Source: https://www.propertyinsurancecoveragelaw.com/2018/04/articles/insurance/are-you-at-odds-with-your-insurer-in-arizona-an-outline-on-initiating-litigation-in-the-grand-canyon-state/
Timestamp: 2019-04-21 02:59:07+00:00

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2. A credit card as defined in § 13-2101, paragraph 3, subdivision (a).
Prejudice determines whether an insurer may assert the limitations period in a policy or is estopped from asserting it.6 A limitations provision in a policy is enforceable unless it is inequitable to enforce it; the key factor is whether the insurer has shown prejudice from the delay in filing suit. In Nangle v. Farmers Insurance Company, Farmers failed to show prejudice from the insureds’ delay in filing suit until two years after fires, thus, the one-year limitations provision was unenforceable. This was found to be the case even though Farmers asserted generally that memories faded and that witnesses could become unavailable. Despite having alleged it, Farmers failed to show that any given witness became unavailable or that any specific relevant fact was forgotten or became unavailable due to the delay.
An insurance policy clause shortening an applicable statute of limitations will be enforced when the reasons for its existence are served and will not be applied when to do so would be to defeat basic intent of parties in entering into the insurance transaction.7 For example, where the enforcement of an insurance policy limitation clause would forfeit a patently valid claim, would not serve the purpose for which the limitation clause existed, would work an injustice to the insured, and the parties had not negotiated the condition in question and the condition was adhesive, the insurer was estopped to enforce such a clause. In other words, even where the policy condition shortening the statute is valid…the insurer may be estopped from raising a defense based upon such an adhesive clause where the enforcement of the clause would work an unjust forfeiture. The key factor in determining this issue is whether the insurer has shown prejudice from the delay in filing suit. Absent such a showing, the purpose for which the insurer was permitted to insert the clause will not be served by its enforcement.
And, the concept of estoppel can also be applied where the court determines that an insured’s delay in having filed suit did not prejudice the insurer—particularly where the policy acts to shorten the policy period to only one or two years.
1 See Blutreich v. Liberty Mut. Ins. Co., 170 Ariz. 541, 826 P.2d 1167 (App. 1991)(The limitations period in cause of action for benefits under underinsured motorist provision of automobile policy began to run on date insurer breached contract and not on date of accident); Clark Equip. Co. v. Arizona Prop. & Cas. Ins. Guar. Fund, 189 Ariz. 433, 943 P.2d 793 (App. 1997)(For limitations purposes, breach of insurance contract generally occurs when insurer denies insured the relevant coverage).
2 See Eureka-Sec. Fire & Marine Ins. Co. v. Simon, 1 Ariz. App. 274, 401 P.2d 759 (1965)(In the absence of a time limitation clause in a business interruption policy standing alone, the policy would be governed by the ordinary statute of limitations).
3 See also, Gibbons v. Badger Mut. Ins. Co., 11 Ariz. App. 485, 489, 466 P.2d 36, 40 (1970).
5 Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, 650 P.2d 441 (1982). For more on the Zuckerman case, see our post, Arizona: How Long Does a Policyholder Have to File Suit Under an Insurance Policy?
6 Nangle v. Farmers Ins. Co. of Arizona, 205 Ariz. 517, 73 P.3d 1252 (App. 2003).
7 A.R.S. § 20-1115; Zuckerman, 133 Ariz. 139 (1982).
8 See Ins. Co. of N. Am. v. Superior Court In & For County of Santa Cruz, 166 Ariz. 82, 800 P.2d 585 (1990).
9 Ins. Co. of N. Am. v. Superior Court In & For County of Santa Cruz, 166 Ariz. 82, 800 P.2d 585 (1990); see also, Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964 (1995).
10 See Porter v. Spader, 225 Ariz. 424, 429, ¶ 15, 239 P.3d 743, 748 (App. 2010).
11 McCloud v. State, Ariz. Dept. of Pub. Safety, 217 Ariz. 82, 170 P.3d 691 (App. 2007).
13 Cheatham v. Sahuaro Collection Serv., Inc., 118 Ariz. 452, 577 P.2d 738 (App. 1978).
14 Abney v. Liberty Mut. Ins. Co., 1 CA-CV 11-0112, 2012 WL 554741, at *4 (App. Feb. 21, 2012) citing to, Roer v. Buckeye Irr. Co., 167 Ariz. 545, 547, 809 P.2d 970, 972 (App.1990).
15 Nangle v. Farmers Ins. Co. of Arizona, 205 Ariz. 517, 73 P.3d 1252 (App. 2003).

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