Opinion ID: 2516051
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Heading Rank: 2

Heading: the statute of limitations on insurance claims

Text: The ordinary statute of limitations for breach of a written contract is four years. (Code Civ. Proc., § 337.) Insurance claims for property damage, however, have a one-year limitation period. (Ins.Code, § 2071.) We explained: The short statutory limitation period ... is the result of long insistence by insurance companies that they have additional protection against fraudulent proofs, which they could not meet if claims could be sued upon within four years as in the case of actions on other written instruments. (Code Civ. Proc., § 337.) Originally, the shortened limitation periods were inserted into policies by insurers. Some courts declared such provisions void as against public policy while other courts enforced them in order to protect freedom of contract. ( Bollinger v. National Fire Ins. Co. (1944) 25 Cal.2d 399, 407, 154 P.2d 399.) In 1909, the California Legislature intervened in favor of a shortened period of limitation by enacting the predecessor to Insurance Code section 2071 to impose a 15 month limitation on claims under fire insurance policies. (Stats.1909, ch. 267, § 1, p. 409.) The statute was fashioned after a New York statute governing lawsuits on fire insurance policies. Thereafter, as insurance coverage was expanded to cover more than fire (e.g., theft, lightning and other property damage) the New York provision was broadened in 1943 by replacement of the phrase `after the fire' with ... `after inception of the loss.' ( Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 683, 274 Cal.Rptr. 387, 798 P.2d 1230, quoting Proc v. Home Ins. Co. (1966) 17 N.Y.2d 239, 244, 270 N.Y.S.2d 412, 217 N.E.2d 136.) In 1949, California's Insurance Code section 2071 was amended to conform more closely to the New York law, shortening the limitation period to the one-year period of that law. ( Prudential-LMI Com. Insurance v. Superior Court, supra, at p. 682, 274 Cal.Rptr. 387, 798 P.2d 1230.) For years, California cases debated whether the defense of the statute of limitations was a favored or disfavored defense. In 1999, we resolved the matter: [T]he affirmative defense based on the statute of limitations should not be characterized by courts as either `favored' or `disfavored.' The two public policies identified above the one for repose and the other for disposition on the merits are equally strong, the one being no less important or substantial than the other. ( Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 396, 87 Cal.Rptr.2d 453, 981 P.2d 79.) Thus, we approach the issue of the statute of limitations defense in this case with no policy predisposition favoring either side.