Statute of Limitations on Insurance Claims

A car that has been in a fender bender.
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Insurance should be there when you need it, but the time to file a claim is limited. State law sets a statute of limitations on lawsuits and insurance claims arising from personal injuries, auto accidents and other causes. If you believe you have a valid claim, check carefully for this important date before the statute runs and your claim is barred.

Basic Statute of Limitations Law

State law sets the statute of limitations, or SOL, on filing lawsuits arising from an auto accident, a breach of contract, medical malpractice, personal injury and other causes of action. The SOL varies according to the type of claim; in California, for example, you have two years for a personal injury case and three years for property damage. The purpose of these statutes is to protect defendants who may have difficulty gathering evidence and witnesses to dispute a dated, "stale" insurance claim.

Start and End Dates

The statute of limitations clock begins to run on the date of the cause of action. This is an easy date to calculate in the case of personal injury and auto accidents but not quite as easy in medical malpractice claims. For a bad-faith claim against an insurance company, the statute is extended. The SOL is clocked from the date the insurer wrongfully notified you that coverage was lacking or otherwise acted in bad faith to avoid a legitimate payout.

Contractual Limits

An insurance contract may also set its own limit on the amount of time you have to file a claim. For example, a business fire insurance contract may require you to file a claim for damages within a year from the date the damage occurred. Such a clause may not be enforceable if it's shorter than the SOL set by state law for the same cause of action. In Texas, for example, any agreement that sets a limit shorter than two years for a breach of contract lawsuit -- the state law limit -- can't be enforced.

Check It Twice

If there's any doubt about the statute of limitations that applies to your claim, consult your insurance company or your attorney. If there's a contractual limit, it should be spelled out explicitly in the contract of insurance that you signed. In the case of liability claims against someone else, such as for an auto accident, state law would apply. Since you're not a party to the contract, the other driver's insurance would not be able to shorten your time to file a claim.

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