90 N.Y.2d 717 (1997)
In disability insurance policies, the limitations period for commencing a lawsuit begins to run upon the actual termination of the insured’s disability, not upon the insurer’s termination of benefits.
Summary
Maria Panepinto sued New York Life Insurance Company to reinstate disability payments. New York Life argued the suit was time-barred based on a three-year contractual limitations period triggered by their termination of benefits. The New York Court of Appeals held that the limitations period began upon termination of the disability itself, not the termination of benefits, interpreting policy language requiring proof of loss within 90 days of “termination of any period of disability.” Because a factual issue existed as to whether Panepinto’s disability had terminated, summary judgment for New York Life was inappropriate.
Facts
Maria Panepinto filed a disability claim with New York Life in 1984, citing allergic rhinitis preventing her from working with wool. New York Life paid disability benefits for three years and waived premiums. In 1986, New York Life terminated benefits, based on their doctor’s assessment that Panepinto was no longer disabled, and notified her in October 1986. Panepinto sued to reinstate benefits in June 1990, approximately 3.5 years after the notice of termination.
Procedural History
The Supreme Court granted summary judgment to New York Life, holding the action was time-barred by the insurance policy’s three-year limitations period. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether the three-year limitations period in the disability insurance policies began to run when New York Life terminated disability benefits, or when the insured’s disability actually terminated.
Holding
No, because the policy language requires proof of loss within 90 days after “termination of any period of disability,” which refers to the objective termination of the medical condition causing the disability, not the insurer’s decision to cease benefit payments.
Court’s Reasoning
The court focused on the policy language requiring proof of loss within 90 days of “termination of any period of disability.” The court reasoned that this phrase refers to the actual end of the disabling condition, not the insurer’s decision to stop payments. The court rejected New York Life’s argument that the limitations period began upon termination of benefits, stating this would require rewriting the policy. The court also rejected the argument that the limitations period ran independently for each monthly installment, finding this inconsistent with the policy’s overall structure, particularly provisions for a “Maximum Benefit Period” and the distinction between monthly benefits and the continuous period of liability. The court cited the principle of practical construction, noting that New York Life initially made payments for three years without requiring monthly proof of loss. The court noted “[t]he practical construction put upon a contract by the parties to it, is sometimes almost conclusive as to its meaning”. The Court stated “reading ‘any period of disability for which the Company is liable’ to mean monthly payment periods is inconsistent with the policy language when read as a whole” and that the policy clearly distinguishes between monthly benefits from the continuous period of liability. The Court stated further “we adopt the interpretation which most closely comports to the literal terms of the policies and hold that the proof of loss requirements, and, by extension, the three-year limitations period in the policies, commence upon the termination of the disability as an objective, medical fact.”