Merritt Personal Lines Manual: Limiting Your Right to Sue the Insurance Company

Legal Actions: No legal or equitable action can be taken against us under this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No action will be brought against us after the expiration of 3 years after the time written proof of loss is required to be furnished.

Since the policy is a legal contract, the insurance company is obligated to pay the described benefits for covered expenses. You can sue the company if it doesn't perform its legal obligations. But there are time limits on this option. No legal action may be taken against the company prior to 60 days after proof of loss has been furnished, or more than three years after the date proof of loss is required to be furnished.

An example: You submit a proof of loss and demand immediate payment. You've got no right to sue until the insurance company has taken at least 60 days to verify the charges and determine whether they are reasonable and customary.

An example: You submit proof of loss for hospital bills. The insurance company doesn't deny the claim, but it doesn't pay it either. You get on with your life and four years pass before you realize the insurance company never reimbursed you. You can't sue the company, because you've forfeited the right of legal action by waiting too long.