Insurer who repeatedly demanded more information cannot argue ultimate suit was filed late
Employers Mutual insured two gas stations operated by the Tiel Oil Company in Reed City. The gas stations suffered an in-ground petroleum leak after water infiltrated underground pipes, froze, and fractured the pipes. The insurer was notified of the loss but declined to pay, offering serial excuses based upon its interpretation of various policy clauses.
On each occasion, the insurer offered the oil company the opportunity to provide additional information to document its claim, maintaining that its position of "denial" remained the same, and on each occasion, the oil company performed additional investigation and provided additional proof. This went on for more than two years, as the oil company [unwisely] attempted to comply with insurer's successive demands without filing suit.
When the oil company finally gave up and filed suit to enforce its policy, the insurer invoked a policy clause limiting the time for filing suit and the trial court dismissed the claim. The Court of Appeals reversed this week, noting that the manner in which the insurer responded left open a question of fact with regard to whether the insurer had actually "denied" the claim and commenced the running of the filing period. The court held that a jury will have to determine whether the running evasion of this claim was actually a "formal denial" under the policy language.