Expert: webfoot - 5/23/2006

Question
In November 2001 I was carjacked while I was living in Arkansas. The vehicle was recovered and a person was convicted for driving a stolen vehicle. My insurance company (State Farm) paid me for repairs on the vehicle and the person convicted for possession had to reimburse me and the insurance company for our expenses. I traded in the vehicle to get rid of the bad memories and the payments trickled in from the convicted man over the next 3 yrs.

Now it is May 2006, almost 5 years after the claim was filed, and I live in a different state but still have insurance with the same company. I received a letter from the insurance company "requesting money back for what appears to be and overpayment regarding this claim." This was not a bill, just a letter asking me to send them a check for $420. I wrote back asking for records and details that explained how they came up with the $420 figure. They did send me some documents but never really explained where the $420 figure came from.

My question is, is there some sort of statute of limitations that would apply here? It just seems odd to me that they would send a letter requesting payment instead of a bill and that this is happening 5 years after the claim was filed. Thanks for your help.

Answer
Joel,

What you are referring to here is called subrogation.  Your insurance company stepped in on your behalf to recover claim expenditures made by both the company and yourself.  You likely signed a subro agreement five years ago stating that you would allow State Farm to recover on your behalf and would therefore, not be collecting at the same time.  In all likelihood, they attempted to collect that $420 from the responsible party who then provided proof that you were paid the funds. Some call it "double dipping" and there is language in all insurance policies that address the issue. The subro agreement is a fluid document that, like a note, may have its own terms that are unrelated to the statute of limitations.  In other words, the statute in AR on most debts is five years, but you still can have a 10 year note.  

As far as statutes in general, it does vary from state to state and depends on what is damaged.  Cars, other property and bodily injury each may carry different statutes and the relationship to the insurance company may also determine the length of the statute.  In Georgia, the statute of limitations involving claims between an insured and his/her own carrier (ie.collision, comp) is 7 years.  Third party claimants are two years for bodily injury and four years for property damage.

You are, however within the 5 years and may owe them the money.  I would definitely request a clear and concise accounting of all funds paid and if you do owe it, ask if they can work out a deep discount on the balance.

Good Luck!