IDAHO ADOPTS A BREACH OF CONTRACT STATUTE OF LIMITATION FOR UIM COVERAGE

In Klein v. Farmers Ins. Co. of Idaho, 165 Idaho 832, 453 P.3d 266 (Idaho 2019) the Idaho Supreme Court held that the UIM statute of limitations began to run on the date when the insurance company allegedly breached its contract with the insured. The Court found that the “breach of contract” rule that had been adopted by a majority of jurisdictions applied under Idaho law. In doing so, the Court rejected the “settlement or judgment” rule because if the statute of limitations began to run at the date of settlement or entry of judgment against the tortfeasor, the insured might not know the extent of the UIM carrier’s liability until the insured exhausted the liability coverage of the tortfeasor by settlement or judgment. The Court also rejected the “date of accident” rule, finding that an insured’s recovery from its own insurer depended on the insurance contract, not on the underlying tort.