Statute of limitations on a declaratory judgment action begins to run when the insurer has enough facts to support the contention that it has no duty to defend.

The trial court had held that the statute of limitations begins to run when the insurer is given a copy of the complaint. The en banc Pennsylvania Superior Court disagreed and held that the statute begins to run when the cause of action arises. And, as with any cause of action, that is when the party has a sufficient factual basis to support its contention that it has no duty to defend or indemnify the insured. This opinion notes the general rule that an insurer is required to accept the allegations contained in the underlying complaint as true and provide a defense if the injury alleged could potentially fall within the scope of coverage, and that this is not limited to meritorious actions. Therefore, the statute of limitations on a declaratory action challenging coverage could not be triggered simply by reception of the complaint, which is interpreted in favor of coverage.

_{Case Law Alerts, 4^th Quarter, October 2015}

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