Recently, applying Montana law, a federal district court dismissed bad faith claims on the basis of the expiration of the limitations periods provided by state statute:
Ongoing denial of coverage . . . does not toll the statute of limitations. The claim accrues when the insurer first denies coverage. See e.g. Cyr v. Farmers Alliance Mut. Ins. Co., 2006 WL 2788972 (D. Mont. Sept. 26, 2006). As explained in Cyr:
The Court rejects any suggestion that each day that [the insurer] stands by its previous denial of coverage and fails to reverse its position, a new breach of its statutory duty of good faith occurs. Absent direct legal authority, which has not been provided to or located by the Court, the Court will not adopt such a view since it would effectively eviscerate the statute of limitation in any case where an insurer remains steadfast in a denial of coverage.
The same reasoning applies here. The fact that Hartford continued refusing to pay additional money to the plaintiffs after October 2007 does not extend the date of accrual for purpose of applying the statute of limitations.
The [policy-holders] also argue that their common law bad faith claims could not accrue until the underlying case was resolved entirely. They cite several cases to support their argument, but all of those cases are workers compensation cases. This Court has repeatedly held, outside the workers compensation context, that bad faith claims can accrue before a judgment or settlement. Burton v. St. Farm Mut. Auto. Ins. Co., 30 M.F.R. 173, 192-94 (D. Mont. August 28, 2002).
The [policy-holders] knew they had potential common law bad faith claims more than three years ago. They have admitted as much in their Amended Complaint: "For over four years, both The Hartford and Safeco Insurance Company refused to pay the full measure of the Plaintiffs' harms and losses." (Amended Complaint, doc. 13 at ¶ 27.) The common law bad faith claims fail, and summary judgment is granted in favor of the defendants on these claims.
See the full case here. Different states have different limitations periods and different accrual rules. An accrual rule determines when the limitations period is triggered. Call the firm now if you think you have a meritorious bad faith claim against your insurance company. Don't risk being "out of time" by delaying - we can help!
December update: In Colorado, the following case tracks the foregoing logic:
the plaintiff urges a construction of § 13–80–102 that would permit bad faith claims to be brought within two years of the last incident of unreasonable conduct by an insurer. To support this contention, the plaintiff relies on the “continuing violation” doctrine employed by the federal courts in cases involving anti-discrimination statutes such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq. (1988). We find these cases to be inapposite. We are not aware of any authority in which a court has extended the “continuing violation” doctrine to a bad faith claim. We decline to do so here.
Harmon v. Fred S. James & Co. of Colorado, Inc., 899 P.2d 258, 261 (Colo. Ct. App. 1994).