Understanding the difference between a statute of limitation and a statute of repose is often crucial in determining whether an insurance carrier has a viable property subrogation claim. It is key to know if a claim is time barred before incurring the time and expense to retain experts and investigate a large property loss claim.
The interplay between the statute of limitations and statute of repose can often be complicated, and it is important to consult subrogation counsel as issues in this area arise. However, we hope this article will provide some understanding of the issues as it relates to both product liability and construction losses.
Statute of Limitations
Provides the time limit or deadline for which a Plaintiff can file a lawsuit for recovery. A statute of limitation begins to run from the date of the loss.
Example:
Ind. Code § 34-20-3 (Indiana Product Liability Act): Plaintiffs must bring claims within two years after the action accrues—after an injury or property damage occurs.
If more than two years runs from the date of the injury or property damage, a lawsuit CANNOT be filed for recovery.
Statute of Repose
A specific time period that limits a party’s exposure to liability based on the age of the product or construction project. The statute of repose for a product begins to run on the date that the product was put into the market. For a construction defect or negligence claim, the statute of repose begins to run when the work is substantially completed.
If the loss does not occur within the statute of repose period, then all claims are barred against a manufacturer or contractor.
Examples:
Ind. Code § 34-20-3-1 (Product Liability): “…a product liability action must be commenced…within ten (10) years after the delivery of the product to the initial user or consumer.”
Indiana Code § 32-30-1-5 (Construction Claim): “…an action to recover damages…for a deficiency…in the design, planning, supervision, construction, or observation of construction of an improvement to real property…may not be brought against a designer or possessor unless the action is commenced within the earlier of ten (10) years after the date of substantial completion.”
How Do the Statute of Limitations and Statute of Repose Interact?
Bottom Line: If your loss occurs within the statute of repose, then you still have the full amount of time provided in the statute of limitations to file a subrogation lawsuit.
Product Liability: “…if the cause of action accrues at least eight (8) years but less than ten (10) years after that initial delivery, the action may be commenced at any time within two (2) years after the cause of action accrues.” IC 34-20-3-1(2)
Construction Defect Claim: “If an injury to or wrongful death of a person occurs during the ninth or tenth year after substantial completion of an improvement to real property, an action in tort to recover damages for the injury or wrongful death may be brought within two (2) years after the date on which the injury occurred…. however, an action may not be brought more than…twelve (12) years after the substantial completion of construction of the improvement.” IC 32-30-1-5 (d)(3)
Be aware—not all statute of repose issues are clear-cut: Consider a product that has repairs and alterations in the ninth year; then three years later it fails due to a defect related to its original design that was incorporated in the repairs. Is the claim barred by the statute of repose?
In a situation like this, relying on experienced subrogation counsel will be crucial to evaluating any likelihood of recovery.
If you have additional questions regarding this article or any recovery issues, please do not hesitate to contact one of our Subrogation Attorneys.