Since the start of the COVID-19 pandemic, insured businesses have incurred substantial financial losses around the world. Many insureds have turned to their first-party insurers seeking coverage for their losses; however, most property and business interruption insurers have denied or contested coverage for these losses. In response, more than 2,100 insurance coverage lawsuits having been filed by insureds in the United States since March 2020, and many insureds that have not yet filed suit continue to evaluate their options. In this regard, there is a potential time trap that insureds need to consider so they do not inadvertently lose their right to pursue coverage.
Most states have statutes of limitations that dictate when suit must be filed. Moreover, most first-party insurance policies have contractual limitations provisions that, at least in some cases, may purport to shorten the applicable deadline to file suit. It is therefore important for insureds to carefully review their policy language, assess their circumstances, and consider when they must file suit to comply with all applicable statutory and contractual deadlines.
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