Statutes of limitations and time periods for taking actions after the loss of policyholders are important. Some states keep these periods listed in the policies as “can’t miss” deadlines. In some states, if you’re late, you’re out of luck collecting more money even if you owe.
A hail damage loss in The Oklahoman was decided against the policyholder who did not file within the one-year statute of limitations.1 The trial court noted that the parties discussed the amount owed and that the policy had a two-year replacement cost time frame but eventually held that the one-year time limit for filing suit was independent of the two-year replacement cost provision:
First, the Court accepts the plain, plain language of the provisions and finds that each provision cannot reasonably be construed to have more than one meaning. The one-year statute of limitations clearly and unambiguously required plaintiff to bring this breach of contract claim within one year of the date of the loss. The separate replacement cost provision governed the period of time that the plaintiff could have recovered the depreciation costs of repairs actually made to the property based on the damage for which State Farm reimbursed him. There are no reasonable alternative interpretations of these provisions.
The court did not say what would happen if State Farm paid what was owed for the actual cash value and then defaulted on paying the replacement cost benefits more than a year after the loss.
The facts showed that State Farm paid additional amounts more than a year after the loss. It continued to accept new information on the amount of roof damage. Nevertheless, the court held that State Farm did not waive the one-year limitation:
Plaintiff alleges that Defendant continued to negotiate with him up to and after the expiration of the one-year statute of limitations and thereby waived the provision. The plaintiff is wrong. State Farm accepted the claimant̵7;s claim and issued payment on June 17, 2019, ending its processing of the claim. The plaintiff disagreed with the defendant’s calculation of damages and hoped that State Farm would reconsider the claim. Defendant explained what was required, pursuant to Plaintiff’s “post-loss duties” described in the policy, before State Farm would consider a second inspection. Then, each time after receiving new information, the defendant explained to the plaintiff why the information it provided did not warrant a second inspection. In all discussions Plaintiff had with State Farm leading up to and after the expiration of the one-year statute of limitations on May 26, 2020, Defendant State Farm indicated that it would require more and different information before considering a second inspection. There were no negotiations. State Farm had already accepted the claimant’s claim and issued the payment within one month of the date of loss; these subsequent calls were simply the claimant trying to get State Farm to reevaluate the claim.
Further, at no time in these discussions has defendant advocated to plaintiff that State Farm should pay for the full replacement cost of his roof. Nothing done by the defendant impeded the plaintiff’s ability to timely bring an action under the policy and the delay was entirely due to the plaintiff’s own inaction. The plaintiff did not wait for State Farm to establish its liability, as was the case for the plaintiffs in Prudential and Iglehart. Instead, the plaintiff knew exactly what State Farm determined his liability to be, because it completed its assessment and issued him payment in that amount. Plaintiff could have filed this action within the one-year period required by his policy, without affecting his ability to request that State Farm re-inspect his roof, but he chose not to.
The bottom line is that policyholders must be aware of deadlines and especially limitations in the suit. To be sure, a lawsuit must be filed or a statute of limitations agreement must be obtained.
The tragedy of life is that we grow old too soon and wise too late.
1 Barraza v. State Farm Fire & Cas. Co.No. 21-cv-0282 (ND Okla. Jan. 23, 2023).