The One Year Statute of Limitations for 1st Party Property Claims
This statute sets the time limit for an insured to file a lawsuit against their property insurer when there is a dispute between them.
The cases below reinforce the importance of reporting all property claims in a timely manner and that if a dispute arises between the insured and insurer, the insured needs to move quickly to preserve their rights.
Even though the statute refers to “Fire Insurance”, Courts have interpreted this to mean all 1st Party Property Policies, such as:
- Homeowners
- Dwelling Owners
- Farm-owners
- Commercial Property
- Inland Marine
Wisconsin Statute §631.83 states that:
An action on a fire insurance policy must be commenced within 12 months after the inception of the loss. This rule applies to riders or endorsements attached to a fire insurance policy covering loss or damage to property or to the use of or income from property from any cause, and to separate windstorm or hail insurance policies.
What does “after the inception of the loss” mean?
There have been published cases which have addressed this issue. These cases show just how tough this standard can be.
In Borgen vs. Economy Preferred Ins. Co., the Borgen’s home sustained hail damage in August 1989. They did not discover the damage until October 1990, approximately 14 months later. The Court dismissed their lawsuit and ruled that the inception of the loss was when the hail storm occurred, not when Borgen first discovered the damage. So, unlike other areas of the law, they refused to apply a discovery rule which would extend the 12-month statute of limitations.
In Bronsteatter vs. American Growers Insurance, a farmer’s 12-row corn planter was vandalized on May 17, 2002. As a result of the vandalism, 2 of the 12 rows would over-fertilize and killed the seeds. Unaware of this vandalism, Bornsteatter planted over 1,000 acres of corn. On June 3, 2002, he realized there was a problem, and discovered the vandalism. He reported the vandalism to the Sheriff and his insurance carrier that day. He filed suit against his property insurer twelve months later on June 4, 2003.
However, the court dismissed his lawsuit by concluding that the “inception” of the loss was when the corn was planted in May 2002. The court rejected Bronsteatter’s arguments that the inception of the loss was either when the problem was discovered in June 2002, or when the loss was actually sustained at harvest time in December 2002.
Note that the statute does allow for the 12-month time limit to be tolled, or temporarily stopped, by formal agreement of the parties, or when the parties conduct an appraisal or arbitration procedure outlined in the policy.
As agents we need to make sure that there are no unnecessary delays on our part in reporting a claim to an insurer. R&R's claims tools are available 24 hours a day, 7 days a week. From our emergency claims service center to CSR24, we are here to help when you need it most.
This material is for informational purposes only and not for the purpose of providing legal advice. R&R Insurance Services, Inc. is not a law firm. You should contact your attorney to obtain advice with respect to any issue or problem specific to your business. The information contained in this document is intentionally condensed and a summary of statutes and court findings.
