IF people believe that something of value is rightfully theirs, their claim to such an important thing entails a strong conviction and confidence.
However, if there has been no immediate claim or expressed interest to obtain it by the people who believe they have the right to receive and own it, then it might not really be that valuable to them.
Thus, for equity reasons, they cannot later raise the claim again after a period of inaction and neglect, especially if there was a previous agreement regarding a set period when they should have demanded their right.
In insurance claims, such a situation falls under the so-called prescriptive period.
Similar to an expiration date, the prescriptive period defines the appropriate time to file a complaint with the Insurance Commission or in the courts against an insurance company if the latter denied an insurance claim to recover the proceeds of the insurance.
The period when to file a complaint after a denial of claim may be agreed upon by the policyholder and the insurance company.
Their agreement could be written as among the conditions set in the insurance contract.
Nevertheless, as reflected in Section 63 of the Insurance Code, an agreement in the policy limiting the period within which to file complaint to less than one year after the denial of the claim by the insurance company is void or invalid.
If the insurance contract sets a condition that the policyholder may only file a complaint or suit within six months after the denial of claim, such condition in the insurance contract is deemed invalid.
Also, a few months may not be enough to prepare for a complaint against an insurance company which denied a policyholder’s claim for payment.
Such condition would have been considered valid and binding had it stated that the legal case should be filed within one year, or even longer, say 24 months, after the claim was rejected.
Suppose the prescriptive period is 24 months and the insurance company denied a claim while no complaint was filed by the person claiming against it three years, or 36 months, after the denial.
If on the fourth year after the denial, the claimant then files a complaint, then the case will not have a basis and the policyholder will not recover the insurance payment he or she was claiming for because the period to file a claim has already prescribed.
However, in the case of compulsory third party liability insurance for motor vehicles, the law clearly provides a prescriptive period to file a complaint if the claim was denied.
Section 397 of the Insurance Code states that an “action or suit for recovery of damage due to loss or injury must be brought, in proper cases, with the Insurance Commissioner or the courts within one year from denial of the claim, otherwise, the claimant’s right of action shall prescribe.”
The main reasons behind the prescriptive period in filing a complaint for insurance claims, or an expiration date as to when to demand an insurance claim through the courts or with the Insurance Commission, are basically to increase the chance of tracing the amount of the loss or damage to its origin and to prevent the potential destruction of evidence.
If no time is prescribed or set, opportunistic behavior leading to acts such as fraud or deception may be committed to take advantage of the possibility of receiving insurance payments.
Note that the instance of rejection or denial of insurance claim from which the prescriptive period begins refers to the first time that the insurance company expressly or impliedly denied the claim.
Suppose the policyholder later asked the insurance company to reconsider, but the company denied it again.
The prescriptive period has already started running after the first denial of claim.
The policyholder should have begun filing a complaint from the first time his claim was denied, not when his request to be reconsidered was rejected.
Lastly, the Insurance Code does not require insurance companies to always include in the policy document a condition or stipulation on prescriptive period.
Thus, if an insurance contract does not contain a condition about a prescriptive period, the basis would be the 10-year prescriptive period for written contracts provided for in Article 1144 of the New Civil Code.
Randy B. Escolango, Ph.D. is the deputy commissioner for legal services of the Insurance Commission. He may be contacted at email@example.com.