The Rogak Report: 30 Mar 2007 **Uninsured Motorists - Statute of Limitations**
- TIME LIMIT FOR FILING UM CLAIM DOES NOT BEGIN TO RUN UNTIL ADVERSE
VEHICLE IS DECLARED "UNINSURED"
Matter of Preferred Mut. Ins. Co. v. Rand and Laureano, 2007 NY Slip
Op 50625(U) (Supreme Court, Richmond County) (McMahon, J.)
On May 31, 1998, a vehicle owned and operated by the respondent
Melissa M. Rand was involved in a collision with a vehicle owned by
Tracy Augustyne. Crystal Laureano was a passenger in Rand's vehicle.
In two separate letters dated June 10, 1998, the respondents'
attorney provided notice to Preferred Mutual Insurance Company of
their uninsured/underinsured claim under Rand's policy. In a letter
dated July 7, 1998, Preferred Mutual informed the respondents'
attorney to forward copies of any legal papers and also instructed
the respondents to complete and return "Notice of Intention to Make
Claim" forms. It is undisputed that the respondents never completed
and returned these forms, nor did they forward copies of any legal
In a letter dated October 27, 1998, Preferred Mutual informed the
respondents' attorney that in light of the fact that Allstate
Insurance Company had admitted coverage of the Augustyne vehicle, it
was denying coverage under the Supplementary Uninsured/Underinsurance
Motorists endorsement as the limit of that policy was $25,000 per
person and $50,000 per accident for SUM coverage and Allstate's
policy must at least equal that amount.
The claimants commenced a personal injury lawsuit against Augustyne;
however, Allstate ultimately denied coverage based on non-permissive
use. After a hearing on September 6, 2006, the court found that the
operator of the Augustyne vehicle did not have permission to use it.
In an order dated September 14, 2006, this court dismissed the action
of Rand v. Augustyne based on a determination of non-permissive use.
On September 12, 2006, the respondents demanded arbitration of
uninsured motorist benefits. Preferred Mutual commenced the instant
proceeding to permanently stay arbitration on September 29, 2006.
In support of the application, Preferred Mutual contended that the
arbitration must be permanently stayed because the demand was made
beyond the statute of limitations.
The Court wrote, "Claims made under the uninsured motorist
endorsement of automobile insurance policies are governed by the six-
year statute of limitations applicable to contract actions (see,
Matter of De Luca, 17 NY2d 76, 78 ); Jenkins v. State Farm Ins.
Co., 21 AD3d 529 [2d Dept. 2005]). The claim accrues either when the
accident occurred or when the allegedly offending vehicle thereafter
becomes uninsured (see, Matter of Allstate Ins. Co. v. Giordano, 108
AD2d 910 [2d Dept. 1985], affd. on opinion below 66 NY2d 810 ;
Matter of Allstate Ins. Co. v. Torrales, 186 AD2d 647 [2d Dept.]). As
the respondents' demand was made more than six years after the
accident date, they are required to come forward with legally
sufficient proof that a later accrual date applies, and that they
diligently sought to determine whether the offending vehicle was
insured on the date of the accident (Matter of Allstate Insurance Co.
v. Morrison, 267 AD2d 381 [2d Dept. 1999])."
"Contrary to Preferred Mutual's contention, the respondents have
established that the later accrual date of the court's determination
that the Augustyne vehicle was driven without permission should
apply. The record establishes that less than six months after the
accident, the respondents ascertained that the offending vehicle was
covered by an insurance policy issued by Allstate. Additionally, the
respondents commenced an action against the alleged tortfeasor within
the statute of limitations. Throughout the discovery phase of the
litigation, Allstate did not disclaim liability or deny coverage but
instead chose to defend Augustyne. The question of non-permissive use
was vigorously contested, requiring a hearing prior to trial. Not
until the court determined that the Augustyne vehicle was driven
without permission, did the offending vehicle become uninsured (see,
Rowell v. Utica Mut. Ins. Co., 77 NY2d 636, 640 ); Matter of
Liberty Mutual Ins. Co., 271 AD2d 534 [2d Dept. 2000]). Accordingly,
there could be no demand for uninsured motorist benefits until after
such determination was made (see, Matter of Allstate Ins. Co. v.
Giordano, 108 AD2d 910, supra; Matter of Liberty Mutual Ins. Co., 271
AD2d 534, supra; see also, Rose v. Hartford Ins. Co., 9 AD3d 402 [2d
"In the alternative, Preferred Mutual asserts that it is entitled to
deny coverage because the respondents breached a condition of
coverage under the policy (see, New York Central Mutual Fire Ins. Co.
v. Aguirre, 7 NY3d 772 ; Matter of New York Central Mutual Fire
Ins. Co. v. Gonzalez, 34 AD3d 816 [2d Dept. 2006]). Preferred Mutual
alleges that the respondents should have completed and returned a
sworn 'Notice of Intention to Make Claim' form and should have
provided copies of the legal papers concerning the personal injury
action. This argument is flawed because Preferred Mutual denied
coverage for underinsurance benefits in 1998. Once coverage was
denied on that claim, there was no reason for the respondents to
complete a 'Notice of Intention to Make Claim' form or to provide the
legal papers. After the respondents demanded arbitration of uninsured
benefits, it was the obligation of Preferred Mutual to furnish such
forms within 15 days. However, instead of providing the forms, it
denied coverage by commencing this proceeding. Thus, the respondents
cannot be said to have breached any condition of coverage under the
The Petition was dismissed and the case moves to UM arbitration
Comment: The determination of whether an offending vehicle
is "uninsured" can come about in several ways. Often there is a
framed issue hearing, and the court's determination may wind up
setting the date, thus starting the clock ticking. In this case, the
offending vehicle did have insurance, but became "uninsured" the
moment that Supreme Court determined that its use at the time of the
accident was non-permissive. At that moment, the statute of
limitations countdown began.