statute of limitations calendar

Did you know that you have only a limited time to file a business insurance claim? If you fail to file the claim in a timely manner, you may find that you have very few legal options, or may have no options at all. To protect you and your business, you need to understand the statutes and how they can impact your ability to make an insurance claim.

The What and Why of the Statutes of Limitation

The government mandates statutes of limitation to accomplish three things:

  • promote justice
  • discourage unnecessary delays
  • forestall prosecution of stale claims

These statutes protect defendants from having old claims revived after evidence is lost and witnesses are missing or dead.

In Colorado, the statute of limitations for business insurance claims is three years. That means the business owner has three years from the date of loss to either settle the claim or bring the claim to court. However, if the insurance company is acting in bad faith by refusing to settle the claim in a fair manner, the statute of limitations is two years. This is because the bad faith action is covered by tort law in Colorado, not property law. Tort law has a shorter period for action.

In Texas, the statute of limitations is two years. This period can be extended by up to 180 days if the plaintiff (you) can show the defendant (insurance company) took actions designed to induce the plaintiff to refrain or delay filing suit. Bad faith from the insurance company is also covered by the two-year limit.

Insurance policies often try to put their own statutes of limitations in the policy. They try to limit the time you have to settle or file suit to absurdly short periods, like 6 months. Some states don’t allow these provisions to stand. Texas, for example, automatically voids any such provision that is less than two years, the state’s statute limit.

The courts also consider other provisions within the policy. If the pre-suit provisions prevent the plaintiff from filing suit within the statute of limitations, the courts may find the statute not applicable in a particular case.

How Can Statutes of Limitation Affect Your Business Insurance Claim

Let’s say your building sustained damage during a major storm. You file a claim against the insurance company for the damages. They send out an assessor to survey the damage. The assessor comes up with a ridiculously low settlement offer that won’t cover the damage seen, let alone any damage that was unseen. You reject the claim and hire an attorney.

The insurance company will not settle for a fair amount. You hire a public adjuster and a contractor to survey the damage to come up with a fair settlement value yourself. You present the evidence and higher settlement amount to the insurance company who continues to refuse to negotiate a settlement. This goes on for months. And eventually goes on for more than a year.

For business owners in Texas, you have to file suit before the second anniversary of the date of loss (the storm). If you are in Colorado, you have three years, unless you want to sue over the insurance company’s bad faith, then you only have two. When negotiations or attempts to settle go on too long, the need to be aware of the statute of limitations is even more imperative.

If you fail to file suit until the statute of limitation passes, then you will have few, if any, options available to you. The insurance company is not legally obligated to pay at that point. If they decide to make an offer, it is likely to be at or below the original low amount. You might try to bring suit, but the courts will throw it out due to it being past the date.

Time is of the essence when it comes to making an insurance claim. It is of the essence when it comes to bringing suit against the insurance company if they fail to settle. Any delay on your part could seriously jeopardize your ability to get a fair settlement.


Are you struggling to get your insurance claim settled in a timely manner? The experts at Commercial Claim Pro know exactly how to negotiate with insurance companies to get you the maximum settlement for your claim. Call them today at (877) 877-6612 or leave them a message here.
Photo Dafne Cholet | Used under Creative Commons image attribution license 2.0