Massachusetts Appeals Court holds that contractual limitations period in life insurance policy does not apply to 93A claim

Daniel Brown purchased a life insurance policy from SBLI.  Ten years later, the premium on the policy was due to increase by more than ten times.  An SBLI sales agent left Daniel and his wife Michelle a voicemail message pointing out that the premium was going through the roof and that they had options available to keep the coverage going.  He recommended that they purchase a new policy. 

 

Daniel did not pay the increased premium, so his policy lapsed.  He also did not  purchase a new policy.  When Michelle learned of this, the SBLI agent advised her that Daniel should apply for a new policy.  He did not offer the option of reinstating Daniel's policy pending approval of the new policy.  Daniel's application for a new policy was denied.  Michelle, who had separated from Daniel, was not informed of the denial until after Daniel's death a month later. 

 

Michelle sued SBLI more than two years after Daniel's death, for breach of contract, deceit by failing to recommend that she should continue to pay the premium on the old policy while the application for the new policy was pending, negligent supervision of the agent, and breach of ch. 93A. 

 

SBLI argued that the suit was untimely because the policy set forth a two year contractual limitations period for any suit "brought on or in respect to this policy." 

 

Michelle agreed that her breach of contract claim was time-barred.  In Brown v Savings Bank Life Ins. Co., 93 Mass App. Ct. 572 (2018), the Massachusetts Appeals Court held that the contractual limitations periods did not apply to the deceit and negligent supervision claims.  It also held that the contractual limitations period did not apply to the 93A claim.  The court gave a number of interrelated reasons for that decision.  First, the claim was based on deceit and did not arise "in respect to" the policy.  Second, the term "on or in respect to" is ambiguous and must be interpreted against the insurer.  Third, imposition of a contractually shortened limitations period on a tort-based consumer protection claim would violate public policy.