Commercial Litigation and Arbitration

Contractual Limitations Period Construed Strictly — Claim for Unearned Premium Is Not a Claim “under” Insurance Policy

From Archway Ins. Servs. v. James River Ins. Co., 2010 U.S. Dist. LEXIS 99708 (E.D. Pa. Sept. 21, 2010):

The dispositive question is whether a claim for unearned premiums is a "claim under this policy" as specified in section 4(B). Although this question appears to be an issue of first impression in this Circuit, other courts have answered it in the negative. See P. & E. Finance Co. v. Globe & Republic Ins. Co., 239 P.2d 1009, 1011 (Okla. 1951); McCallum v. Nat'l Credit Ins. Co., 86 N.W. 892, 892-93 (Minn. 1901); see also 44A Am. Jur. 2d Insurance § 1910 (2010) (noting that a contractual time limitation within which a suit must be brought does not apply to "an action to recover unearned premiums upon the cancellation of a policy[.]"); 45 C.J.S. Insurance § 722 (2010) (same); C.T. Drechsler, Annotation, Limitations governing action to recover unearned premium retained by insurer upon cancellation of policy, 29 A.L.R. 2d 938 (1953) (same). ***

I am persuaded by the distinction, set forth in both P. & E. Finance and McCallum, between claims for recovery of benefits under the policy and claims for unearned premiums. I likewise conclude that the contractual time limitation provision applies to the former but not to the latter. Accordingly, defendant's motion for summary judgment on this ground will be denied.

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