Better a Dead Horse Than a Dead Claim
In about five minutes, you are going to think to yourself, “I feel like I’ve heard this from him before.” Allow me to save you the trouble, what I am going to say I have definitely said before. I’ve said it in articles, I’ve said it in presentations, according to my wife I’ve even said it in my sleep. Despite all of this, I’m going to say it again: insurance claims have a relatively short limitations period. Most courts hold that an insured has two years after discovering property damage to bring a lawsuit against the insurer. There is often some confusion about what this means. The two year limitations period is NOT the time within which you must make a claim. That is the time to bring a lawsuit. Those terms are often confused. A claim is when you notify your insurer of damage and/or request that your insurer pay for a loss under your policy. A lawsuit is when you file a complaint in court against your insurance company. You can make a claim within two years and still lose your claim if you haven’t brought a lawsuit within two years. Insurance claims can often be a slow process, which means even a timely discovered claim can push the limits of the two year period.
I have had to turn down otherwise valid claims because the Association or owner discovered the damage or problem more than two years before contacting me. I’ve also had courts dismiss a lawsuit based on the same timing issue. There are some good rules of thumb for Associations, owners, and managers. If you get notice of any sort of water intrusion, you hire a contractor or consultant to inspect your buildings, or receive a reserve study that mentions failing components or damage, your two year clock may have just begun. It is worth contacting an attorney familiar with insurance claims just to be safe. As part of my practice, I do not charge clients for the initial review of a potential claim. Other attorneys may offer the same. I never put an insurer on notice during my review process. There is really no downside in conducting due diligence to determine whether there is a potential claim. While the initial notice of a problem might be minor, it is common for these issues to develop into much bigger problems. Unfortunately, those bigger problems might not be discovered until after the two year limitation period.
I hate to see otherwise valid claims be lost based on timing issues. Because I keep seeing this issue pop up, unfortunately, you will have to continue to listen to me beat a dead horse.