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
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:
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
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
Notice & extension of the limitation
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
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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