Pigs Get Fat but Hogs Get Slaughtered … or a Vague Denial is No Insurer’s Friend

To give Defendant some credit, here, this letter was sent in August 2022. There was no way for Defendant to know that Plaintiffs were going to renovate nearly their whole home and claim it as losses relating to the burst pipe. However, that makes it even more critical for denial of coverage letters to be specific as to what liability is covered and what liability is expressly denied. Further, to protect that denial, and preserve the statute of limitations, it is important that insurers not continue to seek proof of loss and documentation after the coverage decision has been made. If there are questions about whether some claim is part of the covered liability, it is better to seek documentation prior to deciding whether coverage applies and sending out a denial of coverage letter.

The Court of Appeals decision here is fairly clear that, had the insurer either been clearer about what coverage expressly was denied or not continued to seek documentation in support of the additional claims, the Court would not have concluded that a genuine issue of fact remained about the denial such that it was unclear whether the August 18, 2022, letter even was a denial or whether, if it was a denial, the insurer’s subsequent actions revoked the denial before the Plaintiffs filed suit, tolling the statute of limitations.Property Owners and Insurers Newsline – Maksym v AO by Anne M. Miller