Claims Denial Attorney – Watch For Limitations

Being aware of when the statute of limitations runs on a claim is vital so that the limitations period does not expire.  This is illustrated in the 2022, opinion from the Western District of Texas, San Antonio Division.  The opinion is styled, Tobin Endowment v. Great American Assurance Co.

Tobin Endowment is the insured and Great American is the insurer.

Tobin filed this lawsuit on August 23, 2020, claiming that Great American underpaid the claimed loss.  Great American eventually filed this Motion For Summary Judgment stating to the Court that Tobin let too much time expire and that Tobin’s claim is barred by the statute of limitation stated in the policy.

The facts in this case are required reading for an insurance attorney, and for an insured, so that each knows and understands when the statute of limitations runs on an insurance claim.

An insurance policy is a contract and the normal time for limitations on a contract is four years.  However, the limitations period can be contractually lowered to any date that is not less than two years and one day.


Great American contends Tobin’s statute of limitations has run based on the language of the applicable policy.  The relevant language is cited below.

B. Legal Action Against Us
1. The Legal Action Against Us Commercial Property Condition is replaced by the
following, except as provided in B.2. below:

Legal Action Against Us

a. Except as provided in paragraph b., no one may bring a legal action against us
under this Coverage Part unless:

(1) there has been full compliance with all of the terms of this
Coverage Part; and

(2) the action is brought within two years and one day from the date
the cause of action first accrues. A cause of action accrues on the
date of the initial breach of our contractual duties as alleged in the

b. With respect to loss or damage in the State of Texas caused by windstorm or
hail in the catastrophe area as defined by the Texas Insurance Code, no one may
bring a legal action against us under this Coverage Part unless:

(1) there has been full compliance with all the terms of this Coverage
Part; and

(2) the action is brought within the earlier of the following:

(a) two years and one day from the date we accept or
reject the claim; or

(b) three years and one day from the date of the loss
or damage that is the subject of the claim.

In cases such as this, where the insurer paid the claim and closed the file, the U. S. Fifth Circuit has found that the cause of action begins to accrue, at the latest, upon the issuance of a final letter and closing of the claims file.  Any request by the claimant to reopen the claim does 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.

Pursuant to the Texas Civil Practice & Remedies Code, Section 16.051, the statute of limitations for a breach of contract claim is four years from the date the cause of action accrues.  Texas law allows parties to contractually modify the limitations period so long as it is not less than two years, pursuant to Section 16.070(a).  Therefore, Tobin’s breach of contract claim is subject to the policy’s limitation shortening provision.

The limitations period begins when facts come into existence that authorize a party to seek a judicial remedy.  For a first party insurance breach of contract claim, the action accrues when the insurance company sends a letter to the insured detailing its decision to deny the claim or its decision to pay the claim with payment included which the insured disagrees with, as long as the insurance company never changes its position on the claim.

Although expressly stating finality in clear terms would be a very wise standard insurance company practice, Texas law does not require an insurer’s decision letter to expressly state that the claim is closed.

Great American sent its decision letter and payment to Tobin for repair of the roof on June 22, 2017.  This was the last payment Great American sent to Tobin for the subject property.  Tobin deposited the check, did not make any repairs, and did not contact Great American until August 2019.  In addition, there is no evidence that Great American attempted to string Tobin along without denying or paying a claim.  The essence of Tobin’s position is that Great American undervalued its claim and paid for a roof repair instead of a full roof replacement.  If Tobin disagreed with Great American’s decision, it should have taken action based on the payment and decision letter.  Great American accepted Tobin’s claim by paying it and providing a decision on June 22, 2017.  Tobin deposited the check without a complaint until August 2019.  Therefore, June 22, 2017, is the date Tobin’s claim for breach of contract began to accrue.  Tobin waited almost six months to deposit the June 22, 2017 check.  During the period between June 22, 2017, and December 17, 2017, (the day Tobin deposited the check), Great American did not make any additional payments or have any contact with Tobin
regarding the claim.  Plaintiff was clearly aware that Great American considered the claim resolved.  Tobin’s claim is barred by section B.1.b(2)(a) of the contractually agreed limitations period.

Judgement was for Great American.

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