Two-Year Suit Limitation Provision Does Not Violate Public Policy
September, 2004
In Parish v. Country Mutual Ins. Co., 814 N.E.2d 166 (Ill. App. 2004), the Illinois Appellate Court holds that an insurance policy’s two-year suit limitation provision does not violate public policy.
Facts
Plaintiff Debra Parish, the insured, was involved in a car accident on March 16, 1999. Her insurer, Country Mutual, paid approximately $2,000.00 for her medical treatment under the med-pay provision of her policy. More than two years after the accident, plaintiff had surgery as a result of the accident. She settled her claim with the tortfeasor for his policy limit of $20,000. On December 27, 2002, plaintiff placed her insurer on notice of her intent to file a claim under the policy’s underinsured motorist (“UIM”) provision. Country Mutual denied the claim because she did not present a UIM claim within two years of the date of the accident as required by the following policy language:
Legal Action Against Us. No suit, action, or arbitration proceedings for recovery of any claim may be brought against us until the insured has fully complied with all terms of this policy. Further, any suit, action, or arbitration will be barred unless commenced within two years after the date of accident. . . .
Plaintiff and her husband then sued Country Mutual seeking UIM benefits. The trial court granted Country Mutual’s motion to dismiss based upon the foregoing suit limitation provision.
Analysis
On appeal, plaintiff acknowledged that the policy provision at issue is unambiguous and has been considered and upheld by appellate courts throughout Illinois. She nevertheless argued that the provision was against public policy because she did not realize the full extent of her injuries until more than two years after the accident.
The appellate court rejected this argument in its entirety because, as plaintiff admitted, the policy provision was unambiguous and has been repeatedly upheld in Illinois. The court noted that, generally speaking, a judicial declaration that a policy provision is void as against public policy is an “extraordinary remedy” which is “unpalatable,” particularly where, as here, the insured’s request for such a holding is unsupported by any legal authority.
Learning Point:
The fact that plaintiff did not realize the full extent of her damages until after the two-year suit limitation period had expired did not change the result because, the court reasoned, insurance companies are entitled to reasonably limit their exposure through the policy provisions. Moreover, even if plaintiff was not aware of the full extent of her damages, she was still on notice of the tortfeasor’s limited coverage such that she should have notified her own carrier earlier: “While [plaintiffs] argue they were not aware of the extent of their damages until after the two-year limitations period had passed, they should have been aware of the tortfeasor’s limited insurance coverage from [his own insurer] and the possibility their damages could exceed the tortfeasor’s limited coverage over the period of months or years necessary to resolve their claim.”
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