Your Insurance Policy May Give You Only One Year to Sue: Lessons From Dominish v. Nationwide

Published August 31, 2011 · Ohio Supreme Court

Most people know, at least roughly, that Ohio gives an injured person two years to file a lawsuit. What far fewer people know is that the insurance policy sitting in their desk drawer may cut that time in half, and that an insurance company can keep talking to you about your claim right up until the shortened deadline passes and then use it against you.

Last week the Supreme Court of Ohio made that point in the plainest possible terms. In Dominish v. Nationwide Ins. Co., 129 Ohio St.3d 466, 2011-Ohio-4102, decided August 23, 2011, a unanimous court enforced a one-year "Suit Against Us" clause against a homeowner whose house had been damaged by a storm. He sued within two years. It was not enough.

What happened in Dominish

On July 28, 2006, a storm knocked a tree onto Dennis Dominish's house. He filed a claim with Nationwide. The company investigated, decided it owed $6,741.96, and sent a check for that amount. Mr. Dominish thought the figure was far too low, wrote "void" on the check, and sent it back. Nationwide sent it again. He voided it again.

Nationwide's September 6, 2006 letter was labeled a partial denial of coverage. It said the company would pay for interior damage but not the roof, the contents, or mold. The same letter quoted the policy's "Suit Against Us" provision: no action could be brought unless the policyholder complied with the policy, and "any action must be started within one year after the date of loss or damage."

Mr. Dominish filed suit on July 25, 2008, almost two years after the storm. The trial court threw the case out under the one-year clause. The court of appeals reversed, finding the language ambiguous and finding that Nationwide, by continuing to deal with the claim, had waived the deadline. The Supreme Court reversed again and reinstated the dismissal.

The two arguments that failed

The clause was not ambiguous. Ohio law has long held that unclear language in an insurance policy is read in favor of the policyholder. Mr. Dominish argued that "action" and "started" could mean many things. The court disagreed, warning that "ambiguity should not be created where it does not exist." Read as a whole, under a heading that says "Suit Against Us," the sentence plainly means a lawsuit must be filed within one year of the loss.

Nationwide did not waive the deadline. Under a 1981 Supreme Court decision, an insurer can lose the right to enforce a suit deadline if it recognizes liability or holds out a reasonable hope of settlement, and by doing so causes the policyholder to delay filing. The court found neither. Nationwide had admitted part of the claim, paid it, specifically denied the rest in writing, reminded Mr. Dominish of the one-year clause, and then stopped negotiating. Nothing it did induced him to wait.

Why a property-damage case matters to injured people

The policy in Dominish was a homeowner's policy and the dispute was over a roof. But the principle applies across the board, and it bites hardest in the claims that matter most to an injured person: claims against your own insurance company.

When you are hurt by a careless driver, your claim against that driver is governed by Ohio's statute of limitations. We explained the two-year deadline last year. An insurance company cannot shorten that, because it is not a party to your contract with the other driver.

But a claim against your own insurer is a contract claim. Ohio courts allow the parties to a contract to agree to a shorter time for suit than the law would otherwise provide, as long as the shortened period is reasonable. Insurers write these clauses into nearly every policy they sell. Some common examples:

• Uninsured and underinsured motorist coverage. Ohio's UM/UIM statute, R.C. 3937.18(H), expressly permits an auto policy to require that a UM/UIM claim or suit be brought within three years of the crash. Many policies take full advantage of that. If the at-fault driver is uninsured, or has only minimum limits, your own UM/UIM coverage may be the only real source of recovery, and the three-year clock is running from the day of the collision. See our overview of UM/UIM claims and our earlier post on why every Ohio driver needs this coverage.
• Medical payments coverage. Policies frequently limit both the time to incur expenses and the time to sue.
• Homeowner's and renter's policies. One year from the date of loss, as in Dominish, is common.
• Disability and life policies. These often contain their own proof-of-loss and suit deadlines.

The lesson of Dominish is that the insurer does not have to remind you, does not have to stop negotiating, and does not have to tell you it intends to rely on the clause. It merely has to avoid admitting liability for the disputed part of your claim. A partial payment plus a partial denial, as in this case, is enough.

How insurers use the clock

I spent 19 years as a Dayton police officer before practicing law, and I have handled hundreds of claims since. The pattern is familiar. The adjuster is friendly. Requests for records go back and forth. There is always one more document needed. Months pass. The policyholder reasonably believes the claim is being worked on, and it may be. But the company's lawyers know the date on the calendar, and when the suit deadline passes, the friendly tone changes.

Waiver is a real defense, and Dominish did not eliminate it. But the court made clear that ongoing contact alone is not waiver. The insurer must have actually recognized liability or dangled a settlement in a way that caused the delay. That is a hard thing to prove after the fact, and the policyholder bears the burden.

Read the policy, then calendar the deadline

There is a practical fix, and it costs nothing. Pull out the policy and find the section on suits against the company. It will be in the "Conditions" portion and will have a heading like "Suit Against Us," "Legal Action Against Us," or "Action Against Company." Note the period and the date it runs from. The date is usually the date of loss, not the date of denial.

Then treat that date as a hard deadline. If a claim is unresolved as it approaches, suit must be filed, even if negotiations are going well. The lawsuit can always be dismissed if the claim settles. It cannot be revived once the deadline passes.

This dovetails with another point we made last December in our post on the claim-first rule from Kincaid v. Erie. The Supreme Court expects policyholders to follow the policy's procedures: present the claim first, comply with the conditions, and sue within the time the contract allows. The company will hold you to every step.

What this means for you

If you have an open claim with your own insurance company, whether for a crash, a fire, a storm, or an injury, the general statute of limitations may not be your real deadline. The policy is. Find the clause, calculate the date, and if it is within a year, get legal advice now rather than later. Our office calendars the policy deadline alongside the statutory one on every case where the client's own coverage is involved, because Dominish shows what happens when no one does.