In the recent case of Certain Underwriters at Lloyd's of
London v. All Spec Home Inspections and Mario Lucciola, the
Court considered the availability of insurance coverage to a home
inspector who missed a critical electrical problem on a home
inspection resulting in a contractor's death. At the very
end of the decision, the Judge made reference to the "cruel
world of claims-made-and-reported policies of
insurance". While colourful language of this nature is
not unusual for the particular Judge in this case, it is not
language that one sees very often. Nevertheless, the facts of
this case show how appropriate they are.
Mr. Lucciola, a self-employed home inspector, conducted an
inspection of a property in St. Catharines in July 2010. At
the time, Mr. Lucciola had professional liability insurance on the
basis of a one-year term renewed annually through to 2011.
Mr. Lucciola produced a report and photographs, making no
reference whatsoever to any electrical problems.
On August 16, 2010, a contractor was doing work in the attic of
the property. He came into contact with an exposed energized
bare copper wire. He was electrocuted and he died.
Three days later, on August 19, 2010, Mr. Lucciola signed an
application for professional liability insurance as he had done
every year since 2006. His insurance application required him
to indicate whether or not any claim had been made against him in
the last five years, and whether or not he was aware of any
situation or circumstance which may result in a claim in the
future. Mr. Lucciola answered "no" to both
The policy was then issued for a further period of one year.
Several days later, Mr. Lucciola was interviewed by an
investigator for the Ministry of Labour, at which time he was asked
whether or not he had noticed the wire in the attic. He indicated
first that he had not noticed it and subsequently that he had but
that he had tested it with an electrical tester and received no
response from it. For that reason, he had not made any note
of it in his report.
About a year later, the Ministry of Labour conducted an
inquest. Subsequently, Mr. Lucciola signed yet another
application for insurance. It contained the same questions
and he answered them in the same way. Accordingly, a policy
was issued for a further one year.
All of these policies contained language to the effect that if
the insurer subsequently became aware that if any of these
questions had been answered incorrectly, there would be no coverage
for any claim or action emanating from a fact or circumstance that
the applicant failed to mention in his application.
A lawsuit was subsequently brought against Mr. Lucciola.
He notified his insurer of the claim. The insurer brought
this application for an order that it had no obligation to provide
The Court had little difficulty concluding that Mr. Lucciola
should have known of the potential claim against him when he made
his application for the insurance policy that was in effect at the
time that he was sued, and should have answered "yes" to
that question on his application. As a result, the Court
ruled that the insurer was entitled to deny coverage.
The interesting point in this case has to do with the type of
insurance policy that was in place. Mr. Lucciola's policy
was a "claims-made-and-reported" insurance policy, rather
than an occurrence policy. These are very different. In
a claims-made-and-reported policy, it is the transmittal to the
insurer of notice of the claim that invokes coverage. In an
occurrence policy, coverage goes into effect when the incident upon
which the claim is based actually takes place.
In this case, the incident (the contractor's death) took
place in August 2010. The policy in place at that time had
been applied for by Mr. Lucciola in 2009. In 2009, when he
answered "no" to the questions as to whether or not he
was aware of a possible claim, he was being entirely
accurate. Had his policy been an occurrence policy, the
insurer would have had to provide coverage.
In this case, however, the policy in place when coverage was
invoked was the policy in effect at the time that Mr. Lucciola
notified his insurer of the claim. In applying for that
policy, Mr. Lucciola had answered "no" to questions that
should have been answered "yes". For that reason
alone, Mr. Lucciola was disentitled to coverage.
This is obviously a critical distinction. If you have
professional liability insurance coverage, and you are not aware of
the type of policy that protects you, this case is a good lesson on
the importance of finding that out and keeping it in mind.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
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