In Nationwide Mut. Ins. Co. v. Shilling, 468 Md. 239 (2019), the Court of Appeals of Maryland recently clarified that the statute of limitations applicable to a claim for underinsured motorist benefits does not begin to run until the insurance carrier denies the insured’s demand for benefits.
What is Uninsured and Underinsured Motorist Coverage?
Drivers in Maryland can obtain uninsured motorist coverage (UM) in the event they are involved in a collision with someone who does not carry any motorist insurance. This affords certain protections, including insurance coverage/benefits in the event they are involved in an automobile accident with an uninsured driver. Likewise, underinsured motorist (UIM) coverage protects those who get into an automobile accident with a driver who has insufficient insurance to cover the damages sustained as a result of an automobile accident. If someone has UIM coverage and gets into an automobile accident with another driver whose maximum insurance coverage does not fully satisfy the damages incurred, the insurance company with which he/she has UIM coverage would cover the remainder of the damages in an amount up to the applicable policy limits.
The Facts of the Shilling Case
Plaintiff was injured in a motor vehicle accident on April 19, 2011, when she was rear-ended by another driver (the “tortfeasor”). The tortfeasor was an underinsured motorist in that she had a motor vehicle liability insurance policy with limits up to $20,000 in bodily injury coverage. Plaintiff had UIM coverage with her insurer (“Defendant”), with limits up to $300,000 in bodily injury coverage.
On April 4, 2013, the tortfeasor’s insurance company offered its policy limits of $20,000 in settlement, conditioned upon Defendant’s waiver of its subrogation rights and Plaintiff’s execution of a release of all claims. On April 23, 2013, Defendant advised Plaintiff that it would agree to waive its subrogation rights against the tortfeasor.
Plaintiff and Defendant then commenced settlement negotiations. Eventually, on January 26, 2015, Plaintiff issued a demand letter to Defendant, stating her desire to recover UIM benefits under the applicable policy of insurance. Defendant confirmed receipt of the demand on February 2, 2015 and informed Plaintiff that her claim was being reviewed. On February 6, 2015, Defendant requested additional medical records in support of Plaintiff’s claim. Having received no response, Defendant sent multiple follow-up communications requesting the same information to no avail. During this time period, Defendant did not deny Plaintiff’s claim during these settlement negotiations.
On September 23, 2016, Plaintiff filed a lawsuit against Defendant in the Circuit Court for Anne Arundel County, in response to which Defendant filed a Motion to Dismiss on the grounds that Plaintiff’s claim was time-barred. After a hearing and decisions at both the Circuit Court and Court of Specials Appeals levels, the case was ultimately appealed to Maryland’s highest appellate court.
The Court of Appeals rejected Defendant’s argument that the applicable statute of limitations begins to run when the tortfeasor’s insurance policy is exhausted. Instead, the Court held that for UM and UIM claims, the statute of limitations does not begin to run until the UIM insurer denies an insured’s demand for benefits, thereby breaching the insurance contract. In other words, “[t]he insurer’s refusal to pay [UIM] benefits—i.e., the breach of contract—is the event that causes the statute of limitations to run.” Applying this principle to the Shilling case, the Court of Appeals held that the UIM action was not time-barred because the UIM insurer did not deny the claim more than three years prior to Plaintiff instituting her lawsuit on September 23, 2016.
Seek Coverage Counsel with Eccleston & Wolf
The attorneys at Eccleston & Wolf regularly handle personal injury matters, including motor vehicle accidents and related UM and UIM issues. To learn more, contact us.