San Francisco Attorney Michael Papuc has 25 years experience in insurance coverage and bad faith litigation. Michael Papuc represents policy holders in claims against their insurers.
California property insurance policies (homeowners, flood, earthquake, renters, landlord protection) have a Condition requiring the policy holder (insured) to bring a lawsuit on any claim within one year from the time of loss. The one year period is extended for the time period between the insured notifies the insurer of the loss and the insurer investigates and ultimately denies the claim in writing. Failure to bring lawsuit on the claim on a timely basis will cause the lawsuit to fail. The following is a summary of California law on this issue.
The California Standard Form Fire Insurance Policy provides:
"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 12 months next after inception of the loss." (Insurance Code 2071)
This is a standard provision in all fire insurance policies in California. For the most part, all homeowners, earthquake, flood, landlord protection, and renter's insurance policies issued in California contain this or a similar provision.
Under such provisions, the limitations period is measured from that point in time when appreciable damage occurs and is or should be known to the insured.(Prudential LMI Comm'l Ins. v. Sup.Ct.(Lundberg)(1990) 51 Cal.3d 674, 686687.)
The contractual limitations period is equitably tolled from the time the insured gives notice of the loss until the insurer formally denies coverage in writing.(Prudential LMI Comm'l Ins. v. Sup.Ct.(Lundberg)(1990) 51 Cal. 3d 674, 687.) This means that the period of investigation by the insurer is not counted in the calculation of one year to bring a lawsuit.
Where the policy provides that suit must be filed within one year after loss, an insured who makes a timely claim has the right to wait until the insurer denies the claim in writing before commencing suit. The period of time the insurer had the claim under consideration is excluded in measuring the one-year period.(Prudential LMI Comm'l Ins. v. Sup.Ct.(Lundberg)(1990) 51 Cal.3d 674, 687; Prieto v. State Farm Fire & Cas. Co.(1990) 225 Cal. App. 3d 1188, 1195.)
The insurer must warn its insured of any contractual limitations period applicable to the claim, regardless whether the insured is represented by an attorney. On the other hand, the insurer need not warn a claimant who is represented by counsel of the applicable statute of limitations.(Superior Dispatch, Inc. v. Insurance Corp. of N.Y.(2010) 181 Cal.App.4th 175, 189190 (construing 10 Cal.C.Regs. 2695.4(a), 2695.7(f)).) The contractual limitations period is the one year period in the policy. A statute of limitations period is a statute providing a time limit to bring a lawsuit, regardless of what the policy says.