New Jersey Appellate Division Upholds Four-Year Limitations Period in UIM Coverage Dispute Background
The New Jersey Appellate Division’s ruling in Vanrell v. United Services Automobile Association (USAA) reaffirms that insurance contracts may validly shorten the state’s statutory six-year limitation period for filing an underinsured motorist (UIM) claim.
On January 10, 2018, Amy M. Vanrell was rear-ended while stopped at an intersection, allegedly sustaining serious and permanent injuries from the accident. The at-fault driver carried liability limits of $50,000 per person/$100,000 per accident, while Vanrell’s USAA policy provided UIM coverage of up to $300,000 per person/$500,000 per accident.
Vanrell pursued a claim against the tortfeasor in 2019, but did not notify USAA until May 2, 2022, when she sought USAA’s consent to settle for $43,000 via a “Longworth letter.”1 USAA approved the settlement and waived subrogation, but emphasized that this did not guarantee UIM coverage. Negotiations followed, with USAA ultimately offering $100,000 and Vanrell demanding $250,000. The parties could not resolve the matter.
Trial Court
On May 17, 2023, Vanrell filed a complaint against USAA seeking UIM coverage for the January 2018 accident. On July 2, 2023, USAA filed an answer asserting affirmative defenses, including that the statute of limitations barred the complaint and that plaintiff failed to comply with the terms of the policy. The parties briefly engaged in discovery.2
Before discovery closed, USAA filed a motion for summary judgment, which, if granted, would dismiss Vanrell’s case.3 USAA argued the complaint was untimely under the policy’s limitations clause, which required actions to be filed within: (1) four years from the accident date, or (2) one year from when the insured knew or should have known of a UIM claim, whichever is later. Plaintiff did neither.
Vanrell opposed the motion, arguing that the six-year statute of limitations in N.J.S.A. 2A:14-1(a) for breach of contract claims applied to her UIM claim over the terms of her policy.4 She contended the contractual provision conflicted with the statute and was therefore invalid.
On November 17, 2023, the Atlantic County Superior Court – Law Division (Trial Court) granted summary judgment to USAA and dismissed the complaint. The Trial Court found that the statutory six-year period did not preempt the policy’s four-year limitations period, and that the contractual term was neither unconscionable nor unexpected given Vanrell’s agreement to it when obtaining the policy. The complaint was filed outside the time permitted.
Appellate Court’s Decision
Vanrell appealed. The Appellate Division heard argument on November 20, 2024, and issued its decision on August 6, 2025, affirming the trial court’s dismissal. The Court found the UIM policy contained a valid provision shortening the period to file. Under the four-year limit, Vanrell’s filing deadline was January 10, 2022. With the one-year limit, from when she became aware of the UIM claim, the very latest date would be May 2, 2022, the date of her “Longworth letter.” Her complaint was filed on May 17, 2023, missing both deadlines. The Court emphasized that New Jersey law permits parties to agree to shorter limitations periods than those provided by statute. The six-year statutory limit applies only when no different period is agreed upon in the contract. There is no conflict here.
Vanrell also argued that USAA should be equitably estopped from asserting a timeliness defense because it continued settlement discussions and requested medical records after the four-year period had expired.5 She relied on Price v. New Jersey Manufacturers Insurance Company, 182 N.J. 519 (2005).
The Appellate Division found Price distinguishable. Vanrell did not notify USAA of her potential UIM claim until May 2, 2022, after the four-year period had already expired. Because USAA’s conduct occurred only after the contractual deadline passed, it could not have caused her to delay filing within a valid limitations period. The court also noted that Vanrell failed to prove that the one-year period expired while active communications were ongoing and that USAA’s actions caused the delay.
Conclusion
The Vanrell decision underscores that New Jersey courts will enforce valid contractual limitations provisions in insurance policies, even when they shorten statutory filing periods. Policyholders and insurers should not assume the six-year statute of limitations applies to UM/UIM claims. They should check their policy language to see if the policy language shortens the period to file suit.
If you have any questions about the information in this post or if you would like to learn more on this topic, you can contact William Watt at wwatt@hoaglandlongo.com, Frank Caruso at fcaruso@hoaglandlongo.com, or both
at 732-545-4717.
1 A “Longworth letter” refers to the notice required by Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), in which an insured informs their UIM carrier of a proposed settlement with the at-fault driver and offers the carrier an opportunity to protect its subrogation rights before the settlement is finalized.
2 During discovery, the parties exchange evidence that help evaluate the merits and value of a case for a potential settlement, or if needed, for trial.
3 For various reasons, a party may file a motion, which is a mechanism to seek relief from the court.
4 N.J.S.A. 2A:14-1(a) Every action at law for trespass to real property, for any tortious injury to real or personal property, for taking, detaining, or converting personal property, for replevin of goods or chattels, for any tortious injury to the rights of another not stated in N.J.S.2A:14-2 and N.J.S.2A:14-3, or for recovery upon a contractual claim or liability, express or implied, not under seal, or upon an account other than one which concerns the trade or merchandise between merchant and merchant, their factors, agents and servants, shall be commenced within six years next after the cause of any such action shall have accrued.
5 Equitable estoppel is a legal doctrine that prevents a party from asserting a claim or defense when their own conduct has misled another party, causing that party to act (or fail to act) to their detriment in reasonable reliance on the misleading conduct.