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Insurance Commissioner Issues Emergency Rule Regarding Suit Limitations Contained In Policies

March 01, 2006 BY Karen Karabinos

On February 20, 2006, John W. Oxendine, Georgia’s Insurance and Safety Fire Commissioner, issued a “Notice of Emergency Rulemaking” changing the one-year suit limitations contained in fire policies to four years. Until now, insurers have been permitted to include in their policies a one-year suit limitation requiring that the insured must file suit or an action with 12 months of the date of the loss. The change to a four-year suit limitation will severely lengthen the adjusting of property claims and extend the litigation process between insurers and insureds thereby further overburdening our courts. 


The Commissioner does have power to promulgate by regulation a standard fire policy for use in Georgia and is authorized to issue rules and regulations to enforce the provisions of Georgia’s Unfair Claims Settlement Practices Act. See O.C.G.A. § 33-32-1 and § 36-6-36. Under this authority, the Commissioner stated in his Notice that he acted to address what he called “an increasing number of complaints regarding insurers relying on this time limitation provision to avoid suits for recovery of claims.” The Commissioner further added that while the suit limitation provisions are included in the policy, insurers “make no effort to call the attention of consumers to these limitations in connection with claims process.” According to the Commissioner, these actions gave him reason to believe “that an act, practice of transaction is occurring or is about to occur; the situation constitutes a situation of imminent peril to the public health, safety or welfare; and that the situation therefore imperatively requires emergency action.”

The first emergency regulation seeks to modify the Standard Fire Policy to replace the one-year suit limitation with a four-year provision. In addition, the Commissioner adopted emergency Regulation Chapter 120-2-20-.02-0.19 prohibiting any property, casualty, credit, marine and transportation, or vehicle insurance policy issuing first party insurance coverage for loss or damage to any type of real or personal property from providing a contractual limitation period less favorable than that specified in the Standard Fire Policy promulgated by the Commissioner. 

These emergency regulations became in effect on March 1, 2006 and remain in effect for 120 days. The regulations apply to all policies written or renewed on or after that date. 

In the notice issued by the Commissioner, he stated that during the 120 days, he would issue the final regulations making the proposed change to the suit limitation period permanent. Neither the Notice nor the Commissioner’s website contains any information regarding when, or if, a hearing is going to be held before the final regulations are issued.

Georgia courts consistently have upheld the enforceability of suit limitations contained in policies of insurance. See e.g., Parks v. State Farm General Ins. Co., 238 Ga.App. 814, 520 S.E.2d 494 (1999). In addition, the Georgia courts have held that “the clear mandate of O.C.G.A. § 33-32-1(a)” requires that the language of property insurance policies be as favorable to the insured as the language in the Standard Fire Policy. See Fireman’s Fund Ins. Co. v. Dean, 212 Ga.App. 262, 441 S.E.2 436 (1994). Based on this case law, should the regulations become final, Georgia courts will require insurers to provide a four year suit limitation.

Unfortunately, it appears that the only avenue for insurers to contest the promulgation of any final regulations by the Commissioners is to follow the administrative procedures outlined in O.C.G.A. § 50-13-4.

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
(Editor-in-chief)