, regardless of whether the insurer choses to grant or deny the claim prior to the end of the settlement period, its determination to do one or the other acts as a waiver of its immunity from suit, and the contractual limitation period begins to run…if the Daniels were not satisfied with the amount of Allstate’s estimate and/or settlement check, they had one year from that date to challenge it in court. 

(See Page 6).

The real point of this case was that it was the insureds who knew, or could have known, that they were dissatisfied with the payment made by the insurance company, and they had the power to timely file suit.  Please note the court seemingly broadened older cases holding an absolute denial or refusal to pay a claim submitted by the insured was required, as the case does not indicate that either occurred.  This holding is even more favorable to the insurance companies than are those cases which base the contractual period of limitations upon the failure to pay a Proof of Loss within the loss payment period.  The case does not detail whether a Proof of Loss was ever submitted, and we have detailed other cases on this blog which use the date of the Proof of Loss as the determinative date to begin the loss payment and contractual limitations period.

Practically, this case makes sense.  If the insureds are dissatisfied with the payment, they should file suit within that contractual limitations period.  If they do not, they seem to be barred under this holding.