What Is the Legal Time Limit for Insurance Recovery?

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Insurers design their policies to include strict guidelines for how policyholders file their claims and qualify to recover value for their cars, houses and other assets when they are damaged. For instance, some perils, including floods, are not covered by normal insurance at all. But for covered perils such as car accidents and fires, there is often a time limit that insured people have to make the claim, after which the insurance company will not honor the claim and is under no legal obligation to do so.

State Laws

  • In the United States, each state has a choice when it comes to insurance time limits regarding claim recovery. The state can impose its own rules on time limits or allow insurance companies to specify their own limits within their policies. This makes it difficult to pinpoint any particular time limit for any type of insurance. States often limit both claim times, requiring insured people to make claims within a certain number of business days, as well as requiring insurance companies to respond within 10 to 15 days and pay out the claim within days of making a decision.

Car Insurance

  • Auto insurance has what is known as a contractual statute of limitations, which defines the time period that the policyholder has to file a claim. When it comes to vehicle damage, this period is usually from one to two years. This time period gives enough time to fully ascertain damage. However, for most accidents, the sooner the policyholder can make the claim, the better. Insurance companies usually must inspect the damaged vehicle and make a good faith offer within days of notification, so they are under a much stricter time limit.

Life Insurance

  • The collection time frame for life insurance can be longer than the legal time limit for auto insurance. For instance, some states impose a seven-year limit in which to collect life insurance, so that money can be collected by the state or reimbursed to the insurer if no one comes forward to claim it. In other cases, there is no time limit at all for recovery of the funds. The time limit often depends on the contractual language used by the insurer.

Other Types of Insurance

  • Time limits for other types of insurance vary. For homeowners insurance, the sooner the homeowner can make a claim, the better. Like auto insurance, homeowners insurance often requires the insurer to inspect the damage before approving the claim, so timing is vital and, if too many days have passed, the insurer may have grounds to reject claims based on insufficient evidence. For services such as Medicare, claims must be filed within one full year following the year in which medical services were provided.

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