Unresolved Insurance Claims – Last Call
This article was written by Brian Burke.
The damage and disruption caused by the Canterbury earthquakes has resulted in an unprecedented number of insurance claims. Many insureds will be surprised to learn that an insurer may decline an unresolved claim in its entirety if proceedings have not been filed in Court within a specified limitation period.
Insurance claims for damage or disruption which occurred up to 31 December 2010 will be governed by the Limitation Act 1950. Under the 1950 Act insurance claims must be filed within 6 years of the event that caused the loss.
Insurance claims for damage or disruption which occurred from 1 January 2011 onwards will be governed by the Limitation Act 2010 which came into force on that date. Different wording used in the 2010 Act has created uncertainty around when the 6 year period starts to run. There is debate as to whether the limitation period under the 2010 Act starts to run from the event or at a later time such as when the insurer declines a claim.
Subject to what is said below, the safest course for an insured who has an unresolved claim is to file proceedings in Court by 3 September 2016 at the latest. Insureds should not leave the filing of such claims to the last minute. Legal advisors will need sufficient time to consider the claim and prepare the Court documents.
As an alternative an insured may negotiate to contract out of limitation defences with their insurer. EQC has publically announced that there is no 3 September 2016 deadline to bring Court proceedings for an EQC claim. EQC has announced that the 6 year period will generally run from the date of settlement or from the date when the claim is declined. EQC has advised that its announcement can be relied on by insurers. Some insurers have also announced that they will not raise a limitation defence until 4 September 2017 for any residential claim.
Where announcements have been made it would be prudent for insureds with unresolved claims to record in writing to their insurer their agreement to the announcements.
It should also be borne in mind that announcements agreeing to extend limitation periods have not been made by all insurers. Nor do the announcements appear to apply to non-residential insurance claims. For these types of unresolved claims an insured should seek the agreement of their insurer to an extension of the limitation period or failing such agreement file proceedings in the Court by 3 September 2016.
In all cases insureds should take timely legal advice.