My last blog, The First Thing You Do Is Read the Policy, Part I: Limitations Clauses in Texas and the Spicewood Case, was the first in a series on “limitations clauses” in insurance policies. I imagined old Andy Griffith (à la Matlock) sitting around a cracker barrel in his blue seersucker suit telling young lawyers and public insurance adjusters, “The first thing you do is you read the insurance policy.”
By way of refresher, I discussed what are known as “limitations clauses” in insurance policies. The carrier puts these clauses in the “Legal Action Against Us” section of the policy. The clause will say that a lawsuit must be brought within one year or two years from the date of loss. The time limits in these clauses are shorter than the statute of limitations in the state where the policyholder resides. For example, Texas has a four-year statute of limitations on breach of contract lawsuits, which means four years from the date of the breach, as opposed to four years from the date of loss. However, limitations clauses in Texas insurance policies might say that any lawsuit (for any cause of action) must be brought with two years from the date of loss. Texas courts will hold any such clause void because the date of loss—as opposed to the date the cause of action accrues—is the beginning date. Not that Texas outlaws these clauses; rather, in Texas these clauses are only valid if the time limit is at least two years from the date the cause of action accrues. A cause of action does not accrue on the date of loss. It accrues after the claim is adjusted and the carrier denies, partially denies, or underpays the claim.
This week I’ll discuss how Oklahoma handles limitations clauses in property insurance policies.
In Oklahoma there is a five-year statute of limitations for breach of contract actions. A plaintiff would have five years from the breach to file suit.1 As to parties contracting for shorter time limits to file suit, 36 Okl. St. Ann. Section 3617 provides that in all insurance claims, except for property and marine claims, the policy cannot limit the time to file suit to shorter than two years from the date the cause of action accrues. This is the same as Texas. However, in property and marine insurance policies it is legal for the carrier to limit the time a policyholder can file suit to one year from the date of loss. Therefore, if you have claims involving Oklahoma property you must immediately look at the policy and see if it limits the time to file suit to one year from the date of loss. If so, the Oklahoma courts will enforce that provision.
If you are a public insurance adjuster you should note the one-year anniversary in your file or calendar. If the insurance company remains recalcitrant you need to make sure you customer hires competent legal counsel within a sufficient amount of time to get a suit ready to timely filed. In conversations with some public insurance adjusters I get the impression that the public insurance adjuster believes if the carrier is still dealing with them then somehow the lawsuit does not have to be filed until an impasse is reached. Nothing could be further from the truth. If suit is not filed by the deadline then your customer is forever barred from filing suit against the insurance company.
If you are a lawyer taking on a first-party property damage case in Oklahoma you should look at the policy first and determine what the deadline is to file suit and calendar the stature of limitations date accordingly. This is especially important if you are taking on a case shortly before or shortly after the anniversary of the date of loss. Don’t take on the case thinking you have two or five years to file suit, only to learn later on that your limitations ran right after or right before you took the case.
CAVEAT: Please note that Oklahoma has a standard fire policy set out by statute.2 That form fire policy provides:
Suit. No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.
All public insurance adjusters and attorneys who take on fire claims in Oklahoma need to work under the assumption that the policyholder will have one year from the date of the fire to file suit against the insurance company.
1 12 Okl.St.Ann. Section 95A(1).
2 36 Okl.St.Ann. Section 4803.