Many insurance policies limit the time an insured can bring a suit against its insurance provider. Generally speaking, these clauses prevent the insured from bringing a lawsuit against the insurance company if the suit falls outside of the timeframe allowed by the policy. However, Illinois has passed a law that may allow claims to proceed even when the timeframe specified in the policy has actually expired. Section 143.1 of the Illinois Insurance Code pauses the policy’s “statute of limitations” from the time the insured files its proof of loss until the date the claim is denied. This pause, known as tolling, can greatly affect the rights and outcomes for both insureds and insurance companies.
When a claim is tolled, the actual time that passes does not count against the specified timeframe, effectively lengthening the time to file suit. A recent Illinois appellate case illustrates how Section 143.1 is applied and the effect of tolling. In the case Country Preferred Ins. Co. v. Whitehead, Terri Whitehead (“Whitehead”) was injured in a car accident on July 21, 2007, by an uninsured motorist.[1] She promptly notified her insurance carrier, Country Preferred, within hours of the accident. Whitehead’s policy with Country Preferred barred any lawsuit initiated two years after the date of the accident. Whitehead subsequently began to take the necessary steps in order to proceed with her claim. On November 28, 2007, Country Preferred had received the completed forms for Whitehead’s claim. Whitehead remained in contact with Country Preferred’s claim representative until May of 2009, when Whitehead’s attorney sent a notice of attorney’s lien letter to Country Preferred. Whitehead next submitted a written demand for arbitration in October 2009. However, because the arbitration demand failed to adhere to the terms of the policy, Country Preferred rejected Whitehead’s demand for arbitration and shortly thereafter filed a declaratory judgment suit against Whitehead, alleging that her arbitration demand was untimely as filed after the claims expiration period in the policy.
On July 19, 2010, Whitehead sent a new written demand for arbitration and the next day filed a complaint to compel arbitration. The circuit court denied Whitehead’s demand, and Whitehead appealed that decision. The Illinois Appellate Court held that Section 143.1 applied, which tolled the policy’s limitation period until Country Preferred denied the claim on October 19, 2009. Thus, while nearly three years had passed between the time of Whitehead’s accident until she sent a properly completed demand for arbitration, because of the tolling statute, only thirteen months had actually counted against the two-year statute of limitations. As a result, Whitehead’s demand for arbitration was timely, even though it was almost three years after the accident. The appellate court reasoned that Section 143.1 was applicable because, during the time that an insured first files a claim until that claim is ultimately denied, the insured has no reason to file a lawsuit against the insurer and that it would resultantly be unfair to allow insurance companies to wait out the expiration of the policy’s limitation period before denying a claim.
This case highlights one of the many intricacies that are inherent in insurance law. The skilled attorneys at Rock Fusco & Connelly, LLC, have the experience and dedication to review all aspects of your insurance case.
[1] 2016 IL App (3d) 150080.