Petitioner insurer sought a peremptory writ of mandate directing respondent Superior Court of Los Angeles County (California) to reverse its order denying the insurer’s motion for summary adjudication of real party in interest insured’s tort cause of action for bad faith breach of a health insurance policy she obtained from the insurer.
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The insurer contended the cause of action was barred by the two-year limitations period for such claims, and was not extended to three years by the policy’s statutorily-mandated limitations provision. Even assuming that the insurer’s interpretation of the statutorily-mandated limitation provision was correct, the court noted that, instead of using the language set forth in Ins. Code, § 10350.11, the insurer had drafted a policy provision that a reasonable insured would read as providing a three-year time limit to sue for any matters arising out of the policy, regardless of the nature of the remedies sought. Because the insurer departed from the statutorily-mandated language, the court applied insurance contract interpretation principles and construed any ambiguities in a manner that protected the expectations of a reasonable policyholder. A reasonable insured would read the policy’s provisions for submission and payment of claims and its limitation provision together to mean that all claims, whether made by the insured or a preferred provider, required written proof, and that the time to sue began to run after a claim was submitted in either manner.
The court denied the petition.