One of the first questions I’m often asked by a client is, “What is the statute of limitations in XYZ state?” The Property Insurance Coverage Law Blog has not addressed the statute of limitations in North Carolina, and below is a quick cheat sheet for North Carolina policyholders and their representatives.
- 3 years from the date of loss for breach of contract
- 3 years from the date of loss for bad faith
- 4 years from the date of loss for unfair or deceptive trade practices
However, the statute of limitations analysis is based on the following basic insurance principles:
Breach of Contract:
In North Carolina, an insurance policy is a contract and is subject to a three-year statute of limitations. See N.C. Gen. Stat. § 1-52(12); Fidelity Bankers Life Ins. v. Dortch, 318 N.C. 378, 348 S.E. 2d 794, 796 (1986).
“The statute of limitations begins to run upon the ‘inception of the loss.’” See Lanier v. State Farm Fire and Cas. Co., 2009 WL 926914 (W.D. N.C. March 31, 2009).
“Inception of the loss” means that the “policy limitation period runs from the date of the occurrence of the event out of which the claim for recovery arose.” See Marshburn v. Associated Indem. Corp., 84 N.C. App. 365, 370, 353 S.E.2d 123, 126 (1987).
A claim for bad faith denial also arises out of contract and is likewise subject to a three-year statute of limitations. See N.C. Gen. Stat. §1-52(12); Page v. Lexington Ins. Co., 177 N.C.App. 246, 628 S.E.2d 427, 430 (2006).
Unfair or Deceptive Trade Practices:
A claim for unfair and deceptive trade practices is separate and distinct from an insured’s breach of contract and bad faith claims on the underlying insurance policy, and the UDTP claim is therefore governed by the four-year statute of limitations applicable to such claims. See Hunter v. Guardian Life Ins. Co. of America, 162 N.C. App. 477, 485, 593 S.E.2d 595, 601 (2004).
If you find yourself in a property insurance dispute in North Carolina please contact one of Merlin Law Group’s licensed North Carolina attorneys for assistance and answers to your questions.