If you want to get paid, it usually helps to send a bill, at least in an expedient fashion. Such was the situation with a New York Court of Appeals ruling yesterday, when it denied American Zurich Insurance Co.’s (Zurich) claims against Hahn Automotive Warehouse.
Hahn originally had purchased general and automotive liability and workers’ compensation policies from Zurich for a period between 1992 and 2003, which had required the insurer to occasionally recalculate premiums and either bill for the owed sum or refund the balance. However, in 2005, Zurich did an audit in which it discovered that it had neglected to bill Hahn for about $1.9 million, and that it also owed Hahn about $260,000 in refunds. Zurich then invoiced Hahn three times in 2005 and 2006, but Hahn refused to pony up.
Hahn then filed a lawsuit in 2006 seeking an affirmation that the insurer’s demand for payment was too late, which led Zurich to countersue for breach of contract.
In the end, the courts sided with the policyholder. By a 4-3 vote, the appeals court affirmed a lower court’s ruling that New York’s six-year statute of limitations for breach of contract barred Zurich’s claims against Hahn.
“[T]he statute of limitations...was triggered when [Zurich] had the right to demand payment, not when it actually made the demand," Judge Victoria Graffeo wrote in the court’s decision. "To hold otherwise would allow Zurich to extend the statute of limitations indefinitely by simply failing to make a demand.”
For more, read Reuters.