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Georgia Adopts New Standard Fire Policy. 12 Month Suit Limitation, "Trap For The Unwary," Gone

March 02, 2007 BY Founding Partners

     In 2006, operating under enabling rules, Georgia Insurance Commissioner John Oxendine revised the Standard Fire Insurance Policy for the purpose of expanding the twelve month suit limitation.

     O.C.G.A. § 33-32-1 establishes the “Standard fire policy,” requiring that no fire policy issued shall fail to conform to all provisions of the “sequence of the standard uniform form prescribed by the Commissioner.”  The Georgia Court of Appeals has held that no such policy can impose any condition upon an insured that is more restrictive than the condition appearing in the Standard Fire Policy.  Fireman’s Fund Ins. Co. v. Dean, 212Ga.App. 262, 441 S.E.2d 436 (1984).

     The process began February 28, 2006, when the Commissioner issued an “Emergency Regulation” based on the commissioner’s statement that “Insurers have included contractual limitations in their policies under which no suit or action...shall be sustainable...unless commenced within twelve months next after inception of the loss,” which “can be difficult for even a diligent consumer to comply with....”  The Commissioner further observed that he had “received a number of complaints indicating that insurers are becoming increasingly strict in requiring claimants to comply rigorously with every requirement of the policy,” which “results in an untenable situation” if the insured is unable to fully comply until more than twelve months after the loss.  This gives the insurer the opportunity to “simply deny even a legitimate claim because the consumer is forever barred....”  Accusing insurers of making “no effort to call the attention of consumers to these limitations,” and making no mention at all of the insured’s legal duty to read the policy, he concluded that “insurers are utilizing such traps for the unwary.”  This “situation of imminent peril” to “the public health, safety or welfare...required emergency action.”

     With that, he suspended the twelve month limitation in fire insurance policies for 120 days, a period ending June 19, 2006, effective for policies written or renewed on or after March 1, 2006.

     Meantime, on June 9, 2006, the Commissioner issued a new 120 day (through October 7) Notice of Emergency Rulemaking, issuing a new Standard Fire Insurance Policy, changing the suit limitation to 2 years for policies written or renewed after June 9, pending the issuance of a permanent Standard Fire Policy pursuant to Regulations Adopted in Accordance With Law.

     The same was adopted October 12, 2006.

     Therefore, the Standard Fire Policy suit limitation now states:

          Suit.  No suit or action on this policy for the

          recovery of any claim shall be sustainable in any

          court of law or equity unless all the

          requirements of this policy shall have been

          complied with, and that last commenced within two

          (2) years next after inception of the loss.

     For insurers attempting to apply the limitation to pending claims, the Georgia law appears to be that there was no suit limitation at all from March 1, 2006 for any policy written or renewed after that date, until June 20, 2006, when the June 4 Notice Of Emergency Rulemaking imposed a revised Standard Fire Insurance Policy with a two year limitation for policies written or renewed after June 20.  That limitation was made permanent on October 12, 2006 with the final adoption of the new Standard Fire Policy.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley