Statute of limitations and time periods to perform post-loss actions by policyholders are important. Some states hold these periods set out in policies as “can’t miss” deadlines. In some states, if you are late, you are out of luck collecting more money even if owed. 

A hail damage loss in Oklahoman was decided against the policyholder who failed to file within the one-year statute of limitation.1 The trial court noted that the parties were debating the amount owed and that the policy had a two-year replacement cost time frame but eventually held that the one-year time limitation to file suit was independent of the two-year replacement cost provision:

First, the Court accepts the plain, ordinary language of the provisions and finds that each provision cannot be reasonably interpreted to have more than one meaning. The one-year suit limitation provision clearly and unambiguously required plaintiff to bring this breach of contract claim within one year from the date of loss. The separate replacement cost provision governed the time period that plaintiff could have recouped the depreciation costs of repairs actually made to the property based on the damage for which State Farm indemnified 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 at actual cash value and then breached paying the replacement cost benefits more than a year after the loss. 

The facts showed that State Farm paid additional amounts more than one year after the loss. It continued to accept new information about the amount of roof damage. Yet, the court held that State Farm did not waive the one-year limitation:

Plaintiff argues that defendant continued to negotiate with him leading up to and beyond the expiration of the one-year suit limitation period, thereby waiving the provision. Plaintiff is mistaken. State Farm accepted plaintiff’s claim and issued payment on June 17, 2019, completing its handling of the claim. Plaintiff disagreed with defendant’s calculation of the damages and hoped that State Farm would reconsider the claim. Defendant explained what was required, in accordance with plaintiff’s ‘duties after loss’ as outlined in the policy, before State Farm would consider a second inspection. Then, each time after receiving new information, defendant explained to plaintiff why the information provided did not justify a second inspection. In all of the discussions plaintiff had with State Farm leading up to and beyond the expiration of the one-year suit limitation on May 26, 2020, defendant State Farm represented that it would require more and different information before it considered a second inspection. These were not negotiations. State Farm had already accepted plaintiff’s claim and issued the payment within one month of the date of loss; these subsequent conversations were simply plaintiff trying to have State Farm re-estimate the claim.

Further, at no point in these discussions did defendant represent to plaintiff that State Farm would pay for the full replacement cost of his roof. Nothing about defendant’s conducted inhibited plaintiff’s ability to file suit in a timely manner under the policy and the delay was due entirely to plaintiff’s own inactions. Plaintiff was not waiting for State Farm to determine its liability, as was the case for the plaintiffs in Prudential and Iglehart. Instead, plaintiff knew exactly what State Farm determined its liability to be, because it completed its assessment and issued payment to him in that amount. Plaintiff could have filed this suit within the one-year period, as required by his policy, without prejudice to his ability to request that State Farm reinspect his roof, but he opted not to do that.

The bottom line is that policyholders need to be aware of deadlines and especially suit limitations. To be safe, a lawsuit needs to be filed, or an agreement to toll the statute of limitations needs to be obtained.  

Thought For The Day 

Life’s tragedy is that we get old too soon and wise too late.

—Benjamin Franklin

1 Barraza v. State farm Fire & Cas. Co., No. 21-cv-0282 (N.D. Okla. Jan. 23, 2023).