In insurance litigation, knowing when a claim accrues is critical—but equally important is knowing when that time may be tolled. Courts in both Pennsylvania and New Jersey recognize that policyholders shouldn’t always be penalized for waiting, especially during claims processing. But the two states take materially different approaches to tolling contractual limitations periods in insurance policies.
Here’s how the law differs—and why it matters.
The Problem: Policy-Based Suit Limitation Periods
Property insurance policies generally contain contractual limitations provisions, commonly stating that any lawsuit must be filed within one or two years of the date of loss. These provisions are generally enforceable in both states, and for the unwary, can be both unexpected and dangerous. This is because the ordinary statute of limitations (the time within which one can sue another for breach of contract) is typically longer – 4 years in Pennsylvania and 6 years in New Jersey. And neither time period typically starts ticking away until the contract is breached. Insurance companies have successfully negated this general rule and created potential traps for the unwary policyholder by writing into their insurance policies that the time period is shorter (1 or 2 years, typically) and that the time begins ticking on the date of loss, not some later time when the Insurer breaches its obligations.
As with other cases, tolling can sometimes come to rescue of a policyholder who otherwise missed their deadline to bring suit.
But this is an issue where Pennsylvania and New Jersey courts take vastly different approaches. As I explain below, in Pennsylvania, tolling is a sliver-thin crack in the door; in New Jersey, tolling opportunities are far more generous.
Pennsylvania: The Clock Keeps Running – Even During Investigation
In General State Authority v. Planet Insurance Co., 346 A.2d 265 (Pa. 1975), the Pennsylvania Supreme Court squarely held that the contractual limitation period continues to run during the insurer’s investigation and negotiations, unless the insurer affirmatively waives or extends the period.
“The mere fact that negotiations or investigations are pending does not toll the running of the contractual limitation period.”
The Court emphasized that tolling may only apply where the insurer affirmatively misleads the insured or waives the limitation. Passive delay is not enough.
Subsequent cases have consistently reaffirmed this principle:
- The contractual period begins at the time of loss (not denial),
- The insurer’s ongoing handling of the claim does not suspend the limitations period,
- Insureds must sue within the stated time—even if the claim is still “under review.”
Practical Takeaway:
Pennsylvania law strictly enforces policy-based limitations, and does not toll for claim investigation or negotiation. If you’re handling a claim in PA, get a complaint or a writ of summons on file within the limitations window, even if it appears the claim may amicably resolve—or get a written waiver. Otherwise, by the time the Insurer says “No,” it may be too late to do anything about it.
New Jersey: The Clock Pauses During Investigation
New Jersey takes a markedly different approach that is much friendlier to Insureds.
In Price v. N.J. Manufacturers Insurance Co., 182 N.J. 519 (2005) and Adze v. Hanover Ins. Co., 336 N.J. Super. 630 (App. Div. 2001) (as well as other case law) both the New Jersey Supreme Court and the Appellate Division held that the time-limit on bringing suit against an insurer could be tolled even where the policy expressly stated that no action could be brought unless it was commenced within a certain time-span of the date of loss.
The Courts reiterated that tolling applies regardless of the contractual language, so long as the delay was due to the insurer’s ongoing investigation or lack of formal denial, not lack of responsiveness or attention by the Insureds. In a nutshell, after an Insured gives notice of a claim to an Insurer, and for so long as it reasonably appears that the Insurer is still investigating and has not made a decision to deny coverage or underpay an amount, the clock is usually paused.
Practical Takeaway:
In New Jersey, the limitations clock usually stops running from the moment the insured submits the claim until the insurer makes its decision. This creates more breathing room for policyholders—so long as they act promptly after denial.
Side-by-Side Comparison
| Feature | Pennsylvania | New Jersey |
|---|---|---|
| Key Case | General State Authority v. Planet | Price v. N.J. Manufacturers Insurance Co.; Adze v. Hanover Ins. Co. |
| Default Limitations Period (Contract Claims) | 4 years by statute; often 1–2 years by policy | 6 years by statute; often 1–2 years by policy |
| Does investigation toll limitations? | No – Unless insurer affirmatively waives or misleads | Often Yes – Tolling applies from notice of loss to denial |
| Enforce policy’s suit limitation clause? | Yes, strictly | Yes, but tolling modifies enforcement |
Conclusion
The contrast between Pennsylvania and New Jersey on this issue is stark:
- In Pennsylvania, policyholders must sue on time regardless of claim status—unless they can prove waiver or misleading conduct by the insurer.
- In New Jersey, policyholders are protected during the claim process, and time doesn’t start running until it reasonably appears that the insurer says no.
For attorneys and insureds handling property or casualty insurance claims in either state, don’t assume the limitations clock is paused just because the claim is pending—unless the record is clear and you’re in New Jersey.
If you’re unsure, file or toll by agreement. Because once the clock runs out, courts in both states are unlikely to give you a second chance.
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