Subrogated claims: Why getting limitation periods right matters

Written by Alex Howells, Senior Associate in our Insurance and Recoveries Department 

Missing a limitation deadline can be the difference between a successful recovery and a complete loss of recovery rights. For insurers pursuing subrogated property damage claims, understanding and correctly applying limitation periods is crucial. Even the strongest claim will fail if brought outside the statutory time limit, providing defendants with a complete defence.

In this guide, we break down the key limitation rules, explain how they apply to different types of claims, and outline why careful tracking of deadlines is essential to protect recovery rights and avoid time-barred claims.

What is a limitation period?

A limitation period is the legally defined timeframe within which a claimant must bring a legal action. These periods provide certainty and finality in disputes, preventing parties from facing stale claims where evidence may have deteriorated over time.

For subrogated claims, where insurers step into the insured’s shoes to pursue recovery, missing a limitation deadline can extinguish the right to claim entirely, regardless of the claim’s strength or merit.

The applicable limitation period depends on the legal basis of the claim, whether it arises in tort, contract, product liability, or contribution. Insurers must be aware of these distinctions to track and manage timeframes effectively.

Limitation in tort: Negligence and nuisance

Standard rule

For property damage claims based on negligence or nuisance, section 2 of the Limitation Act 1980 (LA 1980) specifies that the standard limitation period is six years from the date the damage occurs.

Latent damage (negligence only)

However, in a negligence claim where damage isn’t immediately apparent, the latent damage provisions under section 14A LA 1980 apply. This gives claimants three years from the date they discover (or should reasonably have discovered) the damage.

The applicable period for negligence claims is whichever expires later, either the six years from the date of the damage or the three years from the date of discovery, subject to the 15-year longstop discussed below.

Examples:

• A water pipe bursts on 1 January 2020, causing immediate damage. The limitation period ends on 1 January 2026 – six years from the date of damage.
• If a pipe installed in January 2020 causes a slow leak that remains undiscovered until September 2026, the limitation period runs until September 2029 – three years from discovery.

The 15-year longstop (negligence only)

Section 14B LA 1980 imposes a longstop rule, which caps claims at 15 years from the date of the negligent act, regardless of when the damage is caused or discovered. This takes precedence over the three and six year periods.

Example:

• A pipe is negligently installed in January 2011. It fails in March 2025, causing damage. The limitation period ends in January 2026, 15 years after installation, even though the three and six year periods would expire later.

Contractual limitation periods

For claims based on breach of contract, the limitation period runs from the date of breach rather than the date of damage (as is the case for tort claims).

Contractual limitation periods under LA 1980 include:

• Simple contracts (not signed as deeds): six years from the date of breach.
• Contracts executed as deeds: twelve years from the date of breach.

In subrogated property damage claims, contracts between claimants and service or goods providers (e.g. building contractors or electrical retailers) are usually simple contracts, making the six-year period most common.

Example:

• A contractor installs a faulty pipe in 2010, but the defect causes damage in 2020. Limitation for the contractual claim expired in 2016, six years after the breach. However, a negligence claim could still be pursued, as limitation for this runs from the date of damage.

Product liability limitation: Consumer Protection Act 1987

Where damage results from a defective product, such as an appliance malfunction causing a fire, claims may be brought under the Consumer Protection Act 1987 (CPA).

Under section 11A LA 1980, the limitation periods for CPA claims are:

• Three years from the date of the damage or the claimant’s knowledge (whichever is later).
• Ten-year longstop from when the product was first placed on the market (which takes precedence over the three-year limitation period above).

Examples:

• An appliance placed on the market in June 2018 causes a fire in May 2025. The limitation period ends in May 2028, three years from the date of damage.
• If the appliance was placed on the market in April 2016, but the damage occurs in March 2025, the claim must be brought by April 2026 due to the ten-year longstop.

Claims for contribution: Civil Liability (Contribution) Act 1978

When multiple parties share liability for property damage, an insurer may pursue a contribution claim against co-defendants under the Civil Liability (Contribution) Act 1978.

Under section 10 LA 1980, the limitation period is two years from:

• The date the defendant is held liable by court judgment or arbitration; or
• The date the defendant agrees the amount it will pay the claimant in a settlement.

Although the limitation period for contribution claims is shorter, it does not usually begin to run until much later than the claim types mentioned above.

Example:

• A structural engineer and a contractor are jointly liable for subsidence. The engineer settles with the claimant. The engineer then has two years from the date they agreed the settlement amount with the claimant to bring a contribution claim against the contractor.

Why limitation periods matter in subrogation

Just as subrogation allows insurers to rely on the causes of action available to an insured whose property has suffered damage, it also binds insurers to the same limitation periods applicable to the insured’s claims. Missing a limitation deadline can:

• Extinguish recovery rights entirely, preventing insurers from pursuing otherwise valid claims.
• Lead to unnecessary payments on claims that could have been defended.

Carefully tracking limitation periods helps to ensure recovery efforts remain viable and protects insurers from unnecessarily settling recovery claims made against them.

Common pitfalls to avoid

To avoid missing limitation periods, insurers should be aware of the following pitfalls:

• Misidentifying the limitation period: Confusing contract and tort claims can lead to missed deadlines. Always confirm the claim type and relevant limitation periods.
• Overlooking latent damage: Damage that goes undiscovered for a period could engage the three-year latent damage limitation period, which may effectively extend time for the claim.
• Ignoring longstop periods: Even if damage remains undiscovered for years, the 15-year (tort) and 10-year (CPA) longstops may result in claims becoming time-barred regardless.
• Delays in contribution claims: Insurers seeking contribution from co-defendants must act within two years of liability being determined or a settlement being agreed.

Practical takeaways

• Identify recovery opportunities as soon as possible, ideally at the claim notification stage.
• Identify claim types (tort, breach of contract etc.) and calculate conservative limitation dates for each claim type.
• Record limitation dates in multiple diaries (e.g. the claim handler and supervisor’s calendars) to ensure they are not missed.
• Identify any contribution claims at the outset and note the short two-year limitation period.
• Reassess limitation periodically, particularly in complex cases or where new facts emerge.
• If unsure, seek advice from your legal representative, who can take steps to protect your position on limitation (e.g. by issuing court proceedings or seeking an extension/suspension of the limitation period using a standstill agreement).