If you search the Merlin Property Insurance Coverage Law Blog for “Prescription” or “Suit Against Us” (which I encourage you to do), you will have no shortage of reading material. Although not a new topic, the number of blogs should emphasize the importance of the topic.
As a policyholder or policyholder advocate, let this be a gentle reminder that you need to be aware of statutes of limitations and statutory time limits for filing a lawsuit if a conflict arises. Missing these deadlines may prevent you or your client from initiating legal proceedings, should the need arise.
However, calculating the statute of limitations is not always straightforward because not all statutes of limitations are created equal. It̵
7;s like shopping for a Rolex in a store versus the guy on the street corner flashing the inside of his jacket…from a distance and to the untrained eye, the statute of limitations may initially appear to be the same based on the policy, but, upon further inspection, differences become apparent and some last quite a bit longer than others.Statutes of limitations must often be calculated on a case-by-case basis due to the specific facts of each claim, applying different state laws. If you are unsure whether you or your client are over the deadline for filing a lawsuit, contact an attorney for help, as the decision is not always black and white.
To better understand this, I will describe the application of the limitations period in California to a homeowner’s policy and then provide just a few of the many considerations that may differ when calculating the limitations period for homeowner’s policies in other states.
California
In California, the statute of limitations for breach of a written contract (such as an insurance policy) is four years from the date the contract was breached. thoughinsurers are contractually allowed to shorten that time frame via a policy, and almost always do.
However, there are limits to how much an insurer can shorten that time frame. California Insurance Code Section 2071 sets forth the language used as the standard form of fire insurance. Policies in the state must offer equivalent or better coverage. In the case of “Suit”, the code reads as follows:
No suit or action against this policy for the recovery of any claim shall be maintainable in any court or equity unless all requirements of this policy have been satisfied, and unless commenced within 12 months after the loss commenced. If the loss is related to a state of emergency, as defined in subdivision (b) of Section 8558 of the Government Code, the time limit for bringing an action is extended to 24 months after the onset of the loss.
As a baseline, California insurers may not contractually limit the time frame for bringing an action to less than 12 months from the onset of the loss and 24 months if it was considered an emergency.
This baseline applies regardless of the language in your California policy. But then Cal. ins. Code 2071 only sets the minimum, you should always read the policy to see if your insurer has given more time than the minimum 12 months from the start of the loss, if it has set one. This provision is often listed in the terms and conditions section under a “Suit Against Us” or similarly titled section. For example, many homeowners will allow 24 months to file a claim, regardless of whether the loss was related to a state of emergency.
But the calculation doesn’t stop there. California and some other states offer fair fees for the limitation period. Fair tolling essentially acts as a pause/play button on the “shot clock” restrictions. The “shot clock” starts counting down at the start of the loss. But the “shot clock” is paused as soon as the policyholder notifies the insurer of the damage. The shot clock does not start again until coverage for the injury in question is denied.1
However, a partial rejection of a claim is not always easily identifiable. If you or your client are considering legal action and are unsure of the statute of limitations, contact an attorney immediately to ensure you do not miss the deadline.
State-by-state considerations
There are many differences from state to state in determining whether the statute of limitations has expired. The list below lists just some of the considerations you should keep in mind if you are a policyholder or a policyholder’s attorney in another state, or someone who does business in multiple states:
- The statute of limitations for different lawsuits varies from state to state.
- Not all states allow fair payment of claims. In these states, you may consider tolling agreements to extend the time to file a lawsuit if claims settlement is pending.
- Not all states allow contractual shortening of the statute of limitations.
- There is a difference between statutory and contractual prescription periods. Some states treat ordinances, orders, and emergency rules about each differently.
- Different statutes of limitations may apply for a contractual action (failure to pay benefits under an insurance policy) versus a breach of the covenant of good faith and fair dealing (unreasonable conduct).
The takeaway? Make sure you know the statute of limitations that applies to your claim and how to calculate it. If you need help, ask.
To get started, be sure to check out other blogs on the topic by using the search bar at https://www.propertyinsurancecoveragelaw.com/.
1 Prudential-LMI Com. ins. v. Supreme Court, 51 Cal. 3d 674 (Cal. 1990).
Source link
