Statutes Of Limitations

Dallas insurance attorneys know about limitations. As a reminder, a 2015 case from the U.S. District Court, Southern District of Texas, Houston Division, is worth reading. It is styled, Charles Van Tassel v. State Farm Lloyds, et al. Their are a number of issues in this case but this focus will be on the limitations imposed contractually by State Farm.
In this case, State Farm filed a motion for summary judgment based on the defense of limitations. The Court stated that the party asserting an affirmative defense, such as the statute of limitations or estoppel, bears the burden of proof on it.
In Texas, pursuant to Texas Civil Practices & Remedies Code, Section 16.051, the statute of limitations for a breach of insurance contract action is four years from the day the cause of action accrues. Under the “legal injury rule,” a cause of action accrues when a wrongful act causes the legal injury, even if the injury is not discovered until later.
Nevertheless, under Texas Civil Practice & Remedies Code, Section16.070(a) the parties to a contract may reduce the four-year limitations period, subject to the following restriction:
Except as provided by Subsection (b), a person may not enter a stipulation, contract, or agreement that purports to limit the time in which to bring suit on the stipulation, contract or agreement to a period shorter than two years. A stipulation, contract, or agreement that establishes a limitations period that is shorter than two years is void in this state.
State Farm points out that Van Tassel’s policy with State Farm, contains a limitations clause requiring any suit or action to be commenced within two years and one day after the cause of action accrues:
SUIT AGAINST US ENDORSEMENT
SECTION I–CONDITIONS . . . .
Suit Against Us, is replaced with the following:
Suit Against Us. No action shall be brought unless there has been compliance with the policy provisions and the action is started within two years and one day after the date of loss or damage.

Texas courts have held that contractual limitations like this one are valid and binding.
In breach of insurance contract cases, the statute of limitations runs from the insurer’s denial of the claim, as the injury would occur when the insurer unreasonably failed to pay the insured’s claim.
What has been stated above is correct. This case is much more involved and also deals with estoppel issues. These other issues will not be discussed here, but awareness of the limitations that may be contractually imposed in an insurance contract are what is important since most attorneys will think in terms of a four year statute of limitations when dealing with insurance policies.