SAN ANTONIO JUDGE TEACHES “STATUTE OF LIMITATIONS 101” FOR INSURANCE CLAIMS

Last week, a federal judge in San Antonio dismissed what could well be one of the last straggler lawsuits arising from a series of 2016 storms that deluged the state of Texas with wind/hail claims.  Tobin Endowment v. Great American Assurance Co., No. 5:20-CV-1146-JKP, 2022 WL 817895 (W.D. Tex. Mar. 17, 2022), involved a hail claim arising from an April 2016 storm.  Great American determined the roof could be repaired, did not need to be replaced and paid the actual cash value for the repair in August 2016.  In June 2017, never having received any further communication from Tobin and no indication he had completed the repairs, Great American issued a closing letter.  Tobin took no further action until 2019, when he hired counsel to dispute the claim decision, and filed suit in August 2020.

In granting Great American’s motion for summary judgment on statute of limitation grounds, the court laid out a useful guidebook on statute of limitations rules and practices for first-party claims.  Key principles the court reviewed include:

• Although the standard limitations period for a breach of contract claim is four years from the date the cause of action accrues, parties may contractually modify the limitations period so long as it is not less than two years.

• Texas law does not require an insurer's decision letter to expressly state that the claim is being closed, although a clear statement definitively closing the file is the best practice.

• Where the insurer has paid the claim and closed the file, the cause of action begins to accrue, at the latest, upon the issuance of a final letter and closing of the claims file.

• Unilateral requests by the policyholder to reconsider or reopen the claim do not toll or extend the limitations period following the claims decision.

• Even if the insurance company is willing to review additional materials, the limitations period continues to run if the insurer does not change its position.

• However, the statute of limitations can be tolled if the carrier attempts to string the insured along without either denying or paying a claim.