Statutes of Limitations
By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE – Vice President/Media Editor
Insurance policies contain conditions for how and when claims must be submitted. There are also state requirements and timeframes for filing claims. Statutes of limitation determine the maximum time for bringing causes of action or lawsuits after an event. Some statutes, especially those applying to sexual abuse, are under review in many states. Helping clients understand how their exposure to such claims may change is another value-added service of the professional agent.
Each state has its own set of regulations. The timeframe differs depending on the type of offense and the jurisdiction. One reason for such limitations is to protect defendants. As time passes, evidence could be harder to obtain. Witnesses may not be available or their memories can fade. In New York, Homeowners claims must be filed within one year of the loss in order for the insured to be eligible for payment. Anyone injured in an auto accident must file a claim within three years if they want to recover damages. Similar statutes exist for health and life insurance (ekjlaw.com). Some crimes have no statutes of limitation. Examples include murder, sexual abuse of children and other violent crimes.
Statutes of limitation are absolute. If a claim is not filed within the proper timeframe, even if it is otherwise valid, there is no recourse. Even a court cannot extend it. Agents may be exposed to errors and omissions claims if they fail to file notices of loss with the insurance company on a timely basis.
There are cases when the statute of limitations may be “tolled” or paused. This could occur when the victim is a minor, in prison or out of state. In 2020, because of the COVID pandemic, New York tolled the statutes for personal injury claims. This extended the allowed time for starting, filing or processing any claims. Such claims would otherwise have been barred by New York’s statute of limitations.
As mentioned earlier, statutes of limitation rules are under review in many states. This can impact both in force policies and those that have expired years prior. Reviver statutes have been used by many states to remove the time limits for adult survivors to initiate child sexual abuse crimes. The impact can be potentially significant on institutions such as churches and schools. Six states have eliminated the statute of limitations for child sexual abuse claims. An alleged victim can bring claims against the organization, such as a school or church, at any time. Applicable insurance policies may have expired long ago. Records of expired policies is important for insureds who may be faced with a claim or lawsuit from a victim.
Changes in statutes of limitation can potentially increase claims filed against insureds. Some of these incidents may have occurred many years ago. Helping clients understand revisions to statute of limitation laws, reviver statutes, and how they may be affected, is another sign of the true insurance professional.
This article is for educational and discussion purposes only and it is not insurance or legal advice and should not be relied upon when making insurance or legal decisions. Nothing herein shall be construed to constitute a legal or underwriting opinion. Nothing herein shall be construed as offering any political, social, or public policy opinion by the author or MSO. Neither the author nor MSO are responsible for errors in, or the accuracy or currentness of, the article.
