Insurance Claims Denial And Statute Of Limitations

When is the deadline for filing a law suit against an insurance company that refuses to fully pay on a claim?
This is usually a simple answer.  It was the main issue in a 2023 opinion issued by the Fort 
Worth Court of Appeals in a case styled, Kenneth Kessler v. Allstate Fire And Casualty Insurance Company.
In this case, the Court granted summary judgment in favor of Allstate on the statue of limitations defense.
Factually, Kessler sustained hail damage in July 2017.  A claim was submitted on April 30, 2018, and Allstate issued a letter on June 1, 2018, indicating payment would be made.
In September 2018, Kessler submitted new information to Allstate and more money was paid.  On November 5, 2018, additional money was paid to Kessler.  On December 3, 2018, Allstate sent Kessler a letter stating that Allstate “was closing” the file.
On December 20, 2018, Kessler’s attorney sent a demand letter for more monies.
On January 15, 2019, Allstate sent a letter offering $2,500 as a full and final settlement.
Kessler sued Allstate on January 14, 2021, claiming breach of contract and Insurance Code violations and bad faith allegations.
According to Texas Civil Practice & Remedies Code, Section 16.051, the limitations period for a breach of contract claim is four years.  However, insurance contracts may shorten these limitations aas long as they do not create a limitations period shorter than two years.  Limitations  for bad faith are subject to two year limitations periods pursuant to DTPA, Section 17.565.  Under the Insurance Code, Section 541.162, limitations are also two years.

As a general rule, a cause of action accrues and the statute of limitations begins to run when facts come into existence that authorize a party to seek judicial remedy.  A plaintiff’s cause of action accrues upon (1) an insurer’s denial of coverage or (2) some other clear indication it would not provide the requested coverage.  In determining whether an insurer has denied coverage, the courts do not require an insurer to use “magic words” in its denial of a claim if an insurer’s determinations regarding a claim and its reasons for the decision are contained in a clear writing to the insured.

Courts only look for a clear denial in determining the accrual date of a denial.  The date upon which the insurer closed the file may be relied upon as an objectively verifiable event that unambiguously demonstrates the insurer’s intent not to pay the claim.
Kessler points to no cases standing for the proposition that an insurer’s settlement offer in response to a pre-suit demand restarts the limitations clock.
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