Strategies, Challenges, and Answers

Nevada Court Enforces Clear and Unambiguous Contractual Limitation of Action

Collins v. Farmers Ins. Exch., 61 F. Supp. 2d 1124 (D. Nev. 1999)Evelyn Collins and her daughter Angela lived in the same house.  They each had their own car and their own auto insurance policy from Farmers Insurance.

One day Evelyn was a passenger in her daughter’s car.  The daughter Angela negligently caused an accident.  Evelyn was seriously hurt.  Evelyn made a claim against her daughter and collected the $100,000.00 auto bodily injury liability limit from the daughter’s policy.  Evelyn also made a claim against her own policy for med pay.  She collected $53,000.00 in med pay benefits.

Evelyn’s policy included a provision that said that Farmers was subject to pay only for that medical care that was provided within two years of the date of loss.  Evelyn’s counsel argued that the contractual limitation provision violated public policy.

In the case of Collins v. Farmers Ins. Exch., 61 F. Supp. 2d 1124 (D. Nev. 1999), the court found that an insurance company could limit its coverage for medical expenses to those services furnished within a certain period of time so long as the policy provisions were clear and unambiguous.  Similar policy limitations these were not contrary to public policy.  See Sullivan v. Dairyland Ins. Co., 98 Nev. 364, 649 P.2d 1357 (1982), Fuerstenberg v. Mowell, 63 Ohio App.2d 120, 409 N.E.2d 1035 (1978) and Johnson v. State Farm Mut. Auto Ins. Co., 78 Ill. App.3d 144, 33 Ill. Dec. 466, 396 N.E.2d 1190 (1979).

If you have questions about whether a provision in your policy is enforceable or whether it might violate public policy, please contact Mike at Mills and Associates for opinions.