Code Details

Insurance Code – INS
DIVISION 2. CLASSES OF INSURANCE [1880 – 12880.8] ( Division 2 enacted by Stats. 1935, Ch. 145. )
PART 3. LIABILITY, WORKERS’ COMPENSATION, AND COMMON CARRIER LIABILITY INSURANCE [11550 – 11895] ( Heading of Part 3 amended by Stats. 1979, Ch. 373. )
CHAPTER 1. General Regulations [11550 – 11629.88] ( Chapter 1 enacted by Stats. 1935, Ch. 145. )

ARTICLE 2. Actions on Policies Containing Liability Provisions [11580 – 11589.5] ( Article 2 enacted by Stats. 1935, Ch. 145. )

Exact Statute Text

No advance payment or partial payment of damages made by any person, or made by his insurer under liability insurance as defined in subdivision (a) of Section 108, as an accommodation to an injured person or on his behalf to others or to the heirs at law or dependents of a deceased person because of an injury or death claim or potential claim against any person or insured shall be construed as an admission of liability by the person claimed against, or of that person’s or the insurer’s recognition of such liability, with respect to such injured or deceased person or with respect to any other claim arising from the same accident or event. Any such payments shall, however, constitute a credit and be deductible from any final settlement made or judgment rendered with respect to such injured or deceased person which does not expressly take into account such advance payments. Any person, including any insurer, who makes such an advance or partial payment, shall at the time of beginning payment, notify the recipient thereof in writing of the statute of limitations applicable to the cause of action which such recipient may bring against such person as a result of such injury or death, including any time limitations within which claims are required to be made against the state or any local public entity when such payments are made on behalf of such public entities. Failure to provide such written notice shall operate to toll any such applicable statute of limitations or time limitations from the time of such advance or partial payment until such written notice is actually given. That notification shall not be required if the recipient is represented by an attorney.

(Amended by Stats. 1985, Ch. 792, Sec. 5.)

Insurance Code § 11583 Summary

California Insurance Code § 11583 addresses the effect of advance payments made by an insurer or a person to an injured party (or their heirs/dependents in a death claim) on potential personal injury or wrongful death claims. The statute clarifies three key points:

1. No Admission of Liability: Making an advance or partial payment for damages is *not* considered an admission of liability by the person or insurer making the payment. It also doesn’t imply recognition of liability. This applies to the specific injured/deceased person and any other claims from the same incident.
2. Credit Against Future Payments: Any such advance payments will be credited against and deductible from any final settlement or judgment, unless that final amount already explicitly accounts for the advance payments.
3. Statute of Limitations Notice: Crucially, if an advance or partial payment is made, the person or insurer making the payment *must* notify the recipient in writing about the applicable statute of limitations for their potential cause of action. This includes special time limits for claims against government entities if applicable. If this written notice is *not* provided, the statute of limitations (or other time limitations) will be “tolled” (paused) from the moment of the advance payment until the written notice is actually given. However, this notice requirement is waived if the recipient is already represented by an attorney.

Purpose of Insurance Code § 11583

The legislative purpose behind California Insurance Code § 11583 is multi-faceted, aiming to encourage good-faith, early assistance to injured parties while protecting the legal rights of both claimants and those potentially liable.

Historically, insurers and individuals were hesitant to make advance payments for fear that such payments would be interpreted as an admission of guilt, strengthening the claimant’s case. This statute removes that disincentive, allowing prompt financial relief for medical expenses, lost wages, or other immediate needs without prejudicing the payer’s defense in a future lawsuit. By clearly stating that advance payments are not an admission of liability, the law facilitates humane and practical support following an accident.

Simultaneously, the statute safeguards the injured party. Without the explicit notice requirement, a claimant receiving ongoing payments might mistakenly believe their claim is being fully handled or settled, causing them to miss critical legal deadlines. The tolling provision acts as a powerful consumer protection mechanism, ensuring that claimants are fully informed of the timeframe within which they must formally pursue their claim, preserving their right to seek full compensation. The exception for attorney-represented recipients acknowledges that legal counsel is responsible for advising clients on such deadlines.

Real-World Example of Insurance Code § 11583

Imagine Sarah is severely injured in a car accident caused by Mark. Mark’s insurance company, “Reliable Auto Insurance,” wants to help Sarah with her immediate medical bills and lost wages while the full extent of her injuries and damages are being assessed.

Reliable Auto Insurance sends Sarah a check for $5,000 to cover her emergency room co-pay and a week’s worth of lost income. This is an “advance payment” under Insurance Code § 11583.

Scenario 1 (Compliance): Along with the check, Reliable Auto Insurance includes a clear, written notice stating: “Please be advised that under California law, you generally have two years from the date of the accident (e.g., [date of accident]) to file a personal injury lawsuit. This advance payment does not constitute an admission of liability for the accident.” In this case, the two-year statute of limitations for Sarah’s personal injury claim continues to run from the date of the accident. If Sarah later settles her claim for $50,000, the $5,000 advance payment will be deducted, and she will receive $45,000.

