Canada: A Note About Notice Under The Insurance Act

We have previously written about the "new" BC Insurance Act and Insurance Regulation (the "BC Insurance Act") which came into force on July 1, 2012 after many years (see our paper entitled: Making the Transition to the New World Order). The Alberta Insurance Act and Fair Practices Regulation (the "Alberta Insurance Act") came into force on the same date. Both Acts contain very similar provisions and although there have not been many cases in BC decided under the new legislation, a recent Alberta case (Dhillon v. Anderson, 2014 ABQB 609) may be of assistance in determining how a BC Court would find on the issue of notice and limitation periods.

The BC Insurance Act imposes a two year limitation period for coverage enforcement actions against insurers and also requires insurers to provide written notice to a "claimant" of the applicable limitation period. We note that the definition of "claimant" under the BC Insurance Act is not as exhaustive as under the Alberta Insurance Act but does include a "judgment creditor" under s. 25. It is not so broad so as to include an unrelated third party as it does under the Alberta Insurance Act (s.5.3(1)(iii)). It is true under both Acts that if an insurer fails to provide the required notice, the running of the limitation period is suspended until the notice is given. Similar requirements are imposed by the Alberta Insurance Act. Neither the BC nor the Alberta legislation specify any other circumstances which suspend or extend the two year limitation period.

The above (although with respect to third party claimants) was recently addressed by the Alberta Court of Queen's Bench. In Dhillon, the plaintiff was injured in a motor vehicle accident in March 2011. The Alberta insurer made an immediate offer to settle the plaintiff's claim, which the plaintiff refused. During the course of subsequent negotiations between the parties, the insurer made various requests for medical documentation. In Dhillon, the Court held that an early offer to settle, requests for medical information, and ongoing negotiations do not operate to waive or suspend the running of the limitation period. The Court also held that the requirement to provide written notice to a claimant of the applicable limitation period does not apply to claims that were already in existence when the new legislation came into force.

On July 1, 2012, the Alberta Insurance Act came into force, requiring insurers to provide claimants with written notice of any applicable limitation period. This notice was not provided to the plaintiff. The parties failed to settle before the expiry of the two year limitation period and the insurer advised the claimant that his claim would be dismissed. The claimant then commenced an action against the insurer, advancing the following arguments:

  1. that the Fair Practices Regulation applied to claims that were under discussion before the regulation came into force. Consequently, the insurer should have advised the plaintiff of the applicable limitation period and its failure to do so extended the limitation period; and
  2. that the doctrine of promissory estoppel suspended the running of the limitation period while the parties negotiated a possible resolution of the claim.

The Court rejected both arguments. First, the Court held that the legislation is more than simply procedural as it imposes a new substantial obligation on insurers. As such, it does not apply retroactively and the insurer was under no obligation to provide the plaintiff with notice of the limitation period. Secondly, the Court held that promissory estoppel only applies where the plaintiff can establish that the insurer, by words or conduct, made a promise or assurance which was intended to affect the legal relationship between the parties and be acted on. Furthermore, the plaintiff would have to show that he acted in reliance of that promise. After examining the insurer's conduct, the Court concluded that merely making an early offer to settle and asking for medical documentation does not amount to the type of assurance or promise sufficient to extend the applicable limitation period. Such requests suggest that further settlement discussions are likely to be held and are not an admission of liability by the insurer. Accordingly, the plaintiff's claim against the insurer was dismissed as it was brought outside the limitation period.

We include the below chart as a reminder of the applicable provisions – in both the BC Insurance Act and Alberta Insurance Act.

Notice & extension of the limitation period


 BC Insurance Act

 Alberta Insurance Act

  • Section 23(1)(b) of the Act establishes a limitation period of "not later than 2 years after the date the cause of action against the insurer arose".
  • Section 4 of the Insurance Regulation, B.C. Reg. 403/2012 requires insurers to give written notice to a claimant of the applicable limitation period 1) within 5 business days of the denial of a claim, or 2) within 10 business days of the one-year anniversary of receiving notice of the claim, if the claim hasn't yet settled. The insurer is not required to provide notice if the claimant is represented by legal counsel.
  • Failure to provide the required notice under s. 4 of the Insurance Regulation has the effect of suspending the running of the limitation period until the notice is given.
  • Section 558(1) of the Act also establishes a 2-year limitation period from the date the cause of action against the insurer arose.
  • Effective July 1, 2012, s. 5.3(2) of the Alberta Fair Practices Regulation require insurers to give written notice to a claimant of the applicable limitation period within 60 days of becoming aware of a claim. The insurer is not required to provide notice if the claimant is represented by legal counsel.
  • Failure to provide the required notice under s. 5.3(2) of the Alberta Fair Practices Regulation has the effect of extending the applicable limitation period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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