This is probably the most important question, and will vary by state:
In Texas, you have two years from the date the cause of action accrues to file a lawsuit. That means two years from the date: (1) the insurance company issues a payment; (2) denies the claim; (3) makes any other claim determination. If you wait longer than that, you are forever barred. The safest bet is to run the clock from the date of the loss itself. Once you hit the second anniversary of the loss without filing suit, you run the risk of your claim being barred by the Statute of Limitations. DO NOT WAIT. If you think your insurance company is not doing the right thing, call us. Once the two years runs, you are out of luck. The two-year limitation applies to bad faith claims, and to claims for breach of the insurance code (such as the Prompt Pay Act). It can also apply to a breach of contract action if the policy includes the correct language.
In Texas, just like many states, the insurance policy can shorten the length of time you have to file a lawsuit. But, the provision must be worded correctly. If the policy’s Suit Against Us or Legal Action Against Us clause limits you to two years from the date of the loss, then Courts have held that language to be unenforceable, and the standard four-year limitations period applies. If the clause limits you to “two years and one day from the date the cause of action accrues” then you have two years. WATCH OUT a lot of policies will have the four-year language in the main policy but will amend it through an “endorsement” (amendment) called “Texas Changes.” Don’t assume you have four years to file suit.
In Colorado it depends on whether your policy is “commercial” or “residential.” If your policy is “residential,” meaning you are a homeowner, you have two years from the date the cause of action accrues. If you have a “commercial” policy, meaning the property is a business, then the policy may lessen the amount of time you have to bring suit. Some courts have upheld limitation language as short as six months from the date of the loss. Check your policy to be sure. Claims for unreasonable delay or denial are subject to a two-year limitation. We will gladly review any policy language to make sure you know when your limitation period will run without any commitment on your part to hire us.