Uninsured / Underinsured Coverage And Limitations

Someone with uninsured and underinsured coverage in Grand Prairie, Arlington, Dallas, Fort Worth, Mansfield, Irving, Pantego, Dalworthington Gardens, or anywhere else in Texas would probably have a hard time understanding when it becomes too late to file a claim for benefits under these coverages. Maybe this will help.
A Texas Supreme Court case decided in 1974, is still good law and a reference point for answering this question. The case is styled, “Raul C. Franco et us. v. Allstate Insurance Company.
In this case, Franco and his wife sought to recover from Allstate Insurance Company, under the uninsured motorist provision of their insurance policy, for the death of their daughter and personal injuries to Franco, arising out of an accident alleged to have been caused by the negligence of an uninsured motorist. Their suit was filed approximately three years after the date of the accident and death. The question is whether the two or four year statute of limitations is applicable to either or both of the claims asserted.
The Texas Supreme Court ruled that the four year statute of limitations applied. Here is further information.
Allstate contended that the claims arose out of a tort action and thus are subject to the two year statute of limitations.
On the other hand, the Francos contended that the suit is based upon a written contract, i.e., an insurance policy issued to them by Allstate providing protection to the extent of $10,000.00 per person because of ‘bodily injury, sickness or disease, including death,’ resulting from the negligence of owners or operators of uninsured motorist vehicles. Therefore, the four year statute relating to suits on contracts is applicable.
Citing a 1942 case, this court stated, “the general rule is well established that similar claims for indemnity or losses under other insurance policies are based upon contracts in writing within the meaning of the four year statute of limitations.”
The reasoning of the courts and texts on this issue is that, although ultimate recovery in these types of actions depends upon the proof of damges due to the tort of an uninsured third party, the cause of action against the insurance company arises by reason of the written contract.
The case above and many others make clear that a four year statute of limitations applies on these insurance policy claims. And it is important to draw the distinction between the “third party” claim against the person who caused the wreck which is subject to a two year statute of limitations and a “first party” claim by the policy holder against his own insurance company for benefits under his own policy.
The Texas Insurance Code, Section 541.162, updated this law in 2003 and 2005 making clear what the above case stands for. This statute reads in part,
(a) A person must bring an action under this chapter before the second anniversary of the following:
(1) the date the unfair method of competition or unfair or deceptive act or practice occurred; or (2) the date the person discovered or, by the exercise of reasonable diligence, should have discovered that the unfair method of competition or unfair and deceptive act or practice occurrred.
Part (2) above can be a little tricky even for an experienced Insurance Law Attorney. This same statute tells where the applicable statute of limitations can be extended an additional 180 days. The best advice is too “not wait” but to seek advice as soon as possible when a situation arises where an insurance claim needs to be. And don’t just rely on what the insurance company agent or adjuster says.