When should the statute of limitations begin on an insurance agency negligence claim?
That’s the question the Supreme Court of Ohio will answer in London Insurance vs. LGR Realty – a case that could have a major impact on the entire insurance industry.
LGR Realty filed a complaint against Frank & London Insurance Agency, an independent agency in Columbus, alleging that they received an unsatisfactory insurance policy.
This allegation arose after a third party filed a claim against LGR Realty and the commercial policy carrier, Continental Casualty Company, refused to defend and indemnify.
Frank & London Insurance argues that the statute of limitations clock began running when the policy was issued. However, LGR Realty argues that it was a “delayed-damages” situation and the statute of limitations clock began when Continental Casualty Company refused to defend or indemnify on the third-party claim.
The trial court ruled in favor of Frank & London Insurance Agency, citing that the case was time-barred. LGR Realty appealed this decision, and the 10th District Court of Appeals overturned the trial court ruling.
Recent Supreme Court of Ohio professional negligence cases have nearly rescinded the court’s decision in Kunz v. Buckeye Union Insurance Co., which approved the delayed-damages rule regarding statute of limitations. However, this decision has not been expressly overruled.
The Supreme Court of Ohio will soon determine whether the delayed-damages rule in Kunz v. Buckeye Union Insurance Co. will remain valid.
LGR Realty’s argument rests on the logic that it is unrealistic to expect a policyholder to know the extent of their coverage until harm is suffered. Therefore, the Court should rule that the statute of limitations began when Continental refused to indemnify LGR when they were sued by a third party.
However, Frank & London Insurance argues that since a cause of action in a professional negligence claim begins when the wrongful act is committed, the statute of limitations in this specific case began when LGR Realty purchased their policy.
Additionally, Frank & London Insurance argues that since the Kunz v. Buckeye Union Insurance Co. case, there have been other professional negligence claims where the court held that the statute of limitations begins when the act is committed, not when the discovery of the tort occurs.
A decision by the Supreme Court of Ohio is expected to be issued soon. Stay tuned for more updates!
