Opinion ID: 1858250
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Heading Rank: 5

Heading: The Contractual Limitation on Time for Bringing Suit.

Text: We now move to the issue involving the policy provision requiring that an uninsured-motorist claim be brought within two years of the accident. We have recognized the validity of contractual limitations on the time for bringing suit against an insurer. Douglass v. Am. Family Mut. Ins. Co., 508 N.W.2d 665, 667 (Iowa 1993). In order to be enforced, such provisions must be reasonable. Nicodemus v. Milwaukee Mut. Ins. Co., 612 N.W.2d 785, 787 (Iowa 2000). In Douglass we upheld a contractual period of limitation which provided that the insurer could not be sued under uninsured-motorist coverage on any claim barred by the tort statute of limitations. We interpreted that clause to refer to the personal-injury statute of limitations contained in Iowa Code section 614.1(2) and, based on the assumption that the claim accrued on the date of the accident, found that limiting the time to sue to a period of two years following the accident was not unreasonable. Douglass, 508 N.W.2d at 666-67. [3] In Nicodemus we dealt with a statutory limitation on the time to sue on an underinsured-motorist claim. The statutory provision required suit to be brought within two years of the accident. We held that limitation was unreasonable because conditions precedent to suit imposed by the policy could force the claimant to delay bringing the underinsured-motorist claim until after the contractual period of limitation had expired. Nicodemus, 612 N.W.2d at 787-88. As a result, we declared the contractual limitation on time to sue invalid and, by default, imposed the statutory period of limitations contained in Iowa Code section 614.1(5). Id. at 789. Because we have concluded that the insurance protection to be accorded those who claim against uninsured motor vehicles under section 516A.1 extends to sanctioned, self-insured vehicles that become insolvent subsequent to the accident, those claimants must be given some reasonable time after the insolvency occurs within which to bring suit to enforce their uninsured motorist coverage. The two-year limitation from the date of the accident contained in State Farm's policy left Faeth with no time to sue following the accrual of his claim. In dealing with a similar situation, the Ohio Supreme Court observed a provision in a contract of insurance which purports to extinguish a claim for uninsured motorist coverage by establishing a limitations period which expires before or shortly after the accrual of the right of action for such coverage is per se unreasonable and violative of the public policy of the state of Ohio .... Kraly v. Vannewkirk, 69 Ohio St.3d 627, 635 N.E.2d 323, 329 (1994). We agree with the observation of the Ohio court, and as applied here, the limitation contained in the State Farm policy is clearly unreasonable as applied to Faeth's claim. We hold that the contractual period of limitation is invalid, and by default, we impose the statutory period of limitations contained in Iowa Code section 614.1(5). We have considered all issues presented and conclude that the district court's ruling on Faeth's motion for summary judgment is reversed. [4] The district court's ruling on State Farm's motion for summary judgment is affirmed. Costs of appeal are assessed against State Farm. REVERSED ON PLAINTIFF'S APPEAL; AFFIRMED ON DEFENDANT'S APPEAL.