Insurance policyholders face many hurdles when a loss occurs.  One such hurdle involves the time in which a law suit must be filed after the insurance company denies your claim.  Suit limitation clauses greatly reduce the time-period to pursue even an illegitimate insurance claim denial.  While the Statute of Limitations for a breach of contract claim typically runs for 6-10 years (depending on the applicable state law), suit limitation clauses may reduce this window to as little as 12 months.  This is particularly problematic because limitation provisions are buried deep within lengthy, complex insurance policies and fail to provide actual and sufficient notice to policyholders.

Though a suit limitation clause functions much like a Statute of Limitations, in that both provide a specific time-period in which a suit may be brought, the difference between the two is important to note.  Significantly, a suit limitation clause is a condition imposed by contract, rather than by statute or law.  Therefore, the application or enforcement of a suit limitation clause may be challenged.

Like most issues relating to insurance policies, the law governing a contract’s suit limitation clause differs from state to state.  The majority of jurisdictions uphold such provisions, though some have not.  In those states where limitation clauses are considered valid, certain restrictions may be imposed on their use, with some states providing more protection for insured parties than other states.  Illinois, for example, extends the contractual limitation by the amount of time the insurance company takes to process the claim.  In other words, the period of time in which an insured may bring a law suit “tolls” for the number of days that pass from the filing of the claim to the date of the denial.

Further, states may provide additional protection against statute limitation clauses in the form of applying a notification requirement.  In Illinois, an insurance company waives its right to impose a time limitation clause if the denial notice does not include the remaining time-period for bringing a law suit.  The rules in Pennsylvania are less protective, on the other hand, with courts finding that a denial letter does not necessarily need to specify the amount of time to bring suit in order for a limitation clause to apply.

The effect of suit limitation clauses can be devastating to policyholders whose claims have been illegitimately denied, giving an insurance company the incentive to delay processing of the claim, and ultimately, the ability to escape liability.  If your insurance claim has been delayed or denied, you should speak to an insurance attorney immediately.  Even if you think too much time has passed to dispute your wrongfully denied claim, we may be able to help collect the life or property insurance proceeds you deserve.