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A Video Explaining the Private Limitation of Action Provision of a First  Party Property Policy  

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The phrase, \\u201cinception of the loss\\u201d in the standard fire insurance  policy has been interpreted to mean the occurrence of the casualty or  event insured against must, if a claim is denied, a suit must be filed  within one or two years of the date of the inception of the loss. The  law is clear that in most situations the limitation period will be  enforced.  The Sixth Circuit held that a one-year limitations period after the  inception of loss or damage in an insurance contract did not conflict  with Kentucky law and was reasonable. [Smith v. Allstate Ins. Co., 403  F.3d 401, 402-04 (6th Cir. 2005); Miller v. Seneca Specialty Ins. Co.  (W.D. Ky., 2019)]  

The inception of loss means \\u201cthe time when the loss was first incurred  or began to accrue.\\u201d [Tucker v. State Farm Mut. Auto Ins., 2002 UT 54,  \\xb6\\xb6 13-14, 53 P.3d 947].  In Oregon, the Supreme Court held that \\u201c[t]he loss occurs and has its  \\u2018inception\\u2019 whether or not the insured knows of it.\\u201d See also Zuckerman  v. Transamerica Ins. Co., supra, 133 Ariz. at 145 (\\u201cthe phrase  \\u2018inception of the loss\\u2019 is not ambiguous and clearly denotes the time at  which the loss occurs\\u201d). Moore v. Mutual of Enumclaw Insurance Co., 317  Or. 235, 855 P. 2d 626 (Or. 07/29/1993).  An insured\'s suit on the policy will be deemed timely if it is filed  within one year after \\u201cinception of the loss,\\u201d defined as that point in  time when appreciable damage occurs and is or should be known to the  insured, such that a reasonable insured would be aware that his  notification duty under the policy has been triggered. \\u201cOnce any damage  becomes reasonably apparent the time begins to run, even if the full  extent of the damage is unknown. The inception of the loss occurs when  the insured should have known that \\u201cAppreciable Damage\\u201d had occurred,  not when the homeowner learned the true extent of the damage.\\u201d (Doheny  Park Terrace Homeowners Assn., Inc. v. Truck Ins. Exchange 132  Cal.App.4th 1076, 34 Cal. Rptr. 3d 157 (2005) and Prudential-LMI Com.  Ins. v. Superior Court, 51 Cal. 3d 647, 798) 

An insured\'s belated discovery of potential coverage is irrelevant to  the inception of loss date. [Abari v. State Farm Fire & Casualty Co.  205 Cal.App.3d 530, 535 Cal. Rptr. 565 (Ct. App. 1988)]  The limitations period is tolled in California from the time the insured  gives notice of the damage to the insurer until the insurer formally  denies coverage. \\u201cThis has been construed to mean \\u2018unequivocal\\u2019 denial  in writing.\\u201d [Migliore v. Mid\\u2013Century Ins. Co. 97 Cal.App.4th 592, 118  Cal. Rptr. 2d 548 (2002)] \\u201cThe reason for the tolling rule is to avoid  penalizing the insured for the time consumed by the insurer  investigating the claim, while preserving the \\u2018central idea of the  limitation provision that an insured will have only 12 months to  institute suit.\\u2019\\u201d [Marselis v. Allstate Ins. Co. 121 Cal.App.4th 122, 16  Cal. Rptr. 3d 668 (2004)] There is no requirement, however, that the  insurer take \\u201cfirm, unmovable positions\\u201d [Liberty Transport, Inc. v.  Harry W. Gorst Co. 229 Cal.App.3d 417, 280 Cal. Rptr. 159 (Ct. App.  1991)] or use particular \\u201cmagic\\u201d words, even the word \\u201cdeny\\u201d to achieve  the requisite unconditional denial.

\\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost equally  for insurers and policyholders.