Court Confirms Two-Year Statute Of Limitations In A Bad Faith UM/UIM Claim Begins When Insured Should Have Known About The Insurer’s Alleged Bad Faith Acts

In an issue of first impression, the Ninth Circuit Court of Appeals affirmed summary judgment for Allstate and held that the two-year statute of limitations for bad faith claims arising out of an uninsured/underinsured motorist claim begins to run when the claimant should have known about the insurer’s alleged bad faith acts, rather than when the claim is resolved.

In Marinelarena v. Allstate Northbrook Indem. Co., 2023 WL 3033498 (9th Cir. 2023), the plaintiff alleged that she suffered injuries in a 2016 car accident with a hit and run driver.

Two years later, in January 2018, Marinelarena made a policy limit demand for uninsured motorist benefits. Allstate declined the demand and insisted on taking steps to further investigate the claim.

Eventually, because the parties could not agree on the value of the claim, they proceeded to uninsured motorist or UM arbitration, after which the arbitrator issued an award in Marinelarena’s favor. Allstate immediately paid the award.