Ohio Casualty Insurance Company v. State of Indiana

The Court of Appeals of Indiana ruled that a suit limitation provision contained in an insured’s policy applied to a suit against its insurer even when the underlying embezzlement suit against the tortfeasor was governed by the applicable statutory limitation. In 2014, a deputy in the Clerk-Treasurer’s office in Lawrenceburg, Indiana plead guilty to wire fraud after issuing excessive paychecks to herself. The city was insured against commercial crime under its policy with Ohio Casualty. Per the terms of the policy, in addition to the state statutes that allow for the purchase of such insurance contracts, the State of Indiana was considered a co-insured under the policy. Proof of loss was not submitted until 2017, over three years after the city had notice of the loss. While the applicable statute of limitation for the underlying tort had not run, the policy’s suit limitation provision of two years had. The State of Indiana argued that this provision should not apply to them, but the court ruled that the State could not recover, as it determined the State was a co-insured under the policy and therefore could not recover the nearly $275,000 in damages where the city was barred from doing so under the explicit terms of the policy.