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Multiple Guaranty Associations brought claims for breach of contract stemming from unpaid policy
deductibles. The trial court granted Defendant Hill Bros.’ summary judgment concluding the
Associations’ claims were time-barred. After determining that various Guaranty Associations had
standing to bring suit on the underlying policy issued by an impaired carrier, the Third Court of
Appeals reversed the trial court and remanded the case for further proceedings.
The appellate court held that the statute of limitations on a breach of contract claim for failure to
reimburse deductibles does not accrue until a demand is made to the insured and the insured fails
to pay on demand. Because large deductible endorsements do not specify the time period within
which demand must be made by the carrier, the court concluded that demand for payment must be
made “within a reasonable time.” A “reasonable time for demand,” the Court explained, is
coincident with the four year limitations period for a breach of contract claim. In other words, in
Texas, a carrier has up to four years to make a demand for reimbursement of a deductible, and the
statute of limitations begins to accrue once the insured fails to make payment on demand.
Applying this rule to the Guaranty Associations’ claims, the court reversed the trial court’s judgment
on limitations and remanded the case for further proceedings.
Cal. Ins. Guar. Assoc., et al. v. Hill Bros. Transp. Co., 2016 WL 2991081 (Tex. App.—Austin
2016).