Understanding Insurance Company Traps: Statute of Limitations

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

While an insured has the right to pursue a breach of contract claim against an insurance company that fails to perform its contractual duties, the procedural requirements and deadlines for bringing such a claim can resemble a minefield.  Insurance carriers carefully utilize these legal complexities to lure policyholders into compromising their claim.  One of the most perilous obstacles for policyholders that lack legal representation is the statute of limitations.  The reason this is such a serious obstacle is that failure to comply with the statute of limitations almost always serves as a complete bar to pursuing a lawsuit.  Even if the breach of contract is clear and insured suffers hundreds of thousands of dollars in damages, there is no “hardship exception” if you fail to comply with the statute of limitation.

A case from the 3rd District, Linares v. Universal Property and Casualty Insurance Company, demonstrates how insurance companies can attempt to subtly induce homeowners into failing to file a breach of contract claim before the statute of limitation runs (i.e. expires).  The Linares home was damaged in Hurricane Wilma on October 24, 2005.  The property owners notified their insurance company of the damage two months after the hurricane.    The insurer responded by sending a letter to the Linares in February 2006 indicating that the loss was less than the deductible.  While the letter indicated that the insurance company had concluded its investigation, the letter did not expressly and unambiguously deny the claim.  Rather, the letter advised the Linares that if they discovered other information or damage, they could submit it to the insurance company for consideration.

Three years after their home was damaged, the Linares submitted a report prepared by a public adjuster that indicated the amount of the loss was ten times the deductible amount.  The Linares also demanded that the insurance company participate in the appraisal process described in the policy.  The insurance company responded by requesting submission of a sworn proof of loss and an examination under oath.  The Linares complied with both requests by the insurance company.  On August 10, 2010, the insurance company sent a letter denying the claim in clear and unambiguous language.

When the homeowners filed suit for breach of contract, the insurer moved for summary judgment based on the statute of limitations.  The applicable statute of limitation at the time of the case was five years from the time the contractual terms of the insurance policy were breached.  The insurance company contended that the statute of limitations began to run when it sent its February 2006 letter that indicated the amount of the damage did not exceed the deductible.

However, the court rejected the insurance company’s contention regarding when the cause of action accrued.  The court observed that the February 2006 letter did not clearly and unambiguously deny the claim and invited the insured to submit further information.  Further, the insurance company continued to take actions that led the insured into believing that the claim was still open and pending.

This precise issue cannot arise again because the statute of limitations for breach of an insurance contract was changed in 2011 to begin from the date of loss.  However, the conduct of the insurance company in acting as though it was investigating and handling the claim until the statute of limitations had run demonstrates the type of sharp practices that insurance companies engage in to deny valid claims.  When you retain an experienced Florida insurance claims law firm, your attorney will be familiar with these types of practices.  The attorney can help you navigate past these litigation traps.

If you have a question about you homeowners’ coverage or claim, you are welcome to contact us to get answers to your questions.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  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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