Lumbermen's Mutual Casualty Insurance Company (Lumbermen's) issued a homeowner's policy to Sandra Mathis (Mathis) for the period June 6, 2000 to June 6, 2001. On July 16, 2000, Mathis's home in Madison, Illinois was destroyed by fire and she reported her loss to Lumbermen's. In a letter dated December 7, 2000, Lumbermen's denied her claim, citing misrepresentation and arson. On January 31, 2002, Mathis sued Lumbermen's, for breach of contract and defamation; Lumbermen's filed the suit's dismissal on April 1, 2002. The insurer argued that Mathis’ suit was filed after the policy's one-year time limitation.

The policy provision required a suit to be filed within one year of the date of loss. However, this one year period is extended by the number of days between the date proof of loss is submitted and the date the claim is denied in whole or in part. Mathis argued that Lumbermen's did not comply with an Illinois Department of Insurance Administrative Code that required the insurance company to specifically state in the claim denial letter the number of days remaining in which to file suit. On August 29, 2002, the trial court held that Lumbermen's had waived the time limitation provision and Lumbermen's appealed on the basis of a question certified by the trial court. The insurer asked whether non-compliance with a Department of Insurance administrative regulation could result in its waiving of the limitation on filing a suit.

Lumbermen's argued that the time limitation section did not apply because Mathis did not file a proof of loss. The court found that Mathis did notify Lumbermen's of the loss and that Lumbermen's never requested a proof of loss. As a result, Lumbermen's waived compliance with the policy proof of loss requirement.

Lumbermen's also argued that the insured was responsible for reading the policy and knowing its contents, especially the "Suit Against Us" section. The court held that this argument did not apply in this case because the requirement of compliance with the insurance regulation is not contained in the policy but is communicated outside the policy. In fairness to the insured, actual notice (not constructive notice) of the time remaining to file suit was needed.

The appellate court affirmed the certified question and found that the insurer's violation of an insurance regulation did waive the policy's time limitation provision.

Sandra S. Mathis, Plaintiff-Appellee, v. Lumbermen's Mutual Casualty Insurance Company, Defendant-Appellant. Illinois Appellate Court. No. 02-L-205. Filed December 30, 2004. Affirmed. 2005 CCH Personal and Commercial Liability Cases. Paragraph 1058.