Authored by Donald Dinnie and Alanna Bollweg.
In mid-2025 a U.S. district appeals court succinctly reiterated the principle of estoppel by silence. Estoppel is a legal principle preventing a party from asserting a right in a way that conflicts with prior conduct when another person has reasonably relied on the prior conduct to their detriment.
The plaintiff in this matter suffered injuries stemming from a car-accident in 2019. The plaintiff, who was an employee covered under his employer’s insurance policy, attempted to claim from the employer’s insurer.
While the insurer did not formally respond to requests for the policy documents in 2020, the insurer repeatedly enquired about the insured’s medical treatment, medical bills and damages suffered over the course of 2020, 2021 and 2022. When the insurer finally disclosed the policy to the plaintiff in 2023, a time-bar clause was uncovered which stated that “any legal action against [the insurer] … must be brought within two years after the date of the ‘accident.’”.
When the plaintiff was unsuccessful in obtaining payment for his claim, he instituted action against the insurer in 2023, well after the expiration of the two-year time-bar clause in the policy.
The appeal court found in the plaintiff’s favour, preventing the insurer from invoking the time‑bar clause, holding that the insurer’s conduct satisfied the requirements for estoppel:
- The conduct of the insurer misled him by withholding, and thereby concealing, the time-bar clause until after its expiry.
- The plaintiff reasonably relied on the conduct of the insurer because nothing about the insurers conduct hinted at the impending expiry of a time-bar, and its enquiries into the plaintiff’s medical costs suggested the insurer was acting in good faith to evaluate the claim.
- The plaintiff was prejudiced by the conduct of the insurer because the insurer’s conduct resulted in the plaintiff filing a late complaint which was then dismissed based on the insurers reliance on the time-bar clause.
This judgment serves as a reminder to insurers to ensure that they treat customers fairly. Neither the courts nor the Ombud are likely to find for the insurer under these circumstances.