Ambiguity Found in Auto Policy Contractual Limitations Period

By Don R. Sampen, published, Chicago Daily Law Bulletin, January 27, 2026

The 1st District Appellate Court recently held that a contractual limitations period for suing the insurer applicable to uninsured motorist coverage was ambiguous when the time bar was phrased in terms of “the tort statute of limitations.”

The case is Garcia v. Sanchez-Lopez, 2025 IL App (1st) 241322 (Dec. 9). The insured, Carlos Garcia, was represented by Timothy Rhatigan of Chicago and Lynn Dowd of Naperville. Croke, Fairchild, Duarte & Beres of Chicago represented the insurer, American Family Mutual Insurance Co.

Garcia was injured in a traffic accident in 2015 by a vehicle driven by Miguel Angel Sanchez-Lopez, who was uninsured and had a suspended license. Garcia sued Sanchez-Lopez and twice notified his own insurer, American Family, for uninsured motorist coverage. Each time American Family requested details of the accident and policy, but none were forthcoming.

In 2021, Garcia added American Family as a defendant in his suit against Sanchez-Lopez. American Family denied coverage and eventually filed a motion to dismiss based in part on the contractual limitations clause in its policy. The clause provided that the insurer could not be sued for UM coverage on “any claim that is time-barred by the tort statute of limitations.”

The trial court granted the motion, and Garcia took this appeal.

Analysis

In an opinion by Justice Margaret Stanton McBride, the 1st District reversed. She acknowledged that such a time bar had never been addressed in Illinois and turned to out-of-state case law for guidance.

She considered, for example, Lane v. Grange Mutual Companies, 45 Ohio St. 3d 63 (1989), in which the Ohio Supreme Court evaluated a similar policy time bar based on “the tort statute of limitations.” That court found the time bar was ambiguous for several reasons.

For one, a typical insured likely would not be familiar with the tort limitations period and would need to consult an attorney. The court suggested that an insured should not be required to retain counsel to avoid a time bar.

The Ohio court further found it problematic that a tort statutory period would apply to a contract cause of action. Also, the time period specified in the policy might give rise to different limitation periods, such as one for the insured’s direct claim and a different period for derivative loss of consortium. In addition, the Ohio court observed that the policy language was not clear whether statutory tolling periods, such as for an injured minor, would apply.

Lane thus ultimately held the policy limitations period was ambiguous and unenforceable.

McBride observed that a similar result was reached by the Iowa Supreme Court in Hamm v. Allied Mutual Insurance Co., 612 N.W. 2d 775 (Iowa 2000). The Iowa court held that the contractual period failed to clearly articulate the event upon which the limitations period would begin to run and applied, instead, the state’s 10-year statute of limitations for breaches of contract.

On the other hand, an Indiana appellate court In Napier v. American Family Mutual Insurance Co., 179 N.E. 3d 504 (Ind. Ct. App. 2021), upheld the “tort statute of limitations” provision, finding that it was specifically applicable to UM coverage and referred to Indiana’s two-year statute of limitations for personal injury claims.

While none of these cases was binding in Illinois, McBride wrote that the Indiana case seemed less well-reasoned than the cases from Ohio and Iowa. She also agreed with the principle that a policy should be written in a manner understandable by an ordinary policyholder without having to consult counsel.

American Family, moreover, could easily cure any uncertainty about the limitations period by simply phrasing the time period in terms of a number of years. She concluded that American Family had no real support for its reading of the policy.

The court therefore reversed the summary judgment in favor of American Family.

Key Point

A contractual limitations period for bringing suit against an insurer phrased in terms of “the tort statute of limitations” is ambiguous and unenforceable as written.