When Does a “Date of Loss” Actually Manifest in California?

Statutes of Limitations are extremely important to policyholders and their attorneys. After all, when a statute runs, your rights to file a lawsuit in hopes of recovery disappears. However, the age old question of when is an actual “date of loss” or “manifestation” in property insurance law is still debated, depending upon the circumstances.

In order to calculate a statute for breach of contract or bad faith causes of action (or any tolling during adjustment of a claim), step one is to actually ascertain the date of loss. However, in some circumstances, the date of loss may be unknown. Although this may sound strange, it’s more common than most people think. For example, if a policyholder is away on vacation and comes home to find a flooded kitchen from a water pipe burst, it may be unclear when the actual burst occurred. Another common scenario is roof damage from a windstorm or hailstorm event. Often times, a policyholder may have been home but had no idea that their roof suffered damage. Months down the line when it rains, the policyholder may find that his roof is compromised and rain water is now coming into the home and causing damage.

If a policyholder experiences a loss but that loss date is unknown, there is a possibility that insured may take advantage of the benefits of the delayed discovery rule. Under this scenario, the policyholder must be diligent in reporting the loss claim to his insurer promptly.¹

In such a situation, the 9th Circuit Court of Appeal decided that,

The inception of the loss occurs when the insured should have known that appreciable damage had occurred, not when the homeowner learned the true extent of the damage.²

When a date of loss is unclear, then it is crucial to establish the date of discovery by the insured and analyze whether the insured had reasonable notice of the damage at the actual time of occurrence. After all, the insured has a duty to diligently inspect if there is a suspicion of a loss occurring.

In the scenario that an insured discovers a loss (delayed or not), the insured should always report that loss immediately to his insurer. By holding off on the reporting of the claim, the policyholder does himself a great disservice by allowing his statute to run, when a simple phone call to the insurer may toll his claim during the claims process.

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¹ See Prudential Prudential-LMI Commercial Ins. v. Sup. Ct., (1990) 51 Cal. 3d 674, 687.
² Campanelli v. Allstate Life Ins. Co., (9th Cir. 2003) 322 F. 3d 1086.