Insurance policies offer policy-holders security: the
policy-holder pays a premium and in return the insurer agrees to
cover the risks outlined in the policy. This coverage is not
however automatic. In fact, failure of the insured to notify the
insurer of any loss which may give rise to an indemnity in a timely
manner can result in the forfeiture of the right to compensation1. In order to ensure
coverage and increase security, it is therefore crucial that the
insured provide notice of any potential claim immediately upon
becoming aware of it2.
The risk associated with failing to disclose a notice of loss in
a timely manner was recently highlighted in the case of
Rosenstein c. Guarantee Company of North America3. In the
Rosenstein case, the Superior Court of Québec
denied the insureds' application for coverage on this basis.
The Court found that the insurer was entitled to rely on a
notification provision in the insurance policy in order to deny
coverage. As a result, the insureds were held personally liable for
hefty damages in a defamation lawsuit.
The defamation case arose from proceedings first instituted by
the insureds in 2005, in the name of their son, against the
son's school teacher on the grounds that the teacher humiliated
and intimidated their son in front of his classmates. The
school teacher and the insureds settled their dispute out of court
and a condition of their agreement was that the dispute remain
confidential. However, immediately after notifying the judge of
their intention to discontinue proceedings, the insureds exited the
courtroom, approached the media and publicly made defamatory
comments that tarnished the school teacher's reputation. These
comments were televised and broadcasted across Canada.
As a result of this public statement, the school teacher filed a
lawsuit against the insureds for damages to her reputation and for
the violation of the confidentiality clause of the agreement. She
was awarded in excess of $234,000 in damages by the Superior Court
in July 2010. This judgement was confirmed by the Court of Appeal
of Québec and the Supreme Court of Canada dismissed the
insureds' application for leave to appeal. The award was
later successfully increased to $1.4 million.
It was only in July 2012 that the insureds notified their
insurer of the court order against them. In September 2012,
following the insurer's refusal to cover said damages in
accordance with the insurance policy, the insureds instituted
proceedings against their insurer.
After analyzing the clauses of the insurance policy, the
Superior Court outlined the paramount importance of notifying the
insurer of any loss which may give rise to an indemnity the moment
the insured becomes aware of it. The court stated that the insurer
suffered a severe prejudice due to the late notice of loss, as the
insurer was unable to:
assign a claim adjuster;
conduct an investigation;
evaluate the possibility of a
retain other experts;
minimize legal costs etc.
The Superior Court held that the prejudice was irreparable at
this stage of the proceedings and therefore allowed the insurer to
invoke the clause under which all rights to compensation are
forfeited by the insured when he fails to notify the insurer of any
loss which may give rise to an indemnity as soon as he becomes
aware of it.
The rationale for imposing a sense of urgency on the insured, it
has been found, is to avoid the insurer being at the mercy of the
insured and to allow for prompt investigation4. As a result, any insured wishing to
take advantage of coverage under an insurance policy must be sure
to file a notice of loss promptly, or risk a finding that the
insurer is justified in refusing to provide coverage under the
The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.
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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.
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.
The recent Preliminary Issue decision in Walsh and Echelon (FSCO A15-007448, August 31, 2016) confirms that an economic loss does not need to be demonstrated in order to be entitled to attendant care benefits.
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.
Policyholders recently won a key victory at the Supreme Court of Canada in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co. as the Supreme Court clarified the interpretation of a standard form...
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