All public adjusters would love to get retained as soon as possible after the date of loss. Unfortunately, often, the public adjuster gets hired months or even a year after the date of loss. In that case, if the first notice of claim filed with the carrier comes from the public adjuster then the carrier will assert that the “prompt notice” provision of the policy was not complied with. However, that is another topic and one I have extensively blogged about.

Today I write about a different fact scenario, and one I see often. Before I set out the fact pattern, remember that generally in Texas the deadline to file a breach of contract and bad faith lawsuit is two (2) years from the “date of accrual.” That means two years from the date the claim is fully or partially1 denied or the date the carrier closes its file, whichever is later. Here is a fact pattern: There is a hail loss on April 15, 2012, and the policyholder immediately puts the carrier on notice. An insurance company adjuster comes out within a week and denies the roof damage claim. However, the carrier forgets to send out a denial letter. A month later on May 15, 2012, the carrier closes it file.2 In late April 2014 the policyholder hires a public adjuster, who sends a letter of representation to the carrier, and asks the carrier to re-open its file and re-inspect the property. The carrier agrees to re-open and re-inspect the property, but after re-inspection the carrier maintains its denial and this time sends out a letter dated May 15, 2014, which reaffirms its prior denial of the claim.

How much time do you think the policyholder has to file a lawsuit? Certainly, because the carrier failed to send out a denial letter in 2012 and agreed to re-open its file and re-inspect the property in 2014 the policyholder should have until May 15, 2016, to file suit, right? When the carrier agreed to re-open the file and re-inspect the property that erased any prior accrual date in favor of the policyholder, didn’t it? The clock started over, didn’t it?

As a recent 5th Circuit Court of Appeals case3 reminds us, the answers to all those questions are in the negative. The date of accrual began to run on May 15, 2012, when the carrier closed its file. It does not matter whether the carrier sent out a denial letter or not. And it does not matter that the carrier agreed to re-open the file and re-inspect the property. The date of accrual stays at May 15, 2012, and the last day the policyholder had to file suit was May 15, 2014. This is true even if the letter reaffirming coverage comes after May 15, 2014.

This is why I cannot overstress to public adjusters to make it a very strong practice at the start of any claim to obtain from the policyholder all claim documents (especially letters/emails from the carrier). The most successful public adjusters have a practice of “timelining” and calendaring in their office. When they get a claim they immediately sit down and look at the documents they received from their customer and they draw up a timeline of events that occurred in the claims handling process.

Then they calendar deadlines—including the deadline to file suit. As a safety precaution most calendar the two-year anniversary of the date of loss just to be safe. They set up reminders in their calendaring system to remind them months and weeks in advance of upcoming deadlines. With regard to calendaring, they do the same thing lawyers do. By following these simple practices, if the claim has to go legal, the public adjuster makes sure his client has plenty of time to seek out and engage an attorney so a lawsuit is timely filed. In my fact scenario above, the public adjuster got hired about 30 days before the deadline to file suit. To prevent exposing himself to any claims by his client, that public adjuster should have immediately told the policyholder she needed to seek advice of counsel. She needed the opportunity to file suit before the deadline. Don’t be lulled into thinking you have extra time because the carrier re-opened the file and re-inspected the property. Two years is two years.

1 A “partial denial” means that the carrier pays some of the claimed damage, but not all. Thus, when the carrier pays some money, the date of accrual is the date the last check was received by the policyholder.
2 The carrier doesn’t tell anyone it closed its file, it just closes its file.
3 DeJongh v. State Farm Lloyds Inc., No. 15-20522, 2016 U.S. App. LEXIS 21432 (5th Cir. Nov. 30, 2016).
**Please note that I made up my own dates for this blog, even though some of the dates herein generally correspond with the facts of the case.