The Superior Court has upheld an arbitrator's decision,
finding that loss transfer is subject to a two-year rolling
In Economical v. Zurich, the claimant was driving
a car and was involved in a motor vehicle accident with a dump
truck. She applied to her insurer, Economical, for accident
benefits. Economical responded and made payments to her. It then
claimed loss transfer indemnification from Zurich, which insured
the dump truck.
On November 8, 2005, Economical sent Zurich a Notice
of Loss Transfer. On January 30, 2006, Economical forwarded a Loss
Transfer Request for Indemnification to Zurich, claiming $27,516.12
less the $2,000 statutory deductible. On February 21, 2008,
Economical served a second updated Request for Indemnification
listing all payments to that date, totalling $119,898.14. A third
Request for Indemnification was sent by Economical on April 17,
2008 in the amount of $127,172.22.
A Notice to Participate and Demand for Arbitration, dated
November 25, 2009, was served by Economical, on Zurich, on November
On December 8, 2011, the underlying accident benefit claim was
settled as between the claimant and Economical. The Settlement
Disclosure Notice indicates the total settlement was in the amount
of $127,220.00. A further Request for Indemnification, dated
January 24, 2012, was sent from Economical to Zurich reflecting the
amount of the settlement less costs, disbursements and HST. The
amount requested for indemnification was $95,857.00.
At arbitration, the arbitrator held that the amounts in the
first Request for Indemnification were excluded by operation of
the Limitations Act, 2002, as the arbitration was not
initiated until November 27, 2009. This request for loss transfer
was in the amount of $27,516.12 before the $2000 deductible was
applied. All subsequent requests for indemnification (February 21,
2008, April 17, 2008, March 8, 2011 and January 24, 2012)
were not barred as a result of any limitation period.
Zurich's appeal was dismissed. The judge agreed with the
arbitrator that each Request of Indemnification invoked an
independent or separate limitation period. This was referred to as
a "rolling limitation period". The judge
also confirmed that once a first party insurer initiates
arbitration, it does not need to do so again after it submits
further loss transfer Requests for Indemnification. In other words,
in this case Economical initiated arbitration on November 29, 2009.
It then claimed additional loss transfer indemnification after it
settled the claimant's accident benefits file in December
2011. The judge confirmed that Economical was not required to
initiate arbitration again for the December 2011 payments, having
already initiated arbitration in November 2009.
The Economical decision confirms two
principles: Firstly, loss transfer disputes are subject to a
two-year rolling limitation period, starting each time the second
party insurer receives a Request for Indemnification. Secondly,
once arbitration starts, all subsequent Requests for
Indemnification are protected in that arbitration. Essentially the
limitation period for all claims (past and future) stops rolling
when arbitration is initiated.
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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