Assert Rights Promptly or Lose


Insurer Reopening Investigation After Denial Subject to Reservation of Rights is Effective

It is common practice for an insurer to deal fairly and in good faith with its insured. It is not required, however, for an insurer to give up its rights under the policy of insurance because an insured asked it to reconsider a partial denial of a claim. In Write Start Early Christian Education Center, LLC v. National Fire & Marine Insurance, Case No. 20-3456, United States Court Of Appeals For The Sixth Circuit (November 12, 2020) Write Start Early Christian Education Center sued National Fire and Marine Insurance to obtain coverage after a break-in caused damage to the Center. National Fire moved to dismiss the lawsuit as because the suit was filed more than two years after the loss and was, therefore, time barred.


National Fire provides Write Start with commercial property insurance. The policy covers damage from various causes of loss subject to several conditions and exclusions. One condition is a contractual period of limitations. If Write Start disputes a coverage decision, it must sue National Fire within two years after the damage occurs.

In May 2016, Write Start suffered property damage from a break-in. It filed a claim with National Fire. On July 21, National Fire largely denied all but a small portion of the claim.

In March 2018, two months before the contractual limitations period ended, Write Start asked National Fire to reopen the claim. The insurance company agreed to examine any new evidence of damage. But it “continue[d] to stand by” its partial denial of coverage and emphasized that it maintained a “complete reservation of rights,” “without waiver of all of [its] rights and defenses under the policy,” “including the contractual period of limitations.” Write Start offered a new repair estimate.

In June 2018, National Fire responded that it had examined the repair estimate and re-inspected the property but found no reason to change its original decision. It also requested documentation required under the policy to support Write Start’s request for reconsideration. The letter again noted that National Fire reserved all contractual rights and could waive them only “expressly and specifically” in writing.

Write Start reaffirmed National Fire’s original claim decision, noting that National Fire’s three-month-old request for supporting documentation had gone unanswered and that the policy required that documentation within 60 days. Almost three years after the break-in, Write Start sued National Fire for breach of contract in state court. National Fire filed a motion to dismiss the case for failure to state a claim, invoking the contract’s time bar. Between March and October after National Fire produced the letters the district court dismissed the complaint as time barred and denied leave to amend on futility grounds.


Ohio, the state where the loss occurred, enforces reasonable contractual limitations periods. A two-year limitations period counts is reasonable.

The complaint admits that it stems from a May 11, 2016 incident and that Write Start filed its lawsuit on April 12, 2019. National Fire’s motion to dismiss legitimately incorporated the insurance policy and its two-year limitations period. The policy was referred to in the complaint and was indeed the premise of Write Start’s lawsuit. The complaint did not plead any theories or facts indicating the limitations period did not apply. The district court, therefore, properly dismissed the case on time-bar grounds.

A district court may deny leave to amend a complaint where amendment would be futile and an amended complaint that would not survive a motion to dismiss counts as futile.

The key difference between the original complaint and the amended complaint is Write Start’s new allegation that National Fire waived the limitations period through its correspondence with Write Start. But the new allegations were no better than the old ones.

Under Ohio law, an insurance company may waive a contractual limitations clause by recognizing liability or holding out a reasonable hope of adjustment, such that the insured delays filing a lawsuit. To decide whether an insurance company has done so, the court looks at its “acts” and “declarations.” Mere negotiation or discussion concerning the liability of the company does not suffice. The same is true for investigating a claim or reopening an investigation. Even a partial recognition of liability does not waive the limitations period for the disputed portion of the damage, at least where the insurer clearly states the extent of the liability and refers to the contractual limitations clause.

The letters between Write Start and National Fire, incorporated into the amended complaint by reference, render Write Start’s waiver allegations implausible. All they show is that, when Write Start asked National Fire to reopen investigation to consider new evidence, National Fire agreed while reserving its rights including the right to assert the time bar. The Sixth Circuit affirmed.


The reason for time bars in insurance policies is to protect the insurer and the courts from dealing with stale claims where the witnesses memories are weakened if not destroyed and evidence is lost. Write Start had two years to sue National Fire. They took three and they were shut down, properly, by the District Court for the delay could not be honored and the claims of waiver were defeated by admissible evidence that National Fire refused to waive anything and even went so far as to advise Write Start and its counsel of the limitation period and that it refused to waive any of its rights.

© 2020 – 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. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. last two issues of ZIFL here. 

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