After being sued for failure to secure a policy, the insurance agents sought dismissal of the insured's suit on statute of limitations ground. Kelly v. Lodwick, 2011 Fla. App. LEXIS 4810 (Fla. Ct. App. April 6, 2011).
A private school was notified its policy would not be renewed after it lapsed on March 1, 2004 at 12:01 a.m. The school's insurance agents received a commitment from a second insurer which agreed to issue a new policy. The insurer required the agents, however, to provide written confirmation indicating that the school desired the policy. The agents failed to provide such written confirmation and the school became uninsured on March 1, 2004 at 12:01 a.m.
During the afternoon of March 1, 2004, a student was injured due to the alleged negligence of a school employee. When the school notified its insurer, it was informed it had no coverage.
On April 20, 2005, the student and her mother sued the school. On January 8, 2009, the parties settled for a final judgment in the amount of $500,000. In return for an assignment of the school's causes of action against its insurance agents, the plaintiffs agreed abstain from executing on the judgment against the school.
On February 9, 2009, the plaintiffs sued the agents. The agents moved to dismiss, arguing that the four-year statute of limitations commenced on March 1, 2004, when the school discovered it lacked coverage. The plaintiffs responded that the limitations period commenced when the final judgment was entered on January 8, 2009. The circuit court granted the motion to dismiss after holding the limitations period commenced on March 2, 2004.
On appeal, the plaintiffs argued that the statute of limitations did not commence until damages occurred. Here, damages to the school did not occur until April 20, 2005 at the earliest, when the school was forced to defend itself against the plaintiffs' claims.
The appellate court agreed with the plaintiffs. Because the school had no coverage, it had to defend itself against plaintiffs' claims and thereby incurred damages. Once the school incurred damages, the four-year limitations period commenced. Thus, the agents motion to dismiss based on the expiration of the limitations period should not have been granted.