I have suit limitations. No, this has nothing to do with the ill-fitting JC Penney suit my mom bought me for my high school graduation. Nor does it have to do with the profuse sweat I produce when I have to don a suit during Portland’s sweltering summer. My suit limitations are a common hindrance to my life as an insurance coverage lawyer.
As many of you know, my practice focuses on insurance coverage. Among my clients are associations and individuals pursuing claims against their own insurers (“first-party insurance” claims). Many folks I encounter are familiar with the “statute” of limitations applicable to pursuing construction defect claims in Oregon and Washington. I receive many quizzical looks when I inform prospective clients their first-party claims will be subject to a “suit” limitation instead of a “statute” of limitations. A suit limitation is a common provision in an insurance policy that requires a claim to be brought within a certain period of time. Most policies have a two-year suit limitation provision. Courts routinely enforce these provisions even though they shorten the otherwise applicable statute of limitations.
There are exceptions to strict application of these suit limitation provisions. Under certain circumstances, for instance, the suit limitation provision does not start to run until the client “knows” of the damage. That is why we can often recover from historical insurance policies (e.g. we’ve recovered under an Association’s 1998 policy for damage discovered around 2016). The biggest problem I encounter is when an Association receives notice, often in the form of a report, identifying property damage. Insurers will certainly argue that this starts the clock on the suit limitations provision. Board members and managers should have their antennae raised when they receive a report identifying property damage or even potential property damage. In light of the short window provided by the suit limitations provision, it is worth consulting an experienced attorney to see if additional steps are required to preserve rights.
Recently, my wife “accidentally” gave my JC Penney suit to goodwill. Like my suit, if an Association fails to act in a timely matter, its suit will also be lost forever.