State Compensation Insurance Fund v. WallDesign Inc.

*1527 Opinion

Introduction

State Compensation Insurance Fund (the Fund) provided workers’ compensation insurance to WallDesign Incorporated (WallDesign) under two insurance policies. WallDesign failed to pay the premium the Fund claimed was owing; the amount of the final premium was determined through an audit of WallDesign’s records by the Fund. The Fund (through its collection agent) sued WallDesign to recover the unpaid premium. WallDesign demurred to the Fund’s complaint; the trial court sustained the demurrer on the ground the complaint was not timely filed.

We reverse. The insurance policies were executory contracts. Under the terms of the insurance policies, we hold the statute of limitations on the Fund’s cause of action for breach of contract to recover the unpaid premium did not accrue until the Fund demanded payment of the premium after completion of the audit. The complaint was filed within the four-year limitations period and was not time-barred. We publish our opinion in this case of first impression to make clear that where an insurance policy states that the insurer has three years after the end of the policy period to complete an audit of the insured’s records…