The limitation period for first party benefits may commence on the date that the injury occurred

An action by an insured against an insurer under the statutory Section D provisions of a policy – damages caused by an at-fault unidentified driver – is a direct action or claim against the insurer and not a claim in contract.

Tucker v. AXA General Insurance, [2012] N.J. No. 315, September 25, 2012, Newfoundland and Labrador Supreme Court, Trial Division, D.B. Orsbon C.J.N.B.

In October of 2007, the insured was injured by an unidentified driver. On November 1, 2007 counsel for the insured put the insurer on notice of a potential claim under Section D – recovery of damages caused by uninsured or unidentified driver.  In November of 2010, the insured presented a Section D claim to the insurer for compensation for bodily damage arising out of the 2007 accident. The insurer denied the claim in February of 2011. In November of 2011, the insured commenced an action against his insurer claiming under Section D of his own automobile insurance. The insurer applied for an order dismissing the claim on the grounds that it was time barred by the two year limitation period provided under s. 9(2) of Section D.

The main dispute was with respect to when the cause of action arose. The insurer took the position that the cause of action arose on the date of the accident. The insured argued there were a variety of limitation dates available to him depending on which cause of action he pursued.

The Court considered a line of cases from the Court of Appeal dealing with unidentified or under-insured motorists. It concluded the limitation period for a claim against an insurer for Section D benefits arising out of an accident involving an unidentified driver begins to run on the date of the accident, subject to the discoverability principle. The Court went on to clarify that in a matter involving only an unidentified driver, the insured’s only recourse for Section D benefits is a direct action or claim against his or her insurer. A claim for Section D benefits is not a claim for breach of contract. The elements of this cause of action do not include a denial of liability by the insurer and the limitation date is not postponed until such denial arises.

In conclusion, the Court held the cause of action against an unidentified driver is complete when the insured knew or ought to have known that the driver was unidentified and unidentifiable. This may be the point in time at which the insured has made reasonable but unsuccessful efforts to determine the identity of the driver. Thus, the cause of action arose, at the latest, on November 1, 2007, when the insured put the insurer on notice that he would be pursuing a Section D claim.

This case was digested by Djuna M. Field and edited by David W. Pilley of Harper Grey LLP.

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