The Private Limitation of Action Provision – 3
The courts are now beginning to acknowledge the importance of these clauses. The California Supreme Court, in Prudential-LMI, has established that, in California, they were wrong to pay losses that manifested themselves before a policy incepted or after it expired. Insurers took public-spirited actions at a time when the law was confusing with regard to claims of continuing and progressive losses. Their interpretation of insurance coverages in this manner, however, has resulted in insurers paying claims neither contemplated by the policy nor capable of being paid under any reasonable interpretation of the time bar in the insurance contract or the statute of limitation.
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