The statute of limitations is a legal issue that must be taken into account in every case. This case from the Southern District of Texas, Laredo Division,does a good job of discussing the statute of limitations in insurance cases. The case is styled, Gilberto Rodriguez v. State Farm Lloyds.
This is an insurance coverage dispute that arose out of a water pipe bursting in Gilberto’s home. State Farm filed a motion for summary judgement, part of which dealt with the limitations issue. The Court granted State Farm’s motion.
Here are relevant facts and discussion:
Under Texas law, claims for breach of the duty of good faith and fair dealing and violations of the Texas Insurance Code must be brought within two years after the cause of action accrues. The default limitations period for breach of an insurance contract is four years from the day the cause of action accrues. The policy in this case specified that contract claims must be filed within two years and a day from the date the cause of action accrues. This is allowed pursuant to Texas Civil Practice & Remedies Code, section 16.070(a).
This lawsuit was brought on July 13, 2017. Hence, the Court must determine whether Gilberto’s claim accrued before July 12, 2015.
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 a judicial remedy. In Texas, a cause of action for breach of a first-party insurance contract accrues when the insurer denies the claim.
Accrual of a cause of action arising from the denial of an insurance claim can be triggered by either (1) the issuance of a written notice of denial, or (2) in the absence of a written denial, the insurer’s closure of the claim. A denial letter need not use the word denial, but only state that there is not coverage for the claim and give reasons why coverage is being denied.
Evidence in the record of this case conclusively establishes the following: On January 7, 2015, Gilberto reported a claim to State Farm for damage to his property caused by a burst pipe. On January 21, 2015, State Farm sent a letter informing Gilberto that it had completed its evaluation of the claim and determined that the cost to repair his property, less depreciation, did not exceed his deductible. Thus, State Farm concluded, “we are unable to make a payment on this claim.” State Farm made its position on the claim clear: Gilberto was entitled to nothing under the policy.