Prescription in Insurance Claims: When Does the Clock Really Start Ticking

The Supreme Court has settled a crucial question for policyholders: when does the clock start running on the prescriptive period to file an insurance claim? In a recent ruling, the Court clarified that the period does not begin until the insurer has actually denied the claim, not merely from the date of the loss or the filing of the claim. This decision protects policyholders from being barred by technicalities while their claims are still pending.

The Case: A Claim Denied Too Late

The case involved a policyholder whose property was damaged. The insured filed a claim with the insurer, but the insurer did not act on it for a considerable time. When the insurer finally denied the claim, it argued that the prescriptive period had already lapsed, barring the insured from pursuing legal action.

The Issue: When Does Prescription Start?

The central issue was whether the prescriptive period for an insurance claim begins to run from the date of the loss, from the filing of the claim, or only from the date the insurer denies the claim. The insurer argued for an early start, which would have made the insured's case time-barred.

The Ruling: Denial Triggers the Clock

The Supreme Court ruled in favor of the insured. The Court held that the prescriptive period for an insurance claim only begins to run when the insurer has made a clear and explicit denial of the claim. This is because a cause of action does not accrue until the insured has a right to file a lawsuit, which only arises after the insurer refuses to pay.

Why This Matters for Policyholders

This ruling provides significant protection for policyholders. It prevents insurers from delaying the resolution of a claim and then using that delay as a defense to avoid payment. As long as the insurer has not formally denied the claim, the prescriptive period does not start, giving the insured ample time to seek legal remedies once a denial is finally issued.

Practical Takeaways

• A claim is not time-barred while pending. If an insurer has not yet acted on a claim, the prescriptive period has not begun to run.
• Demand a formal denial. If an insurer is silent or unresponsive, a policyholder may consider sending a formal demand letter to compel a response, which would then start the clock if denied.
• Act promptly after denial. Once the insurer issues a clear denial, the prescriptive period begins. Policyholders should not delay in filing a case or seeking legal advice.
• Keep records. Document all communications with the insurer, including the filing of the claim and any responses, to establish when the denial was made.
• Consult a lawyer. Insurance policies and the law on prescription can be complex. A lawyer can help determine the specific deadlines that apply to a particular claim.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.