Kentucky Injury Law: Statute of Limitations in UM/UIM Claims

While researching statutes of limitation in UM/UIM claims, I found an unpublished 6th Circuit slip opinion with a succinct explanation of the law in Kentucky on the subject. Kentucky injury lawyers should find this synopsis very helpful.

PIKE v. GOVERNMENT EMPLOYEES INS. CO.:

"The issue on appeal is whether a contractual limitation for bringing UIM claims that tracks the statutory MVRA limitation period is unreasonable under Brown and Gordon. In Kentucky, the statutory period of limitation for a written contract, such as an insurance policy, is fifteen years after the cause of action accrued. K.R.S. 413.090(2). Parties to an insurance contract may, however, limit the time in which to bring a claim against an insurance carrier so long as the time limit is reasonable. Webb v. Kentucky Farm Bureau Ins. Co., 577 S.W.2d 17, 18 (Ky.Ct.App.1978) (citing Riddlesbarger v. Hartford Ins. Co., 7 Wall. 386, 74 U.S. 386, 19 L.Ed. 257 (1868); Lee v. Union Central Life Ins. Co., 56 S.W. 724 (Ky.Ct.App.1900)). See also Brown, 189 F.Supp.2d at 670; Gordon, 914 S.W.2d at 333; Elkins v. Kentucky Farm Bureau Ins. Co., 844 S.W.2d 423, 427 (Ky.Ct.App.1992). Where a policy limitation is deemed unreasonable, the fifteen-year statutory period for commencing contract claims in Kentucky applies. Gordon, 914 S.W.2d at 332.

With respect to uninsured or UIM contracts, Kentucky courts have held that a one-year policy limitation for bringing UIM claims against one's insurance carrier is unreasonable because it would require the insured to sue his carrier for UIM benefits long before he is required to sue the tortfeasor. Elkins, 844 S.W.2d 423; Gordon, 914 S.W.2d 331. Also, a policy limitation requiring an insured to sue his UIM insurance carrier no later than two years from the date of the accident has been deemed unreasonable because it would require the insured to sue his carrier "before being required to discover whether or not the tortfeasor is in fact an uninsured [or underinsured] motorist."Brown, 189 F.Supp.2d at 671. This is presumably because the insured has no reason to investigate the tortfeasor's insurance status so long as reparation benefits are being paid.FN1"

Slip Copy, 2006 WL 890147 (C. A.6 (Ky. ), 2006 Fed.App. 0222N

Cont...

"There is, however, no case where a Kentucky court analyzed whether a policy limitation like the one in the instant case is reasonable. The cases cited by Pike in support of his position are distinguishable because none of those cases dealt with the flexible policy limitation involved in this case, i.e., "the period prescribed by Kentucky law for the filing of a personal injury action arising out of a motor vehicle accident."FN2 See Brown, 189 F.Supp.2d 665 (refusing to enforce a UIM policy limitation of two years from the date of the accident); Gordon, 914 S.W.2d 331 (refusing to enforce a policy limitation of two years from the date of the accident). See also Elkins, 844 S.W.2d 423 (refusing to enforce a policy limitation of one year from date of accident). Furthermore, each of these decisions made clear that the rulings should not be construed to prohibit insurance companies from contracting with their insureds for a shorter period of time to file a contract claim. Brown, 189 F.Supp.2d at 670; Gordon, 914 S.W.2d at 333; Elkins, 844 S.W.2d at 425.

Having reviewed the relevant cases, the district court concluded that the policy limitation in this case was reasonable.

The GEICO policy in issue here contains a provision which looks to the tort liability limitation in the MVRA. The MVRA prescribes a period of two years which may be extended by the payment of reparation benefits. Thus the time limit in which the claim for UIM benefits must be brought is exactly the same time as that in which suit must be filed against the tortfeasor, no less than two and possibly more than two years from the date of the injury. This period, which dovetails with the tort liability period of limitation, is reasonable inasmuch as it does not require the insured under any circumstance to file suit for UIM benefits prior to the expiration of the limitation period for filing suit against the tortfeasor.

J.A. at 4 (emphasis added). We agree. We also note that the district court was careful to point out that its decision did not contradict the ruling in Gordon, followed in Brown, that the MVRA does not govern contract actions seeking UIM benefits. Rather, it was the court's reasonableness inquiry which led it to conclude that the flexible limitation period contained in Pike's policy, which period was coextensive with that contained in the MVRA, was reasonable. Nothing in Pike's UIM policy requires Pike to file a claim for UIM benefits prior to suing a tortfeasor. Because the policy limitation does not conflict with the period of time prescribed by Kentucky law for filing a personal injury claim arising from a motor vehicle accident, we conclude that it is reasonable, and enforceable."