Opinion ID: 1862787
Heading Depth: 1
Heading Rank: 3

Heading: Language of the policy.

Text: The dispute in this case centers upon: (1) what is the applicable limitations period for an insured's claim against Allied for underinsured motorist (UIM) coverage under the policy, and (2) when does the limitations period begin to run? To resolve this case, we must review and interpret provisions of the insurance policy. In doing so, we are guided by well-established principles concerning the construction and interpretation of insurance policies: Construction of an insurance policy the process of determining its legal effectis a question of law for the court. Interpretationthe process of determining the meaning of words usedis also a question of law for the court unless it depends on extrinsic evidence or a choice among reasonable inferences to be drawn. Allied Mut. Ins. Co. v. Costello, 557 N.W.2d 284, 286 (Iowa 1996) (quoting A.Y. McDonald Indus. v. Insurance Co. of N. Am., 475 N.W.2d 607, 618 (Iowa 1991)). We have also said that when language in an insurance policy is ambiguous, requires interpretation or is susceptible to two equally plausible constructions, we will adopt the construction that is most favorable to the insured. Costello, 557 N.W.2d at 286. Additionally, an insurer has a duty to define any limitations or exclusionary clauses in clear and explicit terms. Id. The Allied insurance policy here contains the following language concerning UIM coverage: A. We will pay all sums which an insured is legally entitled to recover as compensatory damages from the owner or operator of an underinsured motor vehicle resulting from bodily injury to any person caused by an accident. . . . . We will pay only after an insured's rights to the proceeds of all liability insurance bonds or policies have been determined by judgment or settlement agreement. . . . . SUIT AGAINST US We may not be sued unless all the terms of this policy are complied with. We may not be sued under the Underinsured Motorist coverage on any claim that is barred by the tort statute of limitations. The Iowa tort statute of limitations for personal injuries is two years. See Iowa Code § 614.1(2) (1995). As stated above, the narrow questions we must answer in this appeal are: absent express language in the policy, [1] or applicable statutory provision, [2] what is the applicable limitations period concerning an insured's claim under the Allied policy for UIM benefits and when does that limitations period begin to run? Related questions are: (1) what is the effect of language in Allied's policy which states that Allied will pay benefits only after an `insured's' rights to the proceeds of all liability insurance bonds or policies have been determined by judgment or settlement agreement, and (2) what effect does that language have on the provision which states [w]e may not be sued until all the terms of this policy are complied with.