The Statute of Limitation in Consumer Claims Against Insurers

In Massachusetts, insurers and insurance claims settlement agents have a duty to “effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” The failure to do so is defined by statute as an unfair or deceptive act or practice in the business of insurance that qualifies as a violation of G.L. ch. 93A, the Massachusetts Consumer Protection statute. An action for the violation of this duty to settle most often arises in the context of an insurer’s failure to settle a personal injury claim where courts interpret “liability” to include not only negligence, but also the amount and extent of damages. Such an action must be brought “within four years after the cause of action accrues.” Court decisions have established that the latest date a cause of action for unfair claims settlement practices can accrue is the date of a verdict in favor of the claimant. However, as one recent Massachusetts Federal District Court case illustrates, a cause of action for unfair insurance claims settlement practices may nonetheless be deemed to have accrued well before a verdict is rendered.

Statute of Limitations

In that case, the claimant filed an action for unfair and deceptive claims practices against his insurer on the fourth anniversary date of the jury verdict in his favor on the underlying personal injury claim which resulted in a judgment of $59,713.60.  In his complaint, the claimant alleged that two months before the trial in the personal injury action, the insurer rescinded its final offer of $4,000.00 which was $10,000.00 less than the medical bills, and thus violated the insurer’s duty to settle and G.L. c. 93A. The insurer filed a motion to dismiss the complaint contending that the statute of limitation had expired four years after the date the insurer rescinded its offer. The claimant argued that his cause of action under G.L. c. 93A did not accrue until the jury returned the verdict in his favor and awarded damages over ten times the amount of the rescinded offer.

When to File a 93A Lawsuit in Massachusetts

The District Court judge allowed the insurer’s motion to dismiss the complaint finding that any actionable injury or harm for unfair settlement practices was appreciable at least two months before the verdict was rendered when the insurer rescinded its final offer and, therefore, the cause of action based on the insurer’s settlement conduct accrued at that time. The judge noted that no further settlement activity was alleged after the date the insurer withdrew its offer. The judge further stated that the case “illustrates the difference between crystallization of money damages and accrual of a ch. 93A claim as a result of appreciable harm or injury from settlement conduct.” The judge concluded that the complaint was filed more than four years after the cause of action accrued compelling dismissal.


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