A statute of limitations determines the limit for when a lawsuit can to be filed. Failure to file by that deadline may bar the action forever. The statute of limitations was raised as a defense in a recent property insurance case in Mississippi, Greater Trueway Apostolic Church v. Church Mut. Ins. Co., 2012 WL 1143947 (S.D. Miss. April 4, 2012).

The Church property sustained damages as a result of Hurricane Katrina on August 29, 2005. After being notified of the damage, Church Mutual inspected the loss at the main church building and made payments on December 2, 2005, in the amount of $43,407.47, and May 19, 2006, in the amount of $18,480.06. The Church notified the insurer that an additional building covered under the policy also sustained damages, and the insurer issued an additional payment to Greater Trueway on December 20, 2006, in the amount of $7,758.65.

On April 1, 2010, Greater Trueway wrote the insurer to dispute the amount of the loss as paid by Church Mutual and requested appraisal of the loss under the appraisal provision of the policy. The insurer refused appraisal because it was requested nearly five years after the date of loss, and over three years following the last payment of the claim. The lawsuit was filed October 3, 2011.

In Mississippi, the statute of limitations for bringing suit for breach of an insurance contract is three years. Mississippi courts have held that the statute of limitations begins to run from the date of the refusal of payment.

The Court analyzed whether the statute of limitations barred the action to enforce the appraisal provision of the policy. The Court noted that the Complaint was filed over six years after the date of loss, and nearly five years after the last payment on the claim. The policyholder argued that the appraisal provision of the policy allows it to demand an appraisal of the damages indefinitely, even if after the statute of limitations had passed. The question in the case became whether a request for an appraisal can resurrect the ability to file suit after the statute of limitations has expired.

The Court stated:

The appraisal provision provides a contractual avenue in which the parties to the insurance contract can resolve their differences short of litigation. The appraisal provision was not intended to extend, and does not extend, the time an insured could bring suit over such claims. Indeed, any such provision would be unenforceable, as Mississippi law prevents any attempts to lengthen or shorten a statute of limitations by contract.

The Court granted summary judgment in favor of the insurer and held:

The statute of limitations for Greater Trueway’s claim against Church Mutual is three years, and began to run, at the latest, on the date of last payment by Church Mutual on December 20, 2006. Greater Trueway’s request for appraisal—made after the statute of limitations had run—was not timely made and cannot circumvent the running of the statute of limitations on the otherwise time-barred claim.

Once a statute of limitations runs, the party may lose the ability to file an action to enforce its rights related to that action. Policyholders should consult with experienced insurance claims representatives/attorneys as soon as possible when wondering whether an insurer has fully evaluated and paid all damages sustained in a loss.