Insurance lawyers will often get a call from a potential new client and this potential new client describes a pretty good case against the insurance company. But as the discussion progresses the attorney learns the event the potential new client is describing or relating to the attorney happened many years ago. The problem is that there are statutes of limitations that apply to almost every wrong a person or business commits.
According to the Texas Civil Practices & Remedies Code, Section 16.051, the statute of limitations in insurance breach of contract lawsuits is four years, the same as other breach of contract suits. Even worse than that, insurance companies have begun to use endorsements intended to reduce the period in which an insured may bring suit against the insurance company. Some companies for example, have begun using a “Suit Against Us Endorsement,” which provides that “an action against us must be made within two years and one day after the cause of action accrues.” Sometimes the period is for three years. Insureds should be aware of these contractual limitations periods.
The reason for the two years and one day is that the laws of Texas do not allow a breach of contract claim to be less than two years. This law is found in the Texas Civil Practices & Remedies Code, Section 16.070. It clearly says that regarding contractual limitations periods, any period of time shorter than two years is made void. This includes stipulations, contracts, or agreements. When the period is made shorter than the two years and thus void, the normal four year limitations period will apply instead. This has been made clear in the 1984, 14th Court of Appeals opinion styled, Duster v. Aetna Insurance Company.