In Sikora v. State Farm Insurance Company, a person injured in a motor vehicle accident sought coverage for an underinsured motorist claim. A denial letter was sent to his counsel stating that, after review of the policy, he did not “qualify as an insured” and “we will not be extending any underinsured motor vehicle coverage settlement offers to him.” The letter asked for any other documentation that the counsel wanted to submit on the issue, something that never occurred. The plaintiff admits that this letter denied coverage; however, it claims that a second letter, sent 20 months later, stating that the carrier had previously advised there was no coverage and again asking for documentation was the “official denial” and thus the date of the bad faith’s claim accrual for statute of limitation purposes.
Under controlling law, a cause of action for statutory bad faith begins to accrue when the insurer first provides definite notice of a refusal to indemnify or defend. The Court found that no reasonable jury could find that the second letter was an official denial and that the earlier letter was not the first denial. It dismissed the claim as untimely. It rejected the long discredited idea that the second letter somehow made it a continuing denial or was a separate act of bad faith that started the clock anew.
Date of Decision: August 4, 2009
Sikora v. State Farm Ins. Co., CIVIL ACTION NO. 08-1366, UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, 2009 U.S. Dist. LEXIS 67621 (W.D. Pa. Aug. 4, 2009) (Conti, J.)