(Article from Insurance Law Alert, September 2025)
For more information, please visit the Insurance Law Alert Resource Center.
Holding
An insurer had no duty to indemnify losses based on the policy’s limitation period, late notice and the failure to establish coverage under a business income provision. Transworld Food Service, LLC v. Nationwide Mutual Ins. Co., 2025 U.S. App. LEXIS 21762 (11th Cir. Aug. 26, 2025).
Background
Transworld, a food supplier for Atlanta restaurants, incurred losses at its warehouse during three consecutive years. In 2016, a fire-water main failed, resulting in a flood that damaged the warehouse structure and equipment contained therein. Transworld notified Nationwide, and the insurer made partial payments for property damage and lost income over the following several months. Nationwide made its final payment in March 2018.
In 2017, roofers accidentally cut the freon supply line to the freezer compressor, which required repair of that component and the destruction of spoiled food. Before notifying Nationwide, Transworld made a claim with the roofer’s insurer, which made some payments. After the final payment was issued by the roofer’s insurer, Transworld reported the loss to Nationwide, which agreed to pay for replacement of the compressor but not for lost income.
In 2018, the unit next to the warehouse sprung a leak that ruined the food in Transworld’s freezer. Transworld first notified the landlord’s insurer, and when its claim was denied, it turned to Nationwide for lost business income and coverage for the spoiled food.
In 2019, Transworld sued Nationwide for breach of the policy and bad faith. A Georgia district court granted Nationwide’s summary judgment motion, and the Eleventh Circuit affirmed.
Decision
Transworld’s 2016 Loss
Nationwide’s policy required Transworld to bring a suit within one year of the date on which the damage or loss occurred. While Georgia law strictly enforces such contractual limitation periods, it also recognizes that an insurer may waive such clauses by working with the policyholder to resolve the claim after the period’s expiration date. The court noted that the evidence indicated that Nationwide waived the one-year time bar by working with Transworld to resolve the 2016 loss (i.e., sending an adjuster and making numerous payments) in the months after the loss.
The central issue was whether that waiver was “permanent” or conversely, whether it merely tolled the limitation period, such that the tolling period ends when negotiations cease and the insurer makes a final decision about the claim. The court endorsed the latter view, finding that Nationwide merely tolled the limitation period rather than waived it altogether. Therefore, the tolling period ended when Nationwide made its final payment on March 22, 2018, and denied further liability. Because Transworld waited more than one year after that date to bring suit, the suit was barred by the limitation clause.
Transworld’s 2017 Loss
Nationwide’s policy required Transworld to give “prompt notice” of loss or damage, which the court deemed to be a condition precedent to coverage. The court ruled that because Transworld waited nearly four months after it discovered the damage to notify Nationwide, it was not entitled to coverage. The court rejected Transworld’s assertion that it was justified in waiting because it had initially submitted a claim to the roofer’s insurer and was waiting a determination on that front.
Transworld’s 2018 Loss
Nationwide’s policy provided coverage for lost business income sustained “due to the necessary suspension” of Transworld’s operations during the “period of restoration.” The court ruled that Transworld was not entitled to coverage for lost income because the company continued its operations notwithstanding the damage. In so ruling, the court held that “suspension” requires a complete cessation of operations and that a partial shutdown is insufficient.
Comments
The Eleventh Circuit rejected Transworld’s contention that the notice issue was one of fact for the jury, ruling instead that an unjustified four-month delay is not prompt as a matter of law under Georgia precedent. Additionally, the court deemed it immaterial that the policy language presented in Georgia precedent did not require “prompt” notice, but rather, notice “as soon as reasonably possible” or “as soon as practicable.” The court found that there was “no material difference” between those notice provisions and the one in Nationwide’s policy.