Appraisal Does NOT Stop the Limitations Clock: Do Not Let the Insurance Company Trick You

Chad T. Wilson – News
September 14, 2023
Updated: September 14, 2023 04:20 p.m.
Source: https://cwilsonlaw.com/

At the Chad T. Wilson Law Firm, we routinely speak with clients, public adjusters, and roofing professionals who are misinformed about the deadline to file a lawsuit in order to preserve an insured’s rights regarding a denied or underpaid insurance claim. Many have been led to believe that the deadline to file a lawsuit, which is often referred to as the “statute of limitations”, is “paused” or “tolled” so long as the insurance company is actively negotiating or agrees to participate in the appraisal process.  Common sense would have you believe this is correct, however, this is absolutely not the case.

Appraisal Does NOT Stop the Limitations Clock: Do Not Let the Insurance Company Trick You

In Texas, the deadline to file a lawsuit for bad faith, fraud, and violations of the Deceptive Trade Practices Act and Texas Insurance Code is two years from the date the claim accrues, i.e., two years from the date of the commission of the wrongful conduct. The deadline to file a lawsuit for a traditional breach of contract claim in Texas is four years from the date of the breach. However, importantly, Texas law allows insurance companies to contractually shorten the deadline to file a lawsuit for any legal cause of action, including breach of contract, to two years from the date of the first partial or full denial. Under such a policy, an insurance company’s denial to pay even $1.00 of claimed damages starts the two-year period you must file a lawsuit.

It is imperative to read the policy language of your specific policy under the “Suit Against Us” or “Legal Action” headings. The vast majority of Texas policies now include language limiting the time to file a lawsuit to two years and one day following the date any legal claim accrues. However, to be safe, the Chad T. Wilson Law Firm will typically file a lawsuit as soon as possible.

Oftentimes, public adjusters invoke the appraisal process when they are unable to get an insurer to pay a claim. While the expectation is that appraisal is a relatively quick process, the truth is that the insurance company and its appraiser have no requirement (or incentive) to ensure that the process moves forward quickly. Many claims have been barred forever and policyholders left with no recourse because the statute of limitations expired while the appraisal process was still underway.

For example, a homeowner calls their insurance company to make a claim after being told they need a new roof due to hail damage. An adjuster sent out by the insurance company inspects the property and later sends a small payment along with a letter stating they will cover only a small part of the claimed damage. This is called a partial denial—and per the policy, the deadline to file a lawsuit is now two years and one day from the date of the partial denial letter.  The check is nonexistent or nowhere near enough money to replace the roof so nothing happens.  Later the homeowner notices some ceiling water damage and decides to hire a public adjuster. When negotiations with the insurance company go nowhere, the public adjuster demands appraisal, and the homeowner’s appraiser charges the homeowner $2,000.00 to do the appraisal. At this point, it has been seventeen months since the partial denial letter was issued, meaning there are only seven months until the clock runs out to file a lawsuit.

            Over the next three months, the insurance company’s appraiser makes several excuses for why they need more time to perform their inspection. Finally, the inspection takes place. However, after another three months, the insurance company’s appraiser says he can’t agree with the homeowner’s appraiser, so they’re going to need to bring in an umpire to decide. The homeowner has to pay another $1,600.00, half of the umpire’s fees. Meanwhile, only one month remains until the homeowner’s claim is expired forever. The umpire ultimately issues an award that is even higher than the homeowner had hoped! However, it has now been two years and two days since the first partial denial letter was issued.

            When the public adjuster reaches out to the insurance company to pay the amount of the umpire’s award, they will not return calls or emails. Finally, the public adjuster speaks to an attorney and learns that the statute of limitations has expired, and the insurance company can no longer be forced to pay the claim with a lawsuit. The homeowner has spent $3,600.00 during the appraisal process in vain. It sounds WRONG, but unfortunately this is the current Texas law thanks to the insurance companies.  ALWAYS be aware of how much time you have left to file. 

            Do not let this happen to you! If even a year has passed since the date of the loss, it is wise to consult with an attorney to ensure a lawsuit is filed on time. To reiterate:  it does not matter that the insurance company is still negotiating or has agreed to appraisal: two years is two years. If you are confused or unsure about the legal aspects of your claim, you are not alone. Call the experienced attorneys at Chad T. Wilson Law Firm today.

How to Respond if Your Insurance Claim is Rejected

There are three things you should do if your insurance claim for water damage is rejected:

1. Call the insurance provider.
An insurance claim is handled by numerous departments within the insurance provider. Based on their personal beliefs, anyone could contest the assertion. It is crucial to get in touch with the insurance provider and learn the precise reasons why the claim was rejected.

2. Request A Review.
Ask for the claim to be evaluated if you are unable to fix the problem. The insurance adjusters may get the answers to their inquiries and approve the claim through the review procedure.

3. Call Chad T. Wilsom Law Firm, PLLC.
Speak with a water damage attorney if you’re having trouble getting your claim processed or if the insurance company is attempting to pay less for the claim than is reasonable.

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Chad T. Wilson is an attorney whose firm specializes in property insurance disputes.

Written By:
Alejandro Caro

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