American States Insurance Company v. Joann LaFlam
69 A.3d 831
R.I.2013Background
- This RI Supreme Court case arises from a certified question by the First Circuit on UM/UIM contract limits.
- The ASIC policy contains two components: a three-year statute and a date-of-accident accrual trigger.
- LaFlam notified ASIC of a potential UM/UIM claim on April 3, 2008; settlement was authorized in 2010.
- ASIC filed a federal declaratory judgment action on August 25, 2010 seeking time-bar relief.
- District Court and Court of Appeals questioned public policy and the combined effect of the two provisions.
- RHode Island Supreme Court held the contractual limitations are void; accrual occurs on insurer’s breach/demand denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the two UM/UIM contractual limits are void as public policy. | LaFlam argues the combined provisions defeat the statute’s purpose. | ASIC contends the provisions are valid under public policy. | Yes; the provisions are void as against public policy. |
Key Cases Cited
- Henderson v. Nationwide Insurance Co., 35 A.3d 902 (R.I. 2012) (public policy guidance for UM/UIM coverage)
- Barry v. State Farm Mutual Automobile Insurance Co., 892 A.2d 923 (R.I. 2005) (accrual rules for prejudgment interest and underlying claim)
- Pickering v. American Employers Insurance Co., 109 R.I. 143 (1971) (UM/UIM action is contract-based; contract accrues when breached)
- DiTata v. Aetna Casualty & Surety Co., 542 A.2d 245 (R.I. 1988) (public policy limits on UM/UIM provisions; double recovery)
- Oanes v. Allstate Insurance Co., 617 N.W.2d 401 (Minn. 2000) (accrual not ripe until underlying action resolved)