Insurers ought to take into account telling policyholders the precise dates when relevant limitation intervals expire, and counsel that policyholders search and retain counsel, authorized specialists suggest after an Appeal Court resolution in Alberta.
In Statt v SGI Insurance coverage Providers Ltd, a letter from insurer SGI Insurance coverage Providers Ltd. referred to a limitation interval, but it surely was not clear as as to whether it was the interval to submit a proof of loss or to start a lawsuit in opposition to the insurer. The Court of Appeal of Alberta urged a plain-language wording for clarification.
“Insurers should inform policyholders in clear and unambiguous language of the relevant two-year limitations interval,” write Patrick Heinsen, Raphael Jacob and Mathew Grainger, associate, affiliate and articling scholar, respectively, with Borden Ladner Gervais LLP in Calgary in a Mondaq article. “The foregoing discover should additionally clearly point out that the relevant limitations interval begins operating from the date of loss.”
Heinsen, Jacob and Grainger made their feedback after Alberta’s appeal court in July 2021 dismissed the insurer’s appeal a couple of limitation interval extension, resulting from SGI’s failure to offer sufficient discover of the relevant limitation interval.
“The choice… stresses that an insurer should present detailed discover to their policyholders that’s written in unambiguous language, or danger and extension of the relevant limitation interval pursuant to part 5.3 of the Honest Practices Regulation.”
Part 5.3(2)(a) of the regulation states an insurer should give written discover to a policyholder setting out the relevant limitation interval, “if the declare has not been satisfactorily settled, inside 60 days from the date the claimant notifies the insurer of the declare.”
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In Statt, the Appeal Court notes a letter from SGI did check with a limitation interval, but it surely was not clear as to which one – the one to submit the proof of loss or the limitation interval to start a authorized motion.
The case entails a residential property owned by James and Juliette Statt that was destroyed by a hearth on Nov. 12, 2014. The day after the fireplace, the insureds submitted a declare to SGI for protection of their loss. An SGI adjuster offered a letter to the insureds which suggested, “[i]n accordance with the Alberta Insurance coverage Act, we’re enclosing a clean Proof of Loss kind to your file, and should advise you of the two-year limitation interval relevant to your declare.”
Greater than three years after the fireplace, on Dec. 22, 2017, the Statts introduced an originating software for abstract judgement in search of compensation for his or her losses and an extension of the limitation interval for commencing a authorized motion.
The Court of Queen’s Bench of Alberta in 2019 granted the extension and awarded damages of $127,241 for repairs to the property, in addition to further prices for misplaced rental earnings and utility prices (the insureds had tenants renting the property). The chambers choose largely upheld the award, resulting in SGI interesting the choice.
On appeal, Alberta Court of Appeal Justices Frans Slatter, Patricia Rowbotham and Jolaine Antonio word the Honest Practices Regulation offers little steerage concerning the content material of the discover, apart from it should embody the title of the act or regulation that refers back to the relevant limitation interval. Nevertheless, the Appeal Court discovered SGI’s discover, below the heading “Proof of Loss Kind,” was not enough, as confirmed by the grasp and chambers choose.
“Whereas the discover referred to the Insurance coverage Act, it didn’t hyperlink the reference to dialogue of the limitation interval,” the appeal court resolution says. “Together with the discover below the heading ‘Proof of Loss Kind’ is complicated. Because the grasp noticed, it’s not clear what’s to be achieved inside two years, submit the Proof of Loss or start an motion?”
As shopper safety laws, the discover about limitation intervals must be “written in plain language in comprehensible phrases,” the Appeal Court discovered.
The court even went so far as to counsel the wording as follows:
“Implementing Your Rights below Your Insurance coverage Coverage.
We’ll start processing your declare as soon as we have now obtained your Proof of Loss. This may embody figuring out in case you have protection for the loss you declare, and the way a lot you might be entitled to get better. Whereas we count on to succeed in a consensus with you on these points, we’re required to advise you that below the Insurance coverage Act, should you want to start authorized motion to get better below your insurance coverage coverage, you will need to accomplish that inside two years of the date of the loss. You probably have any questions on your authorized rights, please seek the advice of your lawyer.”
SGI argued the sooner choices erred by extending the limitation interval, however the appeal court dismissed the appeal. Whereas the choice dealt with different points regarding price awards, it finally discovered the insureds have been entitled to abstract judgement for a portion of their declare; that being, the price of the remaining repairs to the property ($127,241).
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