My Claim Was Denied Then Reopened

When Do I Have To Sue By?

Under California law, the statute of limitations for filing a breach of contract suit against an insurance company for wrongfully denying a claim is four years. However, California allows for that period to be contractually shortened. Typically, most insurance policies shorten the time period in which an insured must file a suit to one-year from either the date of the loss or the date the insurance company makes a final decision on the claim. Therefore, if the insured does not file a suit within one year, he or she may lose the right to sue.

To avoid the problem of insurers taking a year or more to evaluate claims, forcing insureds to sue prematurely to avoid losing the right to sue, California courts created law holding that the statute of limitations is equitably tolled (paused) until the insurance company makes a final decision on the claim.  This made a significant difference for claims under policies limiting the time to bring suit to one year from the date of the loss. That tolling honors the insurer’s investigative procedures and allows the insured to wait until after the investigation before filing suit.

But what happens when an insurer re-opens and re-investigates a previously denied claim? California law says that the tolling of the limitations period is triggered once again.[1]   However, a mere request for reconsideration is not sufficient to toll the statute, and neither is the insurer's agreement to re-review the previous determination under all facts it already had. [2]  Without a renewed investigation, courts are unlikely to find that a limitations period was equitably tolled.

[1]           See Ashou v. Liberty Mut. Fire Ins. Co., 138 Cal.App.4th 748 (2006).

[2]           Singh v. Allstate Ins. Co., 63 Cal.App.4th 135 (1998)