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Legal Issues, February 2003
By Edward F. Morrison, Jr.


PROPERTY OWNERS AFFORDED ADDITIONAL RIGHTS
IN INSURANCE CLAIMS

In a case with mixed implications for property owners in California, a State Appellate Level Court has ruled that a homeowner can file an insurance claim well after a catastrophic event.

In the case of Kapsimallis vs. Allstate Insurance Company, the Court ruled that an insurer cannot rely solely on the date of a disaster to start the statute of limitations for a claim under the policy. The Court, who was deciding a claim arising from the Northridge earthquake, held that the “clock” begins for a statute of limitations defense to a claim under the policy only when a reasonable policyholder would have discovered the damage.

Stated succinctly, the Kapsimallis decision means that a property owner may make a claim for damage arising from a catastrophic event literally years after the fact.

While the decision, on its face, would appear to favor property owners, the decision will likely result in even higher insurance premiums for policyholders statewide, and particularly in regard to earthquake insurance.

Of course, time will only tell. In the meantime, property owners would be well advised to retain their policies and to carefully investigate the basis of any property claim, particularly in the event the property may be set for sale in the not too distant future.