A property insurance policy’s suit limitation clause stated that a condominium association had to file a lawsuit against its insurer within one year after discovering its loss. The association failed to meet the one-year deadline, and a King County trial court dismissed the association’s lawsuit—including its claims for statutory bad faith.
Harper│Hayes attorneys appealed that decision to the Washington Court of Appeals, arguing that the expiration of the suit limitation clause did not extinguish the insurer’s coverage obligations—so when the insurer refused to pay, the association could sue it for violating Washington’s Insurance Fair Conduct Act and Consumer Protection Act. Division I agreed, ruling that a suit limitation clause is “merely a contractual modification to the statute of limitations,” and that the expiration of the limitation period “does not negate coverage or extinguish [the insurer’s] obligations under the all-risk policy.” W. Beach Condo. v. Commonwealth Ins. Co. of Am., 11 Wn. App. 2d 791, 803, 455 P.3d 1193, review denied, 195 Wn.2d 1026, 466 P.3d 778 (2020). The Appellate Court therefore remanded the case back to the trial court for a jury determination regarding “whether [the insurer] unreasonably denied coverage and violated IFCA and the CPA by failing to pay for that covered damage.” W. Beach Condo, 11 Wn. App. 2d at 805-06. The Supreme Court declined the insurer’s request for review.