Scenario 2 (Non-Compliance): Reliable Auto Insurance sends the $5,000 check, but forgets to include the required written notice about the statute of limitations. Sarah is grateful for the help but isn’t aware of the specific legal deadline. Under Insurance Code § 11583, the statute of limitations for Sarah’s claim is *tolled* (paused) from the date she received the $5,000 payment until Reliable Auto Insurance actually provides that written notice. If Reliable Auto Insurance never provides the notice, Sarah could potentially file her lawsuit much later than the standard two-year period, as the clock would have stopped ticking. However, if Sarah had hired an attorney before receiving the payment, the notice requirement would have been waived, and the statute of limitations would not be tolled.

Related Statutes

• Code of Civil Procedure § 335.1 – Action for Injury or Death: This is the primary statute of limitations for personal injury and wrongful death actions in California, generally setting a two-year limit. Insurance Code § 11583 directly impacts this deadline by potentially tolling it if proper notice of advance payments is not given.
• Government Code § 911.2 – Presentation of Claim: This statute outlines specific, much shorter time limits (often six months) for presenting claims against California state and local public entities. Insurance Code § 11583 explicitly includes these government claim limitations in its notice requirement, highlighting their critical importance.
• Insurance Code § 108(a) – Liability Insurance Defined: This section defines “liability insurance,” which is referenced in § 11583, clarifying the scope of insurers to whom the advance payment rules apply.

Case Law Interpreting Insurance Code § 11583

While Insurance Code § 11583 has been in effect for many years, the specific *tolling* provision (added by amendment in 1985) has not been the subject of extensive, complex appellate case law interpretation. Its application is often straightforward on a factual basis. However, earlier cases discuss the general principles underlying the statute regarding advance payments not constituting an admission of liability:

• Lara v. State Farm Mut. Auto. Ins. Co., [59 Cal. App. 3d 399 (1976)](https://scholar.google.com/scholar_case?case=17622359247714150537&q=%22California+Insurance+Code+11583%22&hl=en&as_scl=1&as_vis=1)

* Although predating the 1985 amendment that added the explicit tolling provision, this case discusses the legislative intent behind the original version of § 11583, emphasizing that advance payments are intended to be a humane and practical accommodation to injured persons without being deemed an admission of liability. It highlights the policy of encouraging prompt payment for injuries.

• Rodriguez v. Fireman’s Fund Ins. Co., [142 Cal. App. 3d 46, 52 (1983)](https://scholar.google.com/scholar_case?case=15276326177570494336&q=%22California+Insurance+Code+11583%22&hl=en&as_scl=1&as_vis=1)

* This case cites Insurance Code § 11583 in the context of general principles concerning advance payments by an insurer, reaffirming that such payments are not an admission of liability.

The core principle that advance payments are not an admission of liability, and that they act as a credit, has been consistently upheld. The modern application predominantly focuses on the strict requirement for written notice regarding the statute of limitations to prevent tolling.

Why Insurance Code § 11583 Matters in Personal Injury Litigation

Insurance Code § 11583 is highly relevant in California personal injury litigation for both plaintiffs and defendants, shaping strategy and impacting outcomes.

For Plaintiffs and Their Attorneys:

• Protection from Missing Deadlines: This statute is a critical safeguard. If a client receives advance payments from an insurer or at-fault party without proper written notice of the statute of limitations, their legal deadline to file a lawsuit could be extended indefinitely until that notice is given. This is a powerful tool to prevent an unknowing claimant from losing their rights.
• Clarity on Payment Status: It ensures that accepting early payments does not equate to settling the entire claim. Clients can receive immediate financial relief for pressing needs (like medical bills or lost wages) without jeopardizing their right to pursue full compensation for all damages later.
• Strategic Advantage: If an insurer fails to provide the required notice, the plaintiff’s attorney can use this to argue that the statute of limitations has been tolled, potentially saving a claim that would otherwise be time-barred.

For Defendants (At-Fault Parties) and Their Insurers:

• Encourages Early Resolution and Goodwill: The “no admission of liability” clause is crucial. It allows insurers to offer advance payments to assist injured parties and build goodwill without conceding fault or weakening their defense in a potential lawsuit. This can sometimes lead to more amicable settlements.
• Strict Compliance Required: Insurers must meticulously follow the notice requirement. Failure to provide written notice of the applicable statute of limitations will cause the deadline to be tolled, potentially exposing them to claims far beyond the standard statutory period. This makes diligent internal procedures for advance payments essential.
• Credit for Payments: Any advance payments made are creditable against a final settlement or judgment. This ensures that the payer isn’t double-charged for the same damages, promoting fairness and efficiency in the claims process.

In essence, Insurance Code § 11583 balances the desire for prompt assistance to injured parties with the need to protect their legal rights and ensures that all parties operate with clear understanding regarding legal deadlines and the implications of early financial support.