One-Year RCV Deadline Vs. Two-Year Statute Of Limitations Deadline – Hail Claims
By: Ed Beckman of Hellmuth and Johnson
I am often asked about the one-year deadline to complete Minneapolis insurance repairs to recover RCV. The deadline is usually one-year from the date of loss (storm, fire). I have never seen an insurer take this deadline to court. I have seen insurers threaten to do so, but not actually do it. I think I know the reasons why. It’s something we should all keep in mind when we see an insurer cite to the one-year RCV deadline.
If the one-year deadline were really enforced, it seems to me it is an end-run around the two-year statute of limitations. By law, an insurance policy must include a two-year deadline for filing a claim. Minn. Stat. Sec. 65A.01 subd. 3. If the one-year RCV deadline were really enforced it would totally negate the two-year deadline. An insurer could say “game over” after 13 months. Yet the two-year deadline applies to ACV and RCV claims by statute. The one-year deadline cannot, and should not, overcome the statute.
Another reason is the Minnesota rule regarding prejudice and notice. An insurer can only avoid a claim by alleging late notice if it can prove prejudice by the alleged late notice. There is Minnesota case law that states notice after one year, but before two years, is proper notice if the insurer can’t show prejudice. This rule of law would be defeated by a blanket operation of the one-year RCV deadline.
Another problem with enforcing the one-year RCV deadline is the appraisal clause mandated by statute. The appraisal clause and the duty to appraise every dispute about scope are found in every insurance policy because of state statute. Minn. Stat. Sec. 65A.01 subd. 3. The RCV one-year deadline is not mandated by statute, rather it is a deadline created by insurance companies. If a property owner demands appraisal, say, 14 months after a storm, the property owner is invoking a right granted by law. How can that right be defeated by an insurer that says the one-year RCV deadline expired?
In the end, the one-year RCV deadline is a creation of the insurance companies. This deadline should never override what is mandated by law. The insurer would have to say, “judge, ignore the statutes at play here because our one-year deadline controls.” I don’t see that flying in court. I have certainly seen insurance companies rattle their saber about the one-year RCV deadline, but I have never seen it actually enforced. Now, I would never counsel a client to ignore the RCV deadline. For a smooth process, every effort should be made to get the job done as soon as possible. I do tell clients, however, the one-year deadline is fraught with problems for insurers. In many occasions it is probably unenforceable. No RCV claim should ever die simply because one year has based since the loss.
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