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Limitations for Uninsured Motorist Claims in Maryland

April 28, 2020

Recently, the Court of Appeals analyzed when limitations for an uninsured or underinsured motorist claim begins to accrue under Maryland law. The date a claim accrues dictates when the statute of limitations begins to run. In Nationwide Mutual Insurance Company v. Shilling the Maryland Court of Appeals held that limitations for uninsured motorist claims accrue when the claim is denied, not the date of the occurrence giving rise to the claim or when the tortfeasor’s insurance limits are exhausted. The Court explained that an uninsured motorist claim is a breach of contract claim, and, generally, breach of contract claims accrue at the time of breach, overturning the decision of the Court of Special Appeals in Pfeifer v. Phoenix Insurance Co., 189 Md. App. 675 (2010).

In this matter, the Plaintiff was involved in a motor vehicle accident. The tortfeasor had a minimum limits liability policy and the Plaintiff maintained much higher uninsured and underinsured motorist benefits. Plaintiff resolved her claims against the tortfeasor and the underinsured motorist carrier consented in the settlement of those claims. After the settlement was reached Plaintiff was unsuccessful in negotiating a settlement with her underinsured motorist carrier. Plaintiff than brought suit against her own insurance company for underinsured motorist benefits. The Court held that the exhaustion of the tortfeasor’s insurance did not cause a breach, so the claim did not accrue. Instead, an insurer is only in breach of its policy (and therefore, a claim accrued) on the date it disclaimed coverage for the claim.

Here, the insurer never disclaimed. Instead, after consenting in Plaintiff’s settlement with the tortfeasor, it advised Plaintiff that it was reviewing the matter and asked for additional information. The Court did not answer whether the underinsured motorist claim ever accrued, leaving the question open, holding only that here the claim was timely. The Court further rejected the insurer’s equitable arguments that it was prejudiced by Plaintiff’s delay in bringing suit, holding that an insurer can include explicit, unambiguous time limitations in its policies. The Court further left open the possibility for a laches defense if any delay was unreasonable. 

This issue is central for both claimant and insurer. This matter has the potential to revive many claims previously thought to be stale claims. Moreover, this decision makes clear that a claimant is well-advised to make a demand as soon as practicable and, further, to keep track of any denial of such a claim. An insurer would be well-advised to place its insureds on notice of its decisions on uninsured motorist claims as soon as practicable as failing to make a decision will result in claims potentially never accruing and therefore never becoming stale. Insurers would further be well-advised to review their policy language to require prompt notification of claims.