AAA allowed to avoid UIM obligation based on passage of contract claim period

Kevin Krueger, a AAA insured, was injured in a motor vehicle accident.  Krueger had bought Underinsured Motorist Coverage from AAA, and the policy required that me make a claim for arbitration with regard to these benefits within three years of his injury.  Five days before the three-year limitation period was to run, Krueger's lawyer sent a notice of retention, indicating that the at-fault had only $20,000.00 of coverage.  The letter did not explicitly demand arbitration of the UIM claim, but rather sought AAA's permission to resolve the underlying claim as required by the policy.

The Court held that since the insured did not explicitly demand arbitration or file litigation within three years, a UIM action was precluded by the contract language.  The Court also held that there was insufficient evidence of a misrepresentation by AAA to warrant an equitable estoppel claim against the insurer.  Krueger's counsel argued that he was told by a claims adjuster that Krueger did not buy UIM coverage, however, the attorney could not establish that this conversation occurred before the three-year time limit had expired.