Limitations Period In Insurance Contract

Insurance lawyers and anybody who has an insurance policy needs to know what the limitations period is in the insurance policy.  This is illustrated in the 2019, 5th Circuit Court of Appeals opinion styled, Lillian Smith v. Travelers Casualty Insurance Company of America.

Lillian sued Travelers for contractual and statutory violations that arose out of the denial of her commercial property claim for benefits.  Here are the facts.

Smith agrees that Travelers sent her an unambiguous letter, denying her claim for benefits.  She however, insists that her causes of action did not accrue until nine months later (rather than the date of the denial) because Travelers had agreed upon her request, to re-investigate her claim for damages.  After a re-investigation, Travelers affirmed they were standing by their original denial of the claim.

A lawsuit was filed by Smith well over two years after the denial letter was received.  Travelers pointed out that the limitations in this case was two years and one day and sought summary judgement which the district court granted.

There was argument about actions or the lack thereof in the nine month period.  Smith argues that this period extended the limitations period.  The policy reads:

“Some or all of Plaintiff’s claims are excluded or limited by applicable policy terms, conditions, and exclusions contained in the Policy.  The insurance policy issued by Travelers contains exclusions, provisions, conditions, and endorsements that preclude or limit coverage, in whole orin part, including, but not limited to, the following:

4. Legal Action Against Us

No one may bring a legal action against us under this Coverage Form unless:

[…]

b. The action is brought within 2 years and one day from the date the cause of action first accrues on the date of the initial breach of our contractual duties as alleged in the action.”

Travelers pleads the limitations defense pursuant to Federal Rule of Civil Procedure 8 and pursuant to Texas Business & Commerce Code, Section 17.565 and Texas Civil Practice & Remedies Code, Section 16.003(a).  Plus, the policy language as stated above.  Also, Texas Insurance Code, Section 541.162 establishes a two year limitations period.

The Court in this case spent considerable time discussing these limitations periods and found no exceptions to apply to this case.  In particular, the Court discussed insurance companies stringing people along in the claims process, but pointed out that based on the facts of the case, that did not happen here.

The summary judgement in favor of Travelers was upheld.