Statute of Limitations Insurance Claims: Its A to Z You Need to Know

Getting compensation from insurance when something unexpected happens is really important. But there’s a rule that decides how long you have to ask for that money. It’s called the statute of limitations insurance claims.

So, let’s talk about what the statute of limitations means in insurance claims, why it’s important, and how it personally affects you. Without any further ado, let’s dive more deeply and find out!

What Is the Statute of Limitations?

According to Insuranceopedia, the statute of limitations refers to the legal time limit within which an individual can file a lawsuit or claim against an insurance company for a specific incident or event. This limitation duration may vary according to claim and jurisdiction types.

For instance, once the statute of limitations period expires, the individual usually loses the right to pursue legal action or seek compensation for that particular claim.

Why Does Statute of Limitations Exist?

Statutes of limitations exist to ensure things can be properly looked into for a lawsuit or insurance claim. In fact, when someone takes too long to file an insurance claim after an accident, it would be tricky to find out what really happened. 

Consequently, witnesses might forget, and evidence might get fixed or disappear. Hence, the limitation is imposed to avoid this kind of constraint. 

For lawsuits after a car crash, in most states, you have two to three years to sue for damages. For instance, if someone in a crash wants to sue the other driver, they have to do it within this time. Otherwise, the limitation to file your claim is closed.  

In a nutshell, it’s really important for people to know about the statute of limitations insurance claims. Hence, if they wait too long, they might miss their chance to get help with their claim.

What Are the Benefits?

First, it provides a clear and defined timeframe within which individuals must file their claims. This clarity helps insurance companies manage their liabilities by knowing when claims can no longer be pursued. It can have indefinite exposure to potential claims.

Moreover, it encourages prompt resolution of claims. With a time limit in place, claimants are incentivized to file their claims in a timely manner for a quicker resolution and closure of insurance matters.

The statute of limitations also promotes fairness and prevents the unfairness of being sued for incidents that occurred too far in the past. Thus, it ensures that evidence and witnesses are more available to enhance the overall fairness of the legal process.

What Are the Factors?

The factors that influence the statute of limitations can vary based on different things. These include the six variables mentioned below. 

1. Nature of your Claim

What is your claim about, like whether it’s related to an injury or property damage?

2. Type of Damage

The kind of harm or losses you’ve experienced, such as physical injuries or financial losses.

3. Involvement of Governmental Entities

It’s a fact if there is any government organization is part of the situation.

4. Contracts with the Responsible Party

This is about any agreements you’ve made with the person or entity responsible for the situation.

5. Possible People Filing the Lawsuit

This one concerns anyone who might file a lawsuit.

6. Possible Defendants in the Lawsuit

It refers to anyone who might be sued or held responsible for the situation.

How Long is the Statute of Limitations Insurance Claims?

The time limit to take legal action for different types of insurance claims varies. Review the explanation below. 

1. For breach of contract claims, it’s six years from the date of loss, but insurance companies must settle within thirty-five business days after filing.

2. Car accident claims involving injuries have a three-year statute of limitations.

3. Accidents causing bodily injury that require medical help allow two years to file a claim.

4. If property damage only occurs, the limitation to file is three years.

5. Homeowners commonly have one year to file a claim.

6. Health insurance claims must be made within three years, reduced from six.

7. In New York, life insurance claims have a two-year statute of limitations.

What Will Happen If the Statute of Limitations Ends?

When the statute of limitations ends, it means you lose the legal right to file a lawsuit or claim related to that particular incident. Once this time limit expires, the court will reject or dismiss any lawsuit you try to file regarding that matter.

Therefore, it’s important for you to understand this because exceeding the statute of limitations time frame typically results in your claim being unable to proceed in a court of law.

How to Stop the Clock of the Statute of Limitations?

According to United Policyholders, in certain situations, the clock on the statute of limitations insurance claims can be paused or stopped to take more time to file a claim. This is often known as “tolling” the statute of limitations. Tolling can occur for various reasons, such as when the claimant is a minor or is mentally incapacitated. 

Additionally, the statute of limitations might be paused if the individual against whom the claim is being made leaves the jurisdiction, known as “absence from the state.” However, in some cases, if the individual responsible for the incident is in hiding, the clock might temporarily stop until they are accessible. 

Statute of Limitations Insurance Claims Real Example 

In February 2019, New York Governor Andrew Cuomo signed a law called the Child Victims Act. The law made changes to how long people who experience child abuse have to take legal action. 

It extended the time for victims to bring criminal charges against their abusers from age twenty-three to age twenty-eight. Additionally, it allowed victims to file civil lawsuits until they reached fifty-five years old.

A big part of the law was a special twelve-month period where adults who were abused as children, regardless of their current age, could file a lawsuit. Before this law, there were disagreements about extending the time limit, with the Catholic Church being one of the main groups against it.

For about ten years, a group in charge of the state Senate stopped this law from passing. However, when the political majority changed to the Democrats, the law got approved by both the Senate and Assembly.

Now, You Know the Statute of Limitations Insurance Claims!

Understanding the statute of limitations insurance claims is essential for anyone involved in such matters. Hence, knowing the time limits for filing claims ensures that you take timely action and avoid missing out on seeking compensation or legal remedies for incidents covered by insurance.