Renewing a Faulty Insurance Policy Does Not Extend the Statute of Limitations.

The Eighth District Court of Appeals dismissed this complaint that alleged negligence and bad faith against an insurer and an agent after a fire-damage claim was denied. The plaintiff, the administrator of an estate, applied for a Grange insurance policy on a property owned by the decedent but would be transferred to the administrator. The administrator informed the Grange agent that the owner of the property was deceased, but the agent insisted on continuing the application in the name of the decedent because the estate was still open. 

The policy was active for a full year and renewed under the name of the decedent annually. In the following years, there was a fire loss at the property, and Grange denied the claim because the policy was void ab initio as being in the name of a deceased person. The insurer also alleged that the policy was void due to misstatements in the insurance application regarding the status of the owner. The insurer alleged that the claims were filed outside of the four-year statute of limitations (R.C. § 2305.09(D)). 

However, the property owner alleged that the statute began anew when the policy renewed, alleging that he could not be aware of the harm until the loss and that the negligence was based upon the renewed policy. He also alleged that the insurer was not prejudiced by the delayed-damages exception to the statute of limitations because it had renewed the policy annually for several years. 

The court held that the delayed-damages rule did not apply to professional negligence in the procurement of an insurance policy because the terms of the contract were readily apparent when the plaintiff received the policy upon the initial application six years before suit was filed. Therefore, the fact that the policy had renewed was irrelevant to the claims of negligence, fraud and bad faith.

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