Insurance companies often have clauses that shorten the time to bring an action against those who are less than the statutory restrictions on the action. Some states allow this, and some states do not. An important decision in North Carolina that was submitted yesterday indicates that North Carolina will not allow insurance companies to shorten the limitation period under property insurance. The limitation period is three years from the date of the damage. 1
The insurance company had the following in its insurance:
F. LEGAL ACTIONS AGAINST US. No one may bring legal action against us under this coverage unless: [
2. The action is brought within two years of the date on which the direct physical loss or damage occurred. ”
North Carolina is a state with standard policy law and has the following law, N.C. Gene. State. § 58-3-35, which prescribes the following:
“Stipulations regarding jurisdiction and limitation of measures.
(a) No insurer, self-insurer, service company, HMO, MEWA, provider of continuing care, viatical conciliation provider or professional employer organization licensed under this Chapter shall impose all terms or conditions in its contracts relating to the court or jurisdiction in which any action or action against the contract may be brought.
(b) No insurer, self-insurer. , service company, HMO, MEWA, provider of continuous care, provider of viatical settlement or professional employer organization licensed under this Chapter shall limit the time within which a process or action referred to in subsection (a) of this section may be initiated to less than the period prescribed by law.
(c) All terms and conditions prohibited by this section are invalid.
The 4th Circuit Court of Appeals held:
We conclude that the district court applied this correctly. e relevant statutory provisions, North Carolina General Statute § 1-52 (12) and § 58-44-16, to Skyline's claim for declaratory judgment and breach of insurance contract. When we make this decision, we first look at § 58-44-16 to determine whether the charter regulates property insurance. The title of § 58-44-16 — ‘Fire insurance; ordinary fire insurance provisions’ — is misleading, as it seems to suggest that 1-52 § 12 para. only applies to fire insurance. However, courts in North Carolina have extended the limitation period that applies to fire insurance to homeowners insurance and similar property insurance policies. See Page v. Lexington Ins. Co. 177 N.C.App. 246, 628 S.E.2d 427, 428 (2006) (homeowner's property insurance); Marshburn 353 S.E.2d at 124 (same). In addition, the Supreme Court of North Carolina previously held that "[h] homeowners' insurance is fire insurance" with respect to the state tax code. Stat fd rel. Comm’r of Ins. v. N.C. Fire Ins. Rating Bureau 292 N.C. 471, 234 S.E.2d 720, 728 (N.C. 1977). Here, First Baptist bought property insurance for their properties. Thus, North Carolina provides precedent support for extending the limitation period in § 1-52 (12) and § 58-44-16 to the current property insurance.
Next, we examine whether North Carolina's law extends the application of § 58-44-16 to losses that are not fire-related. In particular, North Carolina courts have extended the limitation period for fire insurance and homeowners insurance, even when the damage was not fire-related. See Page 628 S.E.2d at 430 (loss caused by broken sewer line); Marshburn 353 S.E.2d at 126–28 (loss caused by lightning); Quillen v. Allstate Corp … (W.D.N.C. November 20, 2014) (loss caused by explosion). In the present case, the damage to First Baptist's property was not caused by fire. The loss was instead caused by a windstorm. According to the relevant legal framework, the court can thus apply § 58-44-16 to loss by storm. At this stage of the procedure, the insurance's coverage is what exposes the relevant insurance to prescription in accordance with § 58-44-16 (f) (18), regardless of the extent of the insurance's coverage. See N.C. Gene. State. § 58-44-16 (f) (18) (applies to any "case or action concerning [a real property insurance] policy for recovery of claim", regardless of whether the alleged loss is fire-related).
Since § 58 -44-16 extends to insurances that cover real estate for fire and non-fire losses, we conclude that the district court correctly applied the relevant statutory provisions, North Carolina General Statute § 1-52 (12) and § 58-44-16, to Skyline's claims for declaratory judgment and breach of insurance contract. In the present case, the limitation period began to run on the date of the loss, October 7, 2016, when hurricane winds damaged First Baptist's real estate. Since Skyline brought this action on November 22, 2019, more than three years after the loss date, the district court dismissed Skyline's declaratory judgment and contractual breach claim as statute-barred.
Skyline is a restoration contractor. It argued that the time to begin the limitation period was on the day of the infringement. Although the two-year limitation of the policy did not apply, the court was clear that the date was from the date of the loss, which was more than three years from the time the action was brought.
The bottom line is that North Carolina Property Insurance has a statutory limitation period of three years regardless of the cause of the damage that begins to run on the date of the damage. Please note that this does not apply to federal flood insurance policies issued in North Carolina, which have a federal mandate of one year limitation period that runs from the date of denial.
Thought For The Day
] Music, to me, is a synthesis of many different things. But for me growing up in North Carolina, what I listened to, what I heard, was about black music, about soul music.
1  Skyline Restoration, Inc. v. Church Mutual Ins. Co. no. 20-1549, 2021 WL 5912171 (4th ed. 15 Dec. 2021).