Importance of Statute of Limitations in Homeowners Insurance Coverage Disputes

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

Although most people are familiar with the term “statute of limitations”, they may only possess a vague understanding of what it means.  Insurance policyholders who must pursue a lawsuit against their insurer need to understand the paramount importance of compliance with this critical deadline.  When an insurance company denies a claim for coverage after damage to someone’s home, the homeowner will often negotiate with the insurance company in an attempt to work out the dispute.  This process of negotiation with an insurance company is normal, but the clock does not stop running in terms of the deadline to file a lawsuit against your insurance company. 

If the statute of limitations “runs” (expires) prior to an insured filing a lawsuit, this will typically act as a complete bar to the right to bring a claim against your insurance company.  Although there are sometimes complications in terms of calculating when the statute of limitations expires, the law does not permit a judge to exercise discretion in determining whether to apply this statutorily imposed deadline.  Further, the timing requirement applies without regard for the hardship imposed on the policyholder.  Even if the liability of the insurance company is clear and the amount of the damage suffered by the homeowner is not disputed, a judge cannot allow a lawsuit for breach of contract or insurance bad faith to move forward if the limitation period has expired.

The bar on lawsuits resulting from a violation of the statute of limitations can be particularly harsh when legal questions exist about calculation of the limitation period.  The Florida Fourth DCA case of Donovan v. Florida Peninsula demonstrates an example of the importance of proper calculation of this critical deadline when filing of a breach of contract lawsuit against an insurance company.  The case arose out of a dispute over the application of the 2011 version of Fla. Stat. 95.11(2)(e) to the breach of insurance contract claim of a homeowner.

The damage to the property of the homeowner occurred prior to amendment of the statute.  The claim against the insurance company also was made prior to the amendment.  The insurer contended that the court should apply the statute as amended on a retroactive basis.  The policyholder contended that retroactivity was not appropriate, so the pre-existing statute of limitations governed the policyholder’s legal claim.  Under the prior law, the statute of limitations for bringing the lawsuit against the insurance company did not begin to run until the insurer denied the claim.

The insurance company urged the court to find that the statute of limitation as amended in 2011 should be applied to the lawsuit.  Under this interpretation of the statute of limitations, the time limit began to run at the time the loss was incurred.  The insurer’s position meant that the statute of limitations had already run whereas the policyholder’s interpretation meant that the lawsuit was initiated in a timely manner.

The court ruled for the homeowner and declared that the 2011 amendment to the statute of limitations was not retroactive.  In other words, the applicable time period for the statute of limitations was calculated from the date the insurance company breached the contract not the date the homeowner suffered loss. 

Although the policyholder prevailed in this case, this example illustrates the complex issues that can arise regarding application of the statute of limitation and other technical requirements which can adversely impact the viability of your claim.  The post 2011 version of the statute presents a possible trap for unwary policyholders.  While an insured is negotiating with an insurer, the clock is running.  If the dispute is not resolved within 5 years from the date of loss, the statute of limitations will expire even if the policyholder reasonably believed the insurance company was negotiating a settlement of the claim.  An experienced Florida insurance attorney can file a complaint initiating a lawsuit to prevent a violation of the statute of limitations.

Even if you have not decided to retain an attorney to help you deal with your insurance company, you should at least get prompt legal advice, so you do not inadvertently damage your claim.  My law firm represents policyholders in claims disputes in Miami and throughout Florida, so we can guide you through the process.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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