When a client is covered by a Pennsylvania motor vehicle policy and has either an Uninsured Motorist (“UM”) or Underinsured Motorist (“UIM”) claim under that policy, two of the most important questions a practitioner of personal injury representation must answer are:

1. Has the clock on the statute of limitations for that UM or UIM claim started ticking?

2. How much time do I have to preserve that statute of limitations?

It has been universally recognized for over 40 years that the time period for the statute of limitations for both UM and UIM claims in Pennsylvania is the same as for any general contract claim – four years.¹ 

And for many years, the answer to when that 4-year time period begins to run differed for UM and UIM claims.

For UM claims, courts held that the statute of limitations begins to run when the insured knew or should have known that the tortfeasor was uninsured. ² 

For UIM Claims, the courts held that the statute of limitations begins to run from when the third party claim was settled or there was a judgment secured against the third party tortfeasor. ³

These decisions were based on public policy arguments rather than contract principles.

However, that all changed in 2017 with the Pennsylvania Supreme Court’s decision in Erie Ins. Exch. v. Bristol, 174 A.3d 578 (Pa. 2017).  There, the Court addressed the accrual question in the context of a UM claim and, recognizing that UM claims are fundamentally breach of contract claims, held that “the proper circumstance to start the running of the limitation period is an alleged breach of the insurance contract.”  Id. at 589. 

The simple logic of the Supreme Court’s decision applies to UIM cases as well, as courts have since recognized.⁴ 

Naturally, the next question is: What constitutes a breach of the insurance contract in a UM or UIM context to begin the running of the statute of limitations? 

The two examples the Supreme Court gave in Bristol of such a breach were “denial of a claim” or “refusal to arbitrate.” Id. at 589. 

The “refusal to arbitrate”, of course, would apply only if the policy terms either require the UM or UIM claim to be arbitrated rather than litigated in court, or the policy allows either party to demand arbitration of the claim.  However, it is certainly at least arguable that another such breach of the UM or UIM contract would be an offer by the insurer that is less than the amount claimed by the insured. 

So, as a practice point, if a Pennsylvania UM or UIM insurer: (1) denies coverage for any reason; (2) refuses to arbitrate if the policy requires or allows arbitration of the claim; or (3) makes an offer that is less than the insured is willing to accept, consider that date the beginning date for the running of the 4 year statute of limitations on the UM or UIM claim.     

John L. Aris, Esq. is with the firm of Lowenthal & Abrams PC with offices in NJ and PA.  He has been litigating personal injury cases for 35 years throughout both states.   For more information you can reach him at john@lowenthalabrams.com or 484-232-3984.    

_Footnotes:

_{1. Boyle v. State Farm, 456 A.2d 156 (Pa. Super. 1983) (note: the statute of limitations for breach of contract was 6 years when Boyle was decided, but the legislature then changed the breach of contract statute of limitations to 4 years - 42 Pa. C.S. Section 5525(8)).  See also Erie Ins. Exch. v. Bristol, 174 A.3d 578, 579 n. 1 (Pa. 2017).}

_{2. Seay v. Prudential Prop. and Cas. Ins. Co., 543 A.2d 1166 (Pa. Super. 1988); Boyle, supra. at 162.}

3. Hopkins v. Erie Ins. Co., 65 A.3d 453 (Pa. Super. 2013).

_{4. See Krueger v. GEICO Cas. Co., 2020 U.S. Dist. Lexis 272367 (E.D. Pa. 2020); Wegfahrt v. Allstate Fire & Cas. Ins. Co., 2019 U.S. Dist. Lexis (E.D. Pa. 2019); Legos v. Travelers Cas. Co., 2018 U.S. Dist. Lexis 174994 (M.D. Pa. 2018).}