A recent federal decision out of Pennsylvania sends a clear warning to mortgagees, banks, and loss payees who rely on property insurance to safeguard their interests. In Balint v. Allstate Insurance Company, 1 the court held that a lender’s claim under a homeowner’s policy was barred because it was filed outside the policy’s one-year suit limitation period. The case is a lesson that even when a mortgagee or loss payee has an independent right to recover under a policy, that right is not immune from the time limits to file suit, which are written into the contract and applicable in many states.
The facts of the case were tragic. Kenneth Havir died in April 2022, leaving behind a home in Scranton, Pennsylvania. Two days later, the property was destroyed by a fire intentionally set by his son, who died by suicide the same day. The estate, through Terri Balint, filed a claim with Allstate, which denied coverage based on the intentional act exclusion. LoanDepot, the mortgage holder, notified Allstate of its interest but waited over 15 months after the loss to formally enforce its rights by intervening in Balint’s lawsuit. Allstate moved for summary judgment against LoanDepot, pointing to the policy’s clear provision that any suit or action must be brought within one year after the loss. The court agreed, holding that LoanDepot’s claim was untimely and therefore barred.
The court relied on long-standing Pennsylvania precedent, which establishes that a mortgagee’s rights under an insurance policy, while independent from the insured owner’s rights, remain subject to the same contractual limitations. The fact that a lender has a separate insurable interest and rights under the policy does not give it license to disregard deadlines built into the policy. Both the owner and the mortgagee are bound by the suit limitation clause.
This decision offers several lessons for mortgagees, banks, and loss payees. First, suit limitation provisions in property insurance policies apply equally to all parties claiming benefits, including lenders and loss payees. Second, lenders must act promptly after a loss, carefully tracking limitation periods even if claim discussions or coverage disputes are ongoing. Third, mortgage servicers should immediately investigate any denial, obtain copies of the policy and relevant correspondence, and calendar critical deadlines as soon as they become aware of damage to the property. Fourth, while a mortgagee’s rights may be contractually independent from those of the insured, those rights do not extend beyond the policy’s explicit conditions, and action within claim deadlines is essential.
There are some important practical steps I suggest for protecting a lender’s interest. Mortgage companies, banks, and their loan servicing companies should maintain a reliable system for tracking claims, dates of loss, and policy deadlines. They should intervene quickly if the property owner initiates litigation, rather than waiting until after the limitations period has expired. Reviewing the policy language at the outset of a claim is essential to determine whether any mortgagee or loss payee clause alters the standard time limits. Finally, staff responsible for monitoring insurance claims should be trained to recognize the significance of suit limitation clauses and to act decisively when a loss occurs.
For lenders and other parties with a financial stake in insured property, the failure to respect those deadlines can mean the loss of otherwise valid coverage. Vigilance, timely action, and strong internal claim management procedures are the best tools to ensure that mortgagees, banks, and loss payees preserve their rights when disaster strikes.
For those interested in the rights of mortgagees and loss payees following a loss, I suggest reading an article by Corey Harris, Mortgage Company Protections When an Insured Fails to Submit a Proof of Loss, and Loss Payable Clauses and Standard Mortgagee Clauses: Know the Basic Rule and Difference.
Thought For The Day
“If you owe the bank a hundred pounds, you have a problem. But if you owe a million, it has.”
—John Maynard Keynes
1 Balint v. Allstate Ins. Co., No. 3:23-CV-1190. 2025 WL 2375269 (M.D. Penn. Aug 14, 2025